But NAFTA only promised access to markets, and Mexican brands would have been hard pressed to find consumers for their goods in the US if demographics hadn’t provided them with a ready market—US Latinos.
"The only thing growing at a more explosive rate these days than the US Hispanic population," writes Scott Donaton, in Advertising Age's “Hispanic Fact Pack 2004,” "is perhaps the interest marketers, media companies and agencies have in tapping into this highly desirable market." According to the “HFP2004,” the numbers speak for themselves: Of the 40 million Latinos in the US, representing 13 percent of the population, one in three are under the age of 18, two in five are foreign born and two thirds are of Mexican descent. Donaton waxes ecstatic, saying, “Their purchasing power is a stunning US$ 581 billion.”
The rise in status of the US Latino demographic couldn’t have come at a better time for Mexican brands. In the mid-1990s, with a peso crisis and political instability in the form of the Zapatista uprising and assassinations in Mexico, things were not looking so good for Mexican producers to compete in their home market. A tough climate was further compounded by US multinational corporations preparing to come in with their full marketing prowess and already established loyalty from Mexican consumers for such products as Coca-Cola and Kellogg’s.
As Rafael Domingo Perez de la Garza, a student of international business at Mexico’s Monterrey Tech International, points out, if in 1994 a Mexican was presented with the same products, one Mexican and the other American, “you wouldn’t think about it, you would choose the American one.” Yet, in 2004, he says, “You would think about it a little longer, debate which is better and which would give you the best cost-benefit. Then in the majority of cases you would still pick the American product.”
John Price, President of InfoAmericas, a Latin American consultancy, agrees with Garza—to some extent. “This doesn’t hold with cultural products,” he says, such as food, beverages, and music, all of which have emotional appeal to Mexicans. He cites beers, such as Corona and Tecate, as examples of how Mexicans prefer their national brands. “Beer brands across Latin America are national symbols like soccer teams,” says Price.
Nowhere else is the struggle for the hearts and minds of US Latino consumers more visible than at the grocery store. It’s where you’ll find Mexicans still in love with their identity.
“Our philosophy is that we’re selling nostalgia, not products,” a quality and team facilitator for one of the largest Mexican food importers says, speaking only on condition of anonymity. (The reason given by this spokesperson and others interviewed for this article is a fear of large US brands honing in on their positions.) “So the first generation Mexican will walk into a store and see [Mexican sodas] and buy some and take them home to their kids and tell them how they used to drink them back in their country.”
The US Latino market is so lucrative it has made it possible for Mexican brands to solely focus their attention on the niche, while ignoring other markets in the US. “We are en español all the time,” says another anonymous source, who is vice president marketing at the same food importer. “We are comida Mexicana for Mexicans only.”
Nevertheless, other Mexican brands have been more diversified in their strategy toward the US marketplace. Bimbo Bakeries USA, which was formed in the late 1990s after Mexican food giant Grupo Bimbo purchased Mrs. Baird’s bakery (a US company), counts among its portfolio some of Mexico’s top brands: Marinela, Tia Rosa and, of course, Pan Bimbo. With Mrs. Baird’s, Bimbo Bakeries USA not only gained significant brands in the baking industry, such as Oroweat, but also nationwide distribution, which allows it to ship its imported products to Hispanic markets throughout the US.
In general, though, Mexican brands are focused on selling to US Latinos, and if a brand crosses over to other US markets, it’s not necessarily because of a strategy to court them. After all, for every brand, such as Corona or Tecate beer (both initially marketed to US Latinos but now with widespread appeal among a general US audience) there are comparable products, such as Negro Modelo and Sol. While known among non-Hispanics, these beer brands are still marketed mainly toward Mexicans and other US Latinos.
Another reason that Mexican brands remain uninterested in marketing to non-Latinos is this. Non-Latinos already have strong loyalty toward brands that, while not necessarily from Mexico, have done a masterful job mimicking the flavors from south of the border. Brands such as Ortega, Pace, and Old El Paso have become, for non-Latinos, synonymous with Mexican cuisine despite the fact that they are not Mexican brands. Surprisingly, none of the Mexican companies interviewed for this article were targeting Anglos, nor were they treating the ersatz Mexican brands as their competition. Their reasoning is that they have no reason to compete in other markets.
"Our customers know that good food, good salsas, come from Mexico," says the aforementioned VP of marketing. “And most of our business is through small, Mexican-owned grocery stores… places where they have piñatas hanging from ceilings and ranchera music blasting on their stereos.”
Will Future Mexicans Prefer American?
Despite the double-digit, year-over-year growth, many Mexican companies remain wary about their future.
Brand loyalty among US Latinos remains the singular challenge as the current generation of Latino immigrants becomes acculturated to the US. “We need to find a way to make brands continue to be relevant to the next generations,” argues the VP of marketing. “We need to find a way to tap into the acculturated and the bilingual."
In other words, will the second, third or fourth generation of Mexican Americans still love tamarind and coconut soda? Will they prefer Coronado Cajeta to Smucker’s jam on their toast?
The answer may be that Mexican brands will have to begin a concerted effort to attract widespread appeal in the US market beyond Latinos—either through changes in their product lines to adjust for taste differences, or by downplaying the “exotic” flavors of their foods. This will allow acculturated Mexican-Americans to remain emotionally attached to the brands because they’ll seem less “Mexican” and more “American” and thus more in sync with their hybrid identities. Examples of this might be salsa or tortilla chips. Who would know that Herdez salsa is Mexican if it was on the shelf next to Ortega? Who thinks of Mexico when they eat a Guacamole Dorito?
But could tamarind soda become as ubiquitous as salsa and tortilla chips? That may be too much even for intrepid US consumers to stomach.