Companies shift their focus to accommodate and capitalize from the Latino population boom.
Companies shift their focus to accommodate and capitalize from the Latino population boom.
John Wise, founder and president of Atlanta-based Viscom International, No. 4571 on the Inc. 5000, started his calling cards company in 2000, right as the Latino population in the United States began to take off. Before 2000, the group's growth accounted for less than 40 percent of the nation's total population increase. After 2000 Latinos accounted for more than half (50.5%) of the overall population growth. Wise's company made the decision then to cater 100 percent to the growing Latino market and as a result, his company flourished. 'There has been a very expansive growth of the market since [we started],' says Wise, who points to the first five or six years of this decade as when Viscom saw its most significant growth.
Viscom isn't alone -- many businesses, big and small, are realizing that they can't afford to ignore this burgeoning market. As the demographic grows, the economy is greatly affected as nearly every industry has shifted its focus to accommodate and capitalize from it. According to the University of Georgia's Selig Center for Economic Growth, the economic forecasting center of the Terry College of Business, the buying power of Latinos has soared to become the nation's largest minority market. In 1990, the U.S. Latino market was $212 billion. In 2008, Latinos represented $951 billion in spending power. A number of Inc. 500|5000 companies recognized this opportunity and have experienced exceptional growth because of it.
Wise explains that his company's most successful calling card, BEST Mexico, sold several million units this year alone. He believes such sales reflect the tremendous need for a company like his. 'Communication with their families in their home countries is a staple in their lives,' Wise says. 'It's their lifeline back to their families and to stay connected. And therefore, there's an extremely high demand for low-cost, high-quality products that allow them to do that.' As a result of this trend, Viscom saw $20 million in revenue for 2008 and Wise anticipates this year's figures for his 22-employee firm will only be higher. Besides continuing to serve their communication needs, Wise looks to further propel Viscom by addressing other needs in the Latino market such as access to financial services.
'There isn't any industry that can afford to ignore that segment of the population now,' says Dan Roselli, president of Red F Marketing, a Charlotte, North Carolina-based advertising and marketing company and No. 1671 on the Inc. 5000. Roselli, alongside CEO Sara Garcés, works with clients of varying size and focus to reach the Latino consumer. Red F Marketing is strategically located in one of four of the nation's fastest growing Latino markets--North Carolina, Arkansas, Tennessee and Georgia, according to the Selig Center.
According to the same data, the 10 states with the largest Latino markets include California, Texas, Florida, New York, Illinois, New Jersey, Arizona, Colorado, New Mexico and Georgia.
'The new Latino sweet spots are here in the Southeast,' says Jeffrey Humphreys, director of the Selig Center, who compares this to old sweet spots in traditional border or port of entry states like Texas, California, Florida, and New York. 'Anyone who is considering investing time or money in marketing or product development needs to consider the growing importance of the multicultural economy.'
Since Red F launched in 2002, both Roselli and Garcés say interest in connecting with the Latino market may have gained significant traction and become more aggressive; however, it didn't happen overnight. The two say there's a noticeable increase in businesses geared towards Latino communities then there were in the past. And compared to years prior, larger brand corporations also now see the direct correlation between growing their business successfully and putting marketing dollars behind the Latino market. 'There are definitely more companies out there today trying to get a piece of the pie from the perspective of the Latino market,' says Garcés. Roselli adds, 'Now, people have come to the realization of the size of the marketplace.'
Among Red F Marketing's clients include the U.S. Latino Chamber of Commerce, United Health Group, and Time Warner Cable. During this economic downturn, the company still saw revenues of $12 million in 2008 and projects closing out 2009 with about a 15 percent increase in growth. Today, it is aggressively working with clients that have had to rethink their marketing budget and need to make the most of their marketing dollars. And in doing so, put their hope for return on investment in a flourishing Latino market.
'This is the reason our company is growing even in the recession,' Roselli says. 'There's a real belief in the Latino community that Latino-owned companies and companies targeting the Latino and Latino population are really going to drive a lot of the economic recovery and be a critical part of it because its where a lot of the buying power resides.'
'We've all heard President Barack Obama talk about the growth in the Latino population and how Republicans and Democrats have been going after the Latino vote,' Garcés adds. 'The 2010, the U.S. Census will really clarify and help us to understand the true size of that population. The Latino population, with more economic dollars as well as representation in politics, is going to shape the direction of the economy and business. It will be exciting to witness the future uptick of business that focus on Latinos as well as Latino-owned businesses.' The most powerful driver in the gains of this market is by far due to population growth; by 2014, one person out of every six living in the U.S. will be of Latino origin.
Omar Duque, president and CEO of the Illinois Latino Chamber of Commerce, a non-profit membership organization that works with more than 45,000 Latino-owned businesses in the state, says the U.S. business landscape is also contributing to Latino population growth. 'As Latino businesses create local jobs and generate hundreds and hundreds of millions of dollars in tax revenues for local Latino communities, the population becomes more educated and wealthy,' Duque says. "They, in turn, will start more Latino-run businesses." In recent years, states like Illinois, New Jersey, and Georgia have experienced a surge in businesses operated by Latinos.
'The increasing number of Latino business owners is another potent force for growth,' Humphreys agrees. 'The most recent economic census showed that the number of Latino firms increased more than three times faster than the number of all U.S. firms.'
Roselli and Garcés' Red F Marketing is one of those success stories: beyond being Latino-owned, the company also serves the Latino population. Companies "shouldn't do Latino marketing because it's a moral thing to do,' Roselli says. 'You do it now because it's fundamentally good business with better-than-ever returns versus spending advertising and marketing dollars in the general market.'
William H. Frey, a demographer and sociologist specializing in U.S. demographics at the Brookings Institution, a Washington, D.C.-based independent research and policy firm, says the Latino's population's largest growth is among people under 30 years of age -- a key point to note for businesses trying to reach out to this market. But experts warn that the Latino population is much different now then it was a decade ago, due to the fact that most of the population growth can be attributed to Latino births in this country rather than immigration.
'A lot of the stereotypic images of what people believe of the Latino marketplace are not true anymore,' Roselli says, pointing to stereotypes that Latinos have a smaller purchasing power per household when compared to the general market and that they use technology such as Internet access and cell phones less frequently. The reality is that Latino purchasing power exceeds the general market in many categories and they over index in cell phone technology use, she says. 'If you look at what's happening in commerce and across the country and across industries, you see that it's changing more rapidly than they know.'
Frey adds that its companies like Red F Marketing and others on the Inc. 500|5000 that are constantly seeking more innovative strategies and evolving there reach to successfully synchronize with the Latino market. Such will be necessary to drive revenues and grow business. 'We really need to pay attention,' Frey says, because the more the population grows, the more acclimated, better educated, and more aspirational the segment will become.
'So, people who do Spanish-language advertising, they can't just do that,' urges Frey. 'They have to assume that they've got a bilingual audience of Latinos more so than they have had in the past. The nature of the Latino population will change over time -- it's not just numbers anymore, it's who makes up those numbers.'