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America’s Changing Palate: The Rise of Hispanic Grocery
As the number of Hispanics in the U.S. continues to grow — by 2028, they are expectedto account for 22% of the U.S. population, according to the data-based marketing firm
Claritas — so does the opportunity for grocery retailers and food and beverage brands andmanufacturers, as well as their respective investors.
But while certain core characteristics can be applied to Hispanic food and the shopping
preferences of the Hispanic population, they are a notably heterogenous ethnic group,with preferences that vary depending on their families’ countries of origin and level ofacculturation and where in the U.S. they live. There is also a notable amount of expansion,consolidation and investment taking place in the Hispanic-specific grocery space — allagainst a backdrop of Hispanic food’s rising popularity among non-Hispanic American
consumers. In this L.E.K. Consulting Executive Insights, we take a look at how, taken
together, these factors present a unique opportunity for grocery retailers, food andbeverage brands/manufacturers, and investors to tap into a new customer base while
expanding their existing ones.

The changing face of the US population
The face of the U.S. is changing — and changing quickly. Hispanics, who comprised 19% of the
population during the 2020 census, up from 12% in 2000, are expected to account for 22% of
the population by 2028,1 an annual growth rate of approximately 3%. Meanwhile, the numberof non-Hispanic white Americans, who have historically comprised the majority of the U.S.
population, is forecast to be flat or to decline by as much as 1% (see Figure 1).

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Figure 1
Population growth over time by race/ethnicity
CAGR%(2000-2020) (2020-2028)

Millions of people

400

300

12%

7%
12%

Total
All others
Non-Hispanic Asian and PI
Non-Hispanic Black

0.8
3.4
2.9
0.8

0.7
3.0
2.7
0.7

19%

22%

Hispanic

3.1

2.6

69%

58%

53%

Non-Hispanic white

(0.1)

(0.4)

2000

2020

2028

5%
6%

282

3%
4%

12%
12%

200

100

0

330

6%

350

Note: Groups marked as non-Hispanic exclude Hispanic-identifying people, while the Hispanic demographic group can be inclusive of allgroups
PI=Pacific Islander; CAGR=compound annual growth rate
Source: Claritas; U.S. Census Bureau; Statista

And as the Hispanic population in the U.S. grows, so does its buying power.2 From 2010 to2020, Hispanics’ real consumption — the amount spent by this demographic after accounting
for price inflation — grew more than three times faster than that of non-Hispanic consumers(see Figure 2).
Figure 2
US buying power by race/ethnicity*
25
1%
2%

Trillions of USD

20
1%
2%
15

10

5

1%
1%
4%
8%

7.4

87%
7%
(0.5)

0

2000

17.5

21.7
8%
9%

7%
9%

CAGR%
(2000-2020) (2020-2025)
Native American 65Multiracial

8

7

Asian

8

7

Black

5

5

White

4

4

Hispanic**

7

6

80%
81%
11%
(2.0)
2020

12%
(2.6)

2025

*Buying power defined as disposable personal income, meaning the share of total personal income available for personal consumption,
personal interest, payments and savings**“Hispanic” is an ethnicity rather than a race, and a Hispanic person can be of any race
Note: Bars may not total 100 due to rounding; CAGR=compound annual growth rate
Source: Insider Intelligence; L.E.K. research and analysis

