With their loved ones in other countries and their extensive use of the telephone to stay in touch, the ever-growing Hispanic demographic presents an incremental sales opportunity for prepaid phone cards, according to analysts.
According to the U.S. Census Bureau's Census 2000 report, 35.3 million people were Latino, accounting for 13% of the total U.S. population. According to some reports, that figure could top 24% in 2050.
As a tight-knit, family-oriented community, Hispanics like to stay in touch by telephone. According to a 2001 report by the Insight Research Corp., Parsippany, N.J., Hispanic residential telecom expenditures for local, long distance and wireless communications for 2000 totaled $16.7 billion. By 2005, that figure is projected to reach $27.3 billion.
Jerry Jones, nonfood buyer, Brookshire Grocery Co., Tyler, Texas, said the retailer plans to roll out a Hispanic-targeted prepaid phone card early next year in stores with a heavy Hispanic consumer base.
The prepaid phone cards, produced by Qwest Communications, Denver, will promote special rates to Mexico and be completely written in Spanish.
While Brookshire Grocery Co. does not currently showcase any prepaid products because it has been "in between" vendors, Jones pointed out that the retailer's previous foray into prepaid phone cards proved to be most successful in those stores in Hispanic areas.
Qwest would not comment on its ties with Brookshire, but spokeswoman Audrey Mautner said the company introduced a "Que Tal" prepaid phone card about a year ago. "We wanted to respond to the Hispanic customers' needs for these services," Mautner said. "We value our Hispanic customers and their desire to have a card in Spanish -- we try to meet their needs that way."
She said the cards are offered in $10 and $20 denominations with special 7.5-cent-per-minute rates to Mexico (plus a 69-cent connection fee).
Other supermarkets did not see the need for prepaid products specifically targeting certain ethnic groups.
Elizabeth Turgeon, general merchandise category manager, Big Y Foods, Springfield, Mass., said certain stores carry ethnic magazines like People en Espanol, and the retailer has recently started to carry ethnic cookware, but she said "no one has approached me" about prepaid phone cards.
She noted that Big Y Foods carries Sprint phone cards behind the customer service area and are activated at point-of-purchase. She said promotions like the recent "buy any denomination, get a 30-minute card free" were successful ones, and cards "turn pretty well every week."
Turgeon said she did not see why there was a demand for Hispanic prepaid phone cards, since most of them give Spanish- or English-language options.
"Outside of having the information in Spanish, I don't know of any reason why you'd want one," she said.
Marc Jampole, spokesman, Penn Traffic, Syracuse, N.Y., also said the company's stores, including Big Bear, Bi-Lo and Quality Markets, do not merchandise their prepaid items to any specific ethnic group.
The supermarkets display signage advertising their AT&T prepaid phone certificates, which they offer through a partnership with Catalina Marketing, St. Petersburg, Fla. The customer's PIN number and access code are printed on the certificate in denominations of $4.99 for 15 minutes, $8.99 for 30 minutes, $16.99 for 60 minutes and $29.99 for 120 minutes.
"Our big cities -- Columbus, Ohio; Buffalo, N.Y.; Syracuse [N.Y.] -- are not hotbeds of Hispanic population, and we've never discussed carrying [those items]," Jampole said.
Several retailers in areas with high Hispanic populations like California, New York, Arizona, Florida and Illinois either did not return SN's phone calls or declined to comment on the matter. Hispanic-specific supermarkets like Southwest Supermarkets, Phoenix, could not be reached.
"There is a market for it," said senior analyst Imke Mensah, Atlantic-ACM, Boston. "If companies like [Miami-based telecommunications company] AmericaTel are in business and they're 100% based on the Hispanic [consumer], that's proof there is a market."
According to Felipe Korzenny, principal and co-founder of Cheskin Research, Redwood Shores, Calif., the reasons why prepaid phone cards are popular among Hispanics are threefold.
"Aside from the large number of immigrants from Latin America, many do not have credit history, and they move frequently because they're in the process of settling into a new country," said Korzenny.
Mensah agreed. "A lot of Hispanics are newer to the country and have close relationships directly with another country -- they make a lot of international calls and they're looking for a more economical way," she said.
Korzenny added that prepaid products are commonplace in Latin America anyway, and the familiarity carries over to the United States.
Analysts also suggested that mainstream supermarkets in communities with high densities of Hispanics could greatly benefit from marketing to this particular ethnic group.
According to Jim Rothweiler, managing partner, CPR Group, Morristown, N.J., Hispanics are early adopters, they are more likely to purchase based on value and price, they are more brand loyal than any other population segment, and they are more likely to purchase cards more often and purchase more than one card at a time.
Among the primary reasons for Hispanic consumers to purchase a particular brand of card, price and value were the most significant.
"Price is the driving factor," said Steve Phillips, vice president, technical solutions, Catalina Marketing.
While Catalina does not single out any specific ethnic group, it does offer prepaid phone card certificates printed in Spanish on request. Nonetheless, Phillips said he does see the need to target this market.
"There's absolutely a demand for it -- phone cards have a high rate of calling into Spanish-speaking countries," he said. Supermarkets also have to take into consideration the number of Hispanic-Americans in their area and the amount of space they want to devote to products that target that demographic, analysts said.