Food companies are experimenting more and more with exotic flavors and ethnic staples to appeal to a rising number of Latino and Asian immigrants

July 8, 2013

American Tastes Branch Out, and Food Makers Follow



Jarritos, the Mexican fruit-flavored soda in brilliant hues rarely found in nature, has entered the mainstream in California and will soon be in conventional groceries elsewhere.

NEW BERN, N.C. — If chicken producers could breed a bird with three legs, they would. These days, they can hardly keep up with the demand for thighs and other pieces of dark meat that had once been among the least desirable parts of a chicken. “Demographics are changing,” Bill Lovette, chief executive of Pilgrim’s Pride, a division of JBS S.A., told a group at the recent Chicken Media Summit here. “There is a growing population that prefers dark meat.” While the effect of changing demographics has been seen in voting patterns and employment trends, the growing influence on America’s palate of the influx of immigrants from Latin America and Asia has been more subtle, even as grocery shelves increasingly display products containing ingredients like lemon grass and sriracha peppers.For years, multinational food companies have been experimenting with ingredients, often being unable to find appeal broad enough to start or sustain a new brand. But as the buying power of Latino and Asian consumers expands, fruit flavors, hotter spices, different textures and grains and even packaging innovations are becoming essential for big food manufacturers trying to appeal to diverse appetites, according to company executives.

From 2010 to 2012, sales of ethnic foods rose 4.5 percent, to $8.7 billion. The Mintel Group, a market research firm, estimates that between 2012 and 2017 sales of ethnic foods in grocery stores will grow more than 20 percent. Mintel predicts Middle Eastern and Mediterranean foods will increase the most in that time in terms of dollar sales.

So a soup as mainstream as Campbell’s tomato now comes in a version spiked with coconut and lemon grass, and quinoa replaces noodles in a new chicken soup. Frito-Lay has turned up the heat in Doritos with its Flamas variety, which combines red chilies and lime, while McDonald’s asks “Zing! Can you handle it?” when advertising its new bacon habanero ranch quarter-pounder.

Consider the soaring popularity of Jarritos, the Mexican fruit-flavored soda in brilliant hues rarely found in nature, at a time when carbonated soda sales are declining over all.

“We knew we were strong among Hispanics,” said David Flynn, marketing director of Novamex, which makes and sells Jarritos outside Mexico. “But we were surprised to find that among non-Hispanics, people really loved certain things about the brand — the fruit flavors, the glass bottle, the natural sugar.”

Jarritos has entered the mainstream in California and will be in conventional groceries elsewhere over the next couple of years, Mr. Flynn said.

A staple in Hispanic kitchens with similar results is Abuelita, a chocolate product made by Nestlé for cooking and making hot drinks. Based on its success, Nestlé later this summer will introduce a new dulce de leche cheesecake kit that uses its La Lechera sweetened condensed milk.

“The acculturation of those communities into the mainstream has made American consumers generally more open to new tastes and textures,” said Carlos Velasco, president of the international brands division of Nestlé USA. “The good challenge for companies like Nestlé is getting an understanding of those trends and then translating them for this market, because you cannot always use the exact recipes and language that is used in other markets.”

Food and beverage companies are investing heavily in transforming product lines to capture many of the same things. Two years ago, for example, the Campbell Soup Company purchased Bolthouse Farms, a farming company that produces fruits and vegetables, in part to have greater access to the foods that are more attractive to the new American palate, for instance salad dressings like Miso Ginger Vinaigrette.

New packaging from Campbell’s also reflects demographic shifts. Go Soup, a new line, is ready to eat in a pouch, an innovation aimed at young people who also will like the flavorings — soy, coconut milk and green chilies in a creamy chicken soup. The company also opted for pouches to package its new Skillet Sauces and Slow Cooker sauces, which come in flavors like Sweet Korean BBQ and Toasted Sesame.

Chuck Vila, vice president for customer and consumer insights at Campbell’s, said that it was not just the rise of new ethnic groups but also how ethnicity was affecting the buying decisions of millennials, those from 18 to 30-something who are being courted by food and restaurant companies. About 40 percent of the people in that age group identify themselves as something other than white, Mr. Vila said.

“Spaghetti and meatballs might have been adventurous for their parents, but they’ve grown up with everything from Mexican food to sushi, often right out of the same food court,” he said.

A couple of years ago, Mondelez introduced the United States to belVita, a whole-grain biscuit for breakfast. It was a gamble. American biscuits are soft, flaky and usually soaked in butter, but belVita is flat, crispy and more like a cracker or snack bar. But demographics convinced Mondelez that the product would succeed here.

“We look a lot at census data and other internal and external information to understand how demographic shifts might affect our products,” said Amelia Strobel, senior director of the consumer insights group at Mondelez. “Currently, the country is overwhelmingly white, but when you look at younger ages of residents, where the long-term growth in the U.S. will come from for manufacturers like us, you’re looking at 56 percent under 12 who are not white.”

BelVita has proved a major success, named the top new cracker and snack bar of 2012 by Nielsen. The company recommends pairing the crackers with yogurt, another item exploding in popularity because of the population shifts.

Demographics also are driving “grazing” by consumers, increasing the number of times that they eat throughout the day while decreasing the amount eaten.

“The lines are blurring between meals and snacks,” said Pam Forbus, vice president for insights at Frito-Lay, the snacks division of PepsiCo. “People are looking for the kinds of foods they’d have at a tailgate party but eating them as a meal.”

Frito-Lay has engineered Ruffles potato chips with a deeper ridge that can shoulder hearty dips with meat flavors and chunkier consistencies. It also is incorporating richer flavors like beer-battered onion ring and beef and cheese into the chips themselves.

The company held a contest, “Do Us a Flavor,” to help identify new flavorings for its Lays potato chips, and some 3.8 million consumers submitted suggestions. Frito-Lay manufactured three finalists — Chicken & Waffles, Cheesy Garlic Bread and Sriracha — and submitted them to a vote.

All three flavors were intensely sought after, with bags being sold on eBay to the highest bidder. “Do Us a Flavor” itself was an import, having previously been conducted in Britain, India and South Africa, turning up flavors like Caesar Salad, Chilli & Chocolate and Cajun Squirrel.

“The diversity of the final flavors, never mind all the other ones we heard about, is like nothing we ever would have contemplated before,” said Christine Kalvenes, vice president for innovation.

In the United States, Cheesy Garlic Bread finally triumphed.

“Ten years ago, that would have been a very niche product,” Ms. Kalvenes said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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