Demography is destiny. Yes, this is a cliché. But, it’s also the truth. While I hear age demographics discussed from a million different angles in mid-market business trends, I find the discussions of changing race and ethnic demographics to be less nuanced. We talk ad nauseum about millennials—their impact on corporate culture, their values, the impact on urban planning, their use of technology. We talk about the silver tsunami—the need for more elder care services, the impact on wealth distribution, the impact on real estate, the changes in the work force. Because Hispanics are the largest ethnic minority in the United States, on this week’s CEO Exclusive, we bring that same lens to the importance of the growing Hispanic business community.
We jumped right in by having Alejandro Cross, President and CEO of the Latin American Chamber, come to the studio and give us his perspective on what he thinks the wider business community needs to know. It’s a dynamic and bustling part of the economy that’s way more than your local Mexican restaurant or carniceria.
Consider Demographic Trends
While you’ve probably seen these statistics before, they are so foundational that they bear repeating. According to the US Census, as of 2016, there were an estimated 58 million Hispanic people in the United States, comprising over 17% of the population. By 2060, they project that Hispanic people will comprise over 28% of the total population with 119 million residing in the United States. In Georgia, according to the Latin American Chamber of Commerce, Latinos represent 10% of the state’s population.
From a business standpoint, Geoscape’s 2017 Hispanic Business Report found that Hispanics own and lead 4.37 million firms generating over $700 billion in revenue to the U.S. economy. Additionally, they report that between 2012 and 2017, the number of U.S. Hispanic-owned businesses grew 2.5x faster than the average for all firms and faster than any other race or ethnic group. Given these enormous contributions to both overall population and business growth, Javier Palomarez, President & CEO of the United States Hispanic Chamber of Commerce (USHCC), asserts, “Hispanic entrepreneurs are America’s business future.” The growth of Hispanic buying power and Hispanic business ownership is a trend that cannot be ignored.
Know Where the Game is Being Played
Well, in which industries is all of this important business activity taking place? Alejandro responds to this question, “I always say that it doesn’t matter the industry that you look at, there is a Latino or a Latina that is participating in that industry; we have members across all industries. In manufacturing, in IT, in healthcare, in services, