Multicultural Consumers are Private-Label Growth Drivers

Multicultural Consumers are Private-Label Growth Drivers

Over 120 million strong in the U.S., multicultural Americans make up a large, young and growing segment. In fact, 24% of households in the U.S. are considered multicultural, and the growth shows no signs of slowing down. By 2020, Nielsen expects the Hispanic population in the U.S. to grow by 6.8 million, complemented by an additional 2.3 million Asian-Americans and 1.8 million African-Americans.

As brands across the country seek growth in a challenging market, private-label brands are outpacing national brands. According to the Total Consumer Report, Volume 3, private-label dollar sales grew 1.9% in third-quarter 2017, while dollar sales from the top 20 largest fast-moving consumer goods (FMCG) manufacturers declined 0.6%.

While multicultural households purchase fewer private-label products than the general population, Hispanic and African-American dollar spend grew +0.7% and +0.5%, respectively, for the year-ended Aug. 12, 2017. In comparison, non-Hispanic white dollar spend declined 3.6%. Across eight key food departments, African-American households lead the growth in five categories, including alcohol (5.4%), frozen food (3.7%) and produce (3.4%). Their Hispanic counterparts drove even higher growth rates in frozen foods (4.0%) and produce (3.5%).

Women are an important segment to private label, as they purchase above-average amounts of private-label products across a variety of categories. Baby food, tortillas, prepared foods, salsa and candy are the top five categories benefiting from multicultural female consumers. In fact, more than two-thirds of multicultural women agree that if store brands are on sale, they will buy them instead of their regular national brand.

More than 2/3 of multicultural women will buy a store brand instead of a regular national brand if it’s on sale

However, multicultural consumers don’t simply focus  on price. They also demand strong value, so marketers should not focus on pricing alone when engaging with multicultural consumers.

As the population in the U.S. continues to diversify, the opportunity exists for private-label brands to increase their share among multicultural households. Uncovering new product ideas that appeal to the unique demands and preferences of diverse population segments will help private-label brands appeal to the multicultural consumers.