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Differences in Hispanic food shopping preferences
The strong growth in Hispanics’ buying power in the U.S. has implications for grocery retailand food and beverage manufacturers alike and, by extension, U.S. consumer behavior overall.
It will increasingly impact how and where consumers shop, who influences their purchasing
decisions and what, ultimately, they will buy.
Where Hispanic consumers shop: Hispanics shop at more grocery stores versus otherethnicities; in 2018, they shopped at an average of 3.8 stores versus 3.3 for non-Hispanic white
shoppers. 3 Moreover, they prefer to shop for more traditional Hispanic items and authentic
Hispanic brands at Hispanic grocery stores rather than at conventional stores.
How Hispanic consumers shop: Purchasing behavior among the Hispanic population revolves
around multigenerational family dynamics, and often favors options that are authentic totheir native culture. Given that 26% of Hispanics live in multigenerational households4 (versus
13% of non-Hispanic whites), younger generations are more familiar with the brands theirparents and grandparents use to cook. They also typically go grocery shopping together as afamily, as it is seen as a special group activity.
What Hispanic consumers buy: The grocery baskets of Hispanic consumers look different
from those of other consumers. For example, Hispanic consumers over-index in products suchas fresh meat, rice and beans. They also prefer to purchase meat from carnicerías (meatcounters/butcher shops) as opposed to buying it prepackaged. Hispanic consumers also
gravitate toward brands that highlight unique customs and heritages and that use colloquial
language. Indeed, Hispanic shoppers are twice as likely as other demographics to buy grocery
brands that are ethnically “authentic”5 (and almost half say their mom is a source of cooking
inspiration6). Finally, because Hispanic shoppers like to feel connected to the brands theypurchase from, they are often a loyal customer base.

Targeting considerations
For grocery retailers, food and beverage brands, and their investors, not going beyond the
top-line Hispanic population figures can be misleading. To truly serve this demographic, theyneed to delve deeper.
Country of origin matters. The term “Hispanic” refers to Spanish-speaking people who havedescended from a Spanish-speaking population but live in the U.S. — yet they are not ahomogenous group, and instead have a diverse range of backgrounds and cultural norms. The
Hispanic population in the Southwest consists mostly of Mexicans, whereas in the Southeast

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it’s comprised mostly of people from Cuba or the Caribbean (see Figure 3). Food preferences,
meanwhile, vary depending on country of origin. Mexican cuisine focuses more on spices, forexample, while Cuban cuisine focuses more on fruits, root vegetables and citrus marinades.
Figure 3
Hispanic population by country of origin
Peru
EcuadorHonduras
Colombia
Spain
GuatemalaDominican Republic
El Salvador
Cuba
Puerto Rico
MexicoAll Others

1
1

1.25
1.4
1.5

2

2.4

3
3

7
4

0

0.5

1.0

1.5

2.0

2.5
3.0
3.5
4.0
4.5
5.0
Hispanic population (millions)

5.5

6.0

6.5

40
40.5

Source: Claritas Pop-Facts 2023; L.E.K. research and analysis

The level of acculturation also matters. Recent first-generation immigrants have different
grocery needs and wants than, say, third-generation, American-born Hispanics. That said,much of the cultural preferences and shopping behaviors remain sticky across acculturated
Hispanic consumers due to their tendency to live in multigenerational households and shop asa family (see Figure 4).
Figure 4
Hispanic population by acculturation level
30

30

More
Acculturated

Less
Acculturated

26
25

Percentage

20
15

17
15
13

10
5
0

Latinoamericano

Americanizado

Nuevo Latino

AmBi-Cultural

HA1
Englishdominant(nearly no
Spanish); bornin U.S.; 3rd+generation.
Few Hispanic
culturalpractices.

HA2
Englishpreferred(some
Spanish); bornin U.S.; 2ndgeneration.
Some Hispanic
culturalpractices;
often “retroacculturated.”

HA3
HA4
HA5
Bilingual (equal Spanish
Spanishor nearly);
preferreddominant;
immigrated as (some English); recently
a child or
immigrated as immigrated as
young adult.
an adult; inan adult (lessMany Hispanic U.S. 10+ years. than 10 years
culturalPredominantago). Primarily
practices.
Hispanic
Hispanic
culturalculturalpractices.
practices;
identifies withhome country
more than U.S.

HA1 HA2 HA3 HA4 HA5HispanoSource: Claritas Pop-Facts 2022; L.E.K. research and analysis

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Finally, Hispanic populations are more highly concentrated in certain areas of the U.S.,
which makes brand targeting and distribution more of a focused exercise (see Figure 5). For
retailers, identifying the characteristics necessary for a successful store location, as well as
the assortment they choose to stock across their portfolio, can involve relying heavily on the
supporting population mix.
Figure 5
Hispanic population distribution in the US

Hispanic population(in millions)
<1

5

10+

Source: U.S. Census Bureau; L.E.K. research and analysis

Additionally, there is a large ethnic shift underway from a generational perspective. Most notably,by 2028, 21% of the U.S. Gen Z population will be Hispanic (see Figure 6), which has implications
for the marketing approaches taken by consumer goods companies across the board.
Figure 6
2028E Population by ethnicity and generation*
Percentage of total population cohort

100

80

9
8
9

5

11
6
9
10

60

40

6
11

20

23

7

28
5

11

11

20

21

42

40

Millennial
Age 30-44

Gen Z
Age 15-29

4
11

15

69

64

20

0

16

52

SilentAge 75+

BoomerAge 60-74

Gen X
Age 45-59

Non-Hispanic white

Hispanic

Non-Hispanic Black

24

33

Alpha
Age 0-14

Non-Hispanic AsianAll Other*In this figure, 15-year age groups are used to approximate the generations shown
Source: Claritas Pop-Facts 2023; L.E.K. research and analysis

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Hispanic influence on the wider US palate
The growing Hispanic population is impacting the palates of the broader U.S. population.
Google searches for “Mexican food” increased 27% per year from 2014 to 2019 and 18% from2019 to 2021 (see Figure 7). And 45% of Gen Z consumers would choose Mexican if they could
eat only one cuisine for the rest of their lives, according to a Datassential survey, followed by
Asian (29%) and Italian (26%).7
Figure 7
Google Trends searches for ‘Mexican food’
CAGR%(2014-2019) (2019-2021)

100

27

18

Indexed interest

80

60

40

20

0

2014

2015

2016

2017

2018

2019

2020

2021

2022

Note: CAGR=compound annual growth rate
Source: Google Trends; L.E.K. interviews, research and analysis

Mainstream food brands in the U.S. are looking to capitalize on this trend. In 2020, Cholula
Hot Sauce was sold to McCormick for 25x EBITDA due to the growth in demand. Traditional
brands have also launched products that draw on Hispanic flavors such as chile lime, haba ero
and fruity chamoy.

The evolution of Hispanic grocery
The U.S. grocery landscape is constantly changing. The recently announced Kroger acquisitionof Albertsons is just the latest example of traditional grocery retailer consolidation.8 Yet themarket remains both fragmented and regional. Hispanic grocery is even more fragmented,
with countless single-unit stores and only a short list of chains. Indeed, the top five Hispanic
grocery chains (Bodega Latina, Cardenas, Northgate, Vallarta and Sedano’s) are estimatedto account for just 20%-25% of total Hispanic grocery sales9 in the U.S., while the top five
traditional grocers (Walmart, Kroger, Costco, Albertsons and Ahold) make up almost 40% of
the total U.S. food and grocery market.10

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Against this backdrop, there is significant activity taking place in the Hispanic grocery space:• Chain consolidation: Hispanic chains are also acquiring or merging with other chains (seeFigure 8). El Super/Bodega Latina acquired Texas-based Hispanic grocery chain Fiesta Martin 2018, for example, and in June 2022 Cardenas said it would buy six Rio Ranch Market
locations.
Figure 8
Examples of activity in the Hispanic grocery space
Southeastern Grocers launch
Hispanic chain Fresco y Más in
Florida, growing to 23
locations in its first ~1.5 years

2015

2016

2017

KKR acquires Cardenas Markets
and Mi Pueblo and merges thelatter into the former

Cardenas announces its
upcoming acquisition of 6 Rio
Ranch Market locations

Cardenas acquires Los Altos
Ranch Market

2018

2019

El Super/Bodega Latinaacquires Texas-based Hispanic
grocery chain Fiesta Mart

2020

2021

2022

Apollo Funds agrees to acquire
Cardenas Markets, combining
with Tony’s Fresh Market uponcompletion

Albertsons invests in El Rancho
Supermercado

Consolidation

Investment

Rollout/volume growth

Source: L.E.K. research and analysis• Chain expansion: In addition to new sites, Hispanic chains are opening in locations vacatedby conventional grocers such as Vons and Ralphs.
• Chain launches by conventional grocers: Southeastern Grocers launched Fresco y
Más in Florida in 2016 and grew it to 23 locations in the first 18 months of operation.
Albertsons, meanwhile, launched the Amigo store brand in 2010 and invested in El Rancho
Supermercado in 2017, funding its growth into new markets within Texas.
• Investment: In an effort to capitalize on the growth trends, private equity firms areinvesting in the space. For example, KKR acquired Cardenas Markets and Mi Pueblo in 2016,
which it then sold to Apollo in June 2022.

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Hispanic grocery stores, like all ethnic stores in the U.S., have traditionally featured very
different assortment mixes and layouts than those of conventional American grocers; forexample, the meat counter (carnicería) is given prominence alongside shelf space for staples
such as rice, beans, tortillas, spices, etc. More recently, however, the larger Hispanic grocery
chains have been altering their stores’ fit-outs and assortments so as to appeal to the nonHispanic consumers who, due to their interest in ethnic flavors, are increasingly shopping there.
Some stores, such as Vallarta, are using conventional interior designs and English signage
both in-store and online, and numerous Hispanic grocers are now offering a greater number ofclassic American stock-keeping units, or SKUs (see Figure 9).
Figure 9Store experience and product selection in large Hispanic grocery chains
Store layout and shopping
experience

Greater prominence of English
in-store and online

Recent Vallarta store
redevelopments were undertaken by
the same commercial interior design
firm used by Whole Foods

Vallarta’s new layouts include
department signs in Spanish andEnglish, with English often first

Greater number of American
items carried

El Super stocks classic American
brands such as Dunkin’ andLunchables
Cardenas’ new website offers
versions in Spanish and English

Source: L.E.K. interviews, research and analysis

At the same time, conventional grocers are increasingly stocking more Hispanic brands
alongside their traditional assortments as they try to widen their appeal and gain new
customers. Conversely, some Hispanic brands are moving away from the traditional ethnic
food aisle into the more generic aisles — and even at the checkout, where, for example, Cholula
sells its 2-ounce bottles at Walmart. That said, different grocers take different approaches
to Hispanic brands. Consider the spice aisle. In some grocery stores, Bahia, Goya and regional
Hispanic brands such as Chef Merito and La Preferida are stocked alongside traditional spicebrands like McCormick; in others, they are placed in separate aisles.
Conventional brands, meanwhile, are also launching innovative new SKUs with ethnic flavors— both Hispanic and a range of other ethnicities — targeting both the ethnic consumer and thenonethnic consumer whose tastes are evolving.
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Implications for food and beverage brands/manufacturers
There is a long runway for growth in Hispanic grocery brands, but unlocking it can be difficult.
A more attractive expansion strategy can involve scaling within larger Hispanic grocery chainsin regions with high concentrations of Hispanic consumers (see Figure 10). For example, in
California and Texas, where more than 40% of all U.S. Hispanic grocery stores are located,
this includes signing on with distributors that specialize in grocers serving the Hispanic
market, building a sales force that can successfully manage relationships with those grocers
and, finally, innovating across categories. Entering conventional grocery stores is a huge
undertaking, and a risky one, with limited opportunity for a second chance should things gowrong — excellent fulfillment as well as brand recognition are essential to get high velocities inorder to stay on shelf.
Figure 10
Estimated breakdown of Hispanic grocers in the US*
66
34

Percentage of stores

100
80
64

60

49

52

55

76

78

69
31

64

66

Independent

79

Independent

21

Chain outside
CA, TX, FL

26

Chain in
CA, TX, FL

40
20
0

36

0

20
CA

51

48

45
22

40
TX

FL

24

36

60
AZ IL GANJ NY NC

34
80

Other

Chain
100

Total

*~5,300 active Hispanic grocery stores identified in the U.S. and used as the breakdown for splits for chain (>5 locations) versus
independent and by state
Source: L.E.K. interviews, research and analysis

For non-Hispanic brands, the goal is to tap into the demand for Hispanic flavors in anauthentic way. Depending on the brand’s heritage and values, that may mean adding thoseflavors to their portfolio to gain share with their existing customer base instead of risking
targeting Hispanics in a manner that feels inauthentic.
Whatever the strategy retailers and brands (and their investors) take, the message is clear.
The Hispanic population in the U.S. is growing quickly, and together with an increasingly
ethnically diverse population overall — and the changing tastes that come with such diversity— there is an opportunity to unlock an entirely new customer base.
For more information, please contact strategy@lek.com.

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Endnotes
1

Claritas, “The 2022 Hispanic Market Report.” https://www2.claritas.com/2022-Hispanic-Market-Report-EmailInsider Intelligence/eMarketer, “Hispanic visibility in US media lacking even as group fuels nation’s economy.” https://www.insiderintelligence.
com/content/hispanic-visibility-us-media-lacking-even-group-powers-nation-s-economy
2

Acosta, “The Why? Behind the Buy: The Importance of Multicultural Shoppers,” 2019. https://www.acosta.com/

3

Pew Research Center, “The Demographics of Multigenerational Households.” https://www.pewresearch.org/social-trends/2022/03/24/thedemographics-of-multigenerational-households/
4

5

Acosta, “The Why? Behind the Buy: The Importance of Multicultural Shoppers,” 2019. https://www.acosta.com/

6

Acosta, “ The Why? Behind the Buy: U.S. Hispanic Shopper Study,” 2017. https://www.acosta.com/

7

Datassential, “FoodBytes: Future Food.” https://offers.datassential.com/foodbytes-2022-trends

Foodnavigator-USA, “Kroger to acquire Albertsons for $24.6bn solidifying its position as #2 grocery retailer with 11.8% market share.” https://www.foodnavigator-usa.com/Article/2022/10/14/kroger-to-acquire-albertsons-for-24.6bn-solidifying-its-position-as-2-grocery-retailer-with11.8-market-share
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Foodnavigator-USA, “Kroger to acquire Albertsons for $24.6bn solidifying its position as #2 grocery retailer with 11.8% market share.”https://www.foodnavigator-usa.com/Article/2022/10/14/kroger-to-acquire-albertsons-for-24.6bn-solidifying-its-position-as-2-grocery-retailerwith-11.8-market-share
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About the Authors

Claire Davies
Claire Davies is a Managing Director in L.E.K. Consulting’s Los Angeles office, where she works
in L.E.K.’s Retail and Consumer practice. Claire has deep expertise in leading corporate andbusiness unit growth strategy and commercial due diligence projects for private equity investors,
retailers and consumer brands. She has experience across many retail and consumer sectors,
including ecommerce, direct-to-consumer, subscription businesses and more.

Alison Schilling
Alison Schilling is a Managing Director and Partner in L.E.K. Consulting’s Chicago office, where
she works in L.E.K.’s Consumer practice. Alison supports clients on topics including growthstrategy, M&A strategy, due diligence, customer segmentation and project execution. She
has worked across the food and beverage sector, including with brands, ingredient suppliers,
distributors and restaurants.

About L.E.K. Consulting
We’re L.E.K. Consulting, a global strategy consultancy working with business leaders to seize competitive advantage andamplify growth. Our insights are catalysts that reshape the trajectory of our clients’ businesses, uncovering opportunities andempowering them to master their moments of truth. Since 1983, our worldwide practice — spanning the Americas, Asia-Pacificand Europe — has guided leaders across all industries from global corporations to emerging entrepreneurial businesses andprivate equity investors. Looking for more? Visit www.lek.com.
L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document
are properties of their respective owners. © 2023 L.E.K. Consulting LLC

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