3 Ways to Play Hispanic Population Growth

Investors can't ignore the group's impact on consumer spending

   

With the election right around the corner, we’ve been hearing more and more about the candidates’ need to “lure” and “capture” the Hispanic vote. No real surprise there, given the booming U.S. Hispanic population. But just how big is it — and how much will it grow?

Well, from 2000 to 2010, the Hispanic population grew 43%, from 35.3 million to 50.5 million, upping its share of the total from 13% to 16%. Since the mid-1980s, the Hispanic population has more than tripled.

The 2010 Census also showed that 1 in 6 U.S. residents were Hispanic. By 2020, that number is expected to jump to 1 in 5, and by 2050, it should be around 1 in 3.

Whew. The impact of such growth sure doesn’t end at politics. Yes, the fastest-growing segment of the population may translate to the fastest-growing voter base, but it also means the fastest-growing group of consumers.

Last year, the Hispanic population’s total spending reached $1.1 trillion. By 2015, it’s expected to hit $1.5 trillion. That’s growth of around 8% per year for the group, versus an expected 2% annual rate for the overall population. Even during the Great Recession, spending by Hispanics shot up by over 6% — more than double the growth for the rest of the population.

And already, Hispanics make up more than a quarter of the population under 18 — a pretty large chunk of a group not old enough to vote, but old enough to influence nearly half of their households’ consumer spending decisions and to spend billions themselves.

So, what does that means for investors? Well, to start, it’s important to be wary about lumping all Hispanics together into one pod of consumers; a group of more than 50 million people don’t all have the same spending habits. Still, statistics do paint some big-picture trends that are impossible to ignore. Here are three of them:

E-Commerce

The rise of e-commerce, or the death of bricks-and-mortar retail, depending on how you look at it, is a clear and promising trend to bet on by itself. But the prominence of Hispanics online gives it an added boost.

Consider this: In the first quarter of 2012 alone, U.S. Hispanics were responsible for 11%, or $2.2 billion, of total e-commerce purchases. As the Hispanic population and e-commerce both climb, so should that number.

When it comes to specific companies for Hispanic e-commerce, Wal-Mart (NYSE:WMT) and Best Buy (NYSE:BBY) are ahead of the curve. They each offer full Spanish language websites (here and here) — something e-commerce giant Amazon (NASDAQ:AMZN) has yet to add — and they’ve targeted online marketing for the group.

A 2012 Hispanic Digital Consumer Study also showed that the Hispanic shopping experience is very social. If Facebook’s (NASDAQ:FB) newest attempts at e-commerce are successful, they could pay off for this booming demographic.

Entertainment

The language aspect could also give some companies a leg up in terms of entertainment. Many cable providers, for example, have struck deals with the end goal of attracting this market.

Entravision Communications (NYSE:EVC) owns 53 TV stations and 48 radio stations that cater to Hispanic audiences, while Univision Communications created a cable channel geared to Hispanics with the help of ABC News — owned by Walt Disney (NYSE:DIS).

Telemundo Media is also teaming up with the advertising unit of Comcast (NASDAQ:CMCSA) to debut a new ad platform allowing advertisers to show ads in either English or Spanish on the NBCUniversal, Comcast and Telemundo networks.

Eating

Around five years ago, the food industry grew by $40 billion, and a whopping 30% of that increase came from Hispanic consumers. More recently, it’s become apparent that quick-service restaurants are especially popular among the group, with a recent survey showing that they represent around 18% of total traffic and purchases.

Hispanics tend to be more frequent guests, dine in larger groups, average more profit per transaction and buy more items than other visitors. They average more profit per transaction because they tend to order more order beverages, which have higher profit margins. This, of course, could be a boon to providers like Coca-Cola (NYSE:KO) and Pepsi (NYES:PEP).

More obviously, this growing segment could help quick-serve names serving Mexican cuisine — like Chipotle (NYSE:CMG) and Yum Brands‘ Taco Bell (NYSE:YUM) — along with other fast-food stops like Burger King (NYSE:BKW), McDonald’s (NYSE:MCD) and Wendy’s (NYSE:WEN).

Those are just a few possibilities. In the end, just as with the election, this growing segment of the population simply can’t be ignored when it comes to consumer spending and the companies that cater to it — and let you cash in on it.

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/10/3-ways-to-play-hispanic-population-growth/.

©2014 InvestorPlace Media, LLC

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