The Beverage Wars: Name Brands vs. Store Brands There is a myth that Hispanics only buy name brand products and don’t buy private label or store brands. In fact, Hispanics purchase private labels at the same rate as Non-Hispanics across all food categories. When it comes to the beverage category, only a slightly higher percentage of Non-Hispanics drink private label beverages (49% vs. 45% for Hispanics). Given that Hispanics on average spend 17% more on beverages vs. Non-Hispanics ($384 vs. $327) despite their lower income levels, it would be interesting to find out which name brand beverages they are not willing to trade down and which store brands they feel perfectly fine buying. First let’s look at private labels. The beverages with the highest store brand indexes are: powdered soft drinks, instant coffee, instant iced tea mix, orange juice, and instant hot cocoa. Most of these beverages are usually purchased by large households (five or more people), so it makes sense that consumers buy them to save money (refer to Strategic Quadrants for Beverages chart). In the case of name brands the top categories are: diet colas, ground coffee, tomato and vegetable juice, non-cola carbonated drinks (regular and diet), fruit juices (other than OJ), tea, and non-carbonated bottled water. These beverages enjoy a very strong brand affinity and consumers are not looking to downgrade, even when purchasing for large households (which is the case for tea, non carbonated water, and fruit juices). At the same time, Hispanics who prefer named brand beverages are more concerned with their health than Hispanics who prefer store brands, which lead us to believe that name brands are perceived as a healthier option. Recognizing the main purchase drivers behind each of these categories, as well as the consumer’s willingness to trade-down or remain brand loyal is vital for manufacturers and marketing companies to effectively position their brands among Hispanics. The Strategic Quadrants for Beverages chart above is a useful framework to better understand the dynamic among the different beverage categories in the Hispanic marketplace. And as we observed previously, price is not the only component that drives sales, even in our current economic environment. Alejandro Martinez, Marketing Intelligence Strategist

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