UNCOMMON COLD 2005

Amanda Chater

One of every seven food dollars is spent on ethnic foods, and their frozen versions are gaining appeal with mainstream shoppers who want the ethnic experience without the prep time.

They're a tougher sell with some ethnic groups, which place high value on fresh food.

The challenge for retailers is to drive sales among these burgeoning populations -- particularly Hispanics and Asians -- while retaining their mainstream base.

Rather than trying to change the habits of first-generation immigrants, retailers should target subsequent generations who are starting to adopt conventional American eating habits, consultants and retailers said.

Ease of preparation is one selling point. "When you get to the second and third generations, they're more concerned with convenience," said Kora Rush, category manager, organics, for United Supermarkets, a 47-unit chain in Lubbock, Texas, an area that sees much immigration from Mexico. Ethnic frozens meet "customers' need for something good on the table, but it's frozen so it's convenient. It also offers an alternative to restaurant food and is more moderately priced."

United samples food products in the freezer aisle, right where the items themselves are merchandised. "[Hispanics] are very price-conscious and brand-loyal. So, it's important to do sampling to encourage them to try other foods," Rush said. "We try to do some type of frozen ethnic sampling every month, and we focus on prime periods like Friday evening, Saturday and Sunday afternoon. Once a customer tastes a food, it's an easy purchase, but before that, they don't recognize the foods and can't reference them."

Mitch Uyeno, a department manager at Central Market, three stores that are part of the Town & Country chain in the Seattle area, agreed that sampling is a great way to showcase frozen foods to Asian customers, who he estimated to be about 30% of his customer base.

"It's more of an educational thing. Many of our customers don't know how to cook, and they like to try new things," he said. He demonstrates cooking preparation methods and hands out recipes to encourage sales.

For many ethnic shoppers, frozens don't belong to their tradition. Hispanics make, on average, 26 food shopping trips per month to non-Hispanics' seven, according to Food Marketing Institute figures, a difference that speaks to their reliance on fresh ingredients and home-prepared meals.

"And that's the challenge," said David Morse, president and chief executive officer of New American Dimensions, a Los Angeles-based multicultural marketing and research firm. "They feel that a good mother makes food from scratch, but as they acculturate, their values change, and they realize there are other ways to make their kids happy."

Price can be another selling point to acculturating shoppers, who often are budget-conscious. FMI research shows Hispanics, on average, spend $133 per week on groceries, above the $92.50 spent by mainstream consumers, which makes them an important food consumer. But Hispanic consumers tend to be less affluent than mainstream shoppers. Thus it's important to price foods correctly to attract Hispanic consumers, Morse said. Foods that are staples should be priced as such, not as the exotic foods mainstream customers might consider them.

As with other specialty categories, placement can improve the appeal of ethnic frozens. That may mean integrating them with the rest of the category or displaying them separately.

Gary Long, executive vice president of B&R Enterprises, a Hispanic food and beverage supplier in Dallas, calls for a fully integrated approach. "Shoppers do not prefer to have fewer choices or to have their choices segregated." Meat dishes should be placed together, but each section should have a Hispanic food section within it, he said.

Others advocate putting ethnic foods in their own section. That way, customers can go directly to that section, said Prasul Mehta, national category director of multicultural for Tree of Life, a food distributor. "If the foods are mixed up, they can be hard for people to find. This makes it much easier for people who are used to shopping in bodegas."

That's the approach favored by United, which has dedicated freezer doors for Hispanic and Asian foods. "We segment by brand within each section, because it highlights the presentation," Rush said. "We'd probably put all the burritos to one side so they could be grouped vertically, too."

For Central Market stores, a dedicated Asian market-within-a-market is the best method for attracting ethnic customers. The Asian frozen food is all located in the Asian market area. It's separated by category, such as pot stickers, ready-to-eat meals and ice cream, Uyeno said. Hispanic foods, which are not big sellers, are part of the regular frozen food set. "It's one-stop shopping," Uyeno said.

Frozen foods are difficult to merchandise because they're behind a door, Rush said. "We're very concerned about covering the doors; anything that comes between the customer and the product is bad. We try to keep the glass clear, and tagging at the shelf is probably the best idea. And, if there's something that's really spectacular, we highlight that with hanging signs up high that jut out of the frozen aisle."

Sales of ethnic foods are expected to rise by 50% in the next decade, outpacing growth of mainstream foods, driven by demand of ethnic and mainstream shoppers alike, according to the National Restaurant Association.

As consumers' tastes broaden, packaged goods makers are responding with increased variety. Hispanic foods are the best sellers in the frozen aisles at United Supermarkets, but Asian foods are also popular, Rush said. She is starting to see more demand for Cuban, Puerto Rican, Vietnamese, Thai and Indian foods, especially among younger people, who tend to experiment more than older consumers.

As their assortments grow more diverse, retailers also need to consider how to communicate their offerings to ethnic shoppers.

At Central Market stores in the Seattle area, signage is mostly in English, Uyeno said. "Some packages are in Asian, but we do our signs in English because the Asians know what the foods are and don't need the language as much."

In other cases, bilingual signage may be the way to go. "Advertising is a great way to get [Hispanic shoppers] into your store, and you can't go wrong with bilingual ads," Morse said. "For the majority, there's a real appreciation of bilingual packaging and advertising, and it's a way for a store to reach out."

They would do well to do so. The Hispanic population in the United States, which numbered over 37 million in 2002, is forecast to reach nearly 103 million by 2050. Asian Americans, at 12.5 million in 2002, are the second fastest-growing ethnic group, expected to number 33 million by 2050. These groups' combined purchasing power almost tripled between 1990 and 2004, according to the Selig Center for Economic Growth at the University of Georgia.