Selling ‘dulces’ in the States

*This confirms my thinking, more than an “aspirational” culture, Latinos in the U.S. are a transformational force. I like the last line in this piece: “So it sounds like ‘dulces’ are here to stay.” VL

By Crystal Lindell, Candy Industry Magazine

More and more consumers are saying, “Quiero dulces!” And while that may be Spanish for “I want candy,” it’s retailers in the United States who are hearing it.

This Hispanic confectionery market is growing in the States, with its cultural ties to many immigrants’ homeland, the growing purchasing powers among Hispanics, and its crossover appeal.

In fact, according to a 2014 ProMexico report, three of the top five Mexican exports were sugar, chocolate, and sugar confectionery without cocoa, with baked goods and coffee rounding out the top five.

Jorge Martinez, president of Mexibrands, knows first-hand that Hispanic candy is in a growth period. His Texas-based company has distributed Hispanic candy nationwide since 2008, and works with wholesalers and distributors that target Hispanic customers.

Mexibrands sells Mexican food to the United States and focuses on developing the market with products that add value to plan-o-grams through differentiation. In short, it works to match the Hispanic customer’s needs for products and presentations with the manufacturer’s capabilities.

“The purchasing power of Hispanics is growing,” he explains. “More retailers are willing to open spaces for the items and more importantly, in multicultural cities/regions, the crossover to other cultures is playing an important factor too.”

In fact, the estimated Hispanic population of the United States was about 50.5 million as of March 2011 according to data from AHAA: The Voice of Hispanic Marketing, making people of Hispanic origin the nation’s largest ethnic or race minority. To put it another way, 1 in 6 Americans is now Hispanic.

Moreover, Hispanic kids make up 23 percent of the 17 and younger consumers in the United States, or more than 17 million kids. That’s a 39 percent increase in 10 years, according to AHAA.

Of course, those trends translate into growth for the Hispanic confectionery market as well.

“For the next few years the shelf spaces for these kinds of products definitely will grow and develop,” Martinez explains. “More retailers are interested in adding or growing these kinds of products to their programs in order to attract Hispanic customers. Besides this, Hispanic candy as a category has good profit margins year-round.”

Mexibrands says some of its more popular Hispanic confectionery brands, include:

• Don Pepe: A heritage line of confections based on natural ingredients, such as seeds, guava and coconut.
• Fiestalegria: A very popular line of traditional cones with marshmallow in different flavors.
• Super Rico Powder: A  chili powder candy with strong brand recognition among customers

“When talking about Hispanic customers, everything is related to the ‘appeal’ of the item,” Martinez says. “Does the item give the customer a ‘taste of home?’ Does the item connect the customer to their original country? Customers are looking for same or very similar items and flavors to the ones that they used to taste before migrating to the U.S.”

Indeed, one of the best ways to predict upcoming trends in the U.S. Hispanic Confectionery market is to look at what’s hot in Mexico right now.

Euromonitor International, a data-research firm, released a report on the Mexican confectionery market in November, showing what’s hot and what’s not in the country right now.

The data shows that the chocolate confectionery market in Mexico is expected to increase by 3 percent in volume and 12 percent in current value terms in 2014. That would result in (Mexican) $16.1 billion in sales, and 64,000 tons.

Mexicans have a notable preference for plain milk chocolate bars, which are expected to remain the category leader in 2014, with a 45 percent value share, the report shows.

Ranked second are filled bars, which includes orange, mint and strawberry flavors, amongst others.

As for dark chocolate, it’s expected to maintain its third-place ranking with an 18 percent share, because the usually bitter taste of dark chocolate deters most Mexicans. However, dark chocolate also has the greatest potential for growth, as more and more Mexicans become more informed about its purported nutritional value and antioxidant attributes.

In last place is white chocolate, which is expected to account for only an 11 percent share of sales of tablets in 2014.

Ethical chocolate products, such as organic, Fair Trade or Rainforest Alliance certified products, have a minimal presence in Mexico, and sales are negligible.

The most relevant variety of chocolate in ‘other chocolate confectionery’ is chocolate-coated marshmallows, representing more than 77 percent of category sales. The main brands includeRicolino Bubulubu, Ricolino Paleta Payaso andPaletón La Corona, all of which are owned by Grupo Bimbo, Euromonitor reports.

Back in the states, it’s a feel-good factor, and nostalgia, that helps drives Hispanic confectionery sales at retailers. The sweets can encourage customer loyalty, or at least a preference to visit to a specific store, Martinez says.

“Hispanic confectionery-oriented items are specialty or niche products that can give the Hispanic customer a better experience at retail points,” he explains.

Aside from the nostalgia it evokes, many immigrant parents share confections from their home country as a way to pass on a part of their culture to their children, Martinez says.

“Because of the heritage or connection issue, the marketing effort needs to be focused on adults so they can give the first chance to the product and then they will share it with their kids,” Martinez says.

The more popular types of candy include lollipops with chili, chili powder items, confections with seeds, coconut confections and marshmallow items.

However, just because the confectionery items tend to initially appeal to Hispanics, that doesn’t mean there isn’t crossover — especially in cities with a large Hispanic population.

“There’s a Hispanic market that’s growing here in the U.S., and on the other side, some items have crossover,” Martinez says. “In multi-cultural, cities like LA, you can see all different kids sharing the [candy].”

The category does face challenges as it tries to keep up with growth though.

“The big challenges [for Hispanic confections] are related to the dynamics of change of the Hispanic consumers, because once in the U.S., their preferences and habits start to change,” Martinez says.

There’s also a more concrete issue: logistics. But it’s nothing that can’t be overcome.

“The development of distribution channels is critical,” Martinez says. “But as long as the category can offer a profitable business with a nice shelf turnover, retailers will take advantage of the category and have a good opportunity to grow at fast rates.”

So it sounds like ‘dulces’ are here to stay.

This article was originally published in Candy Industry Magazine.

Crystal Lindell is the Managing Editor of Candy Industry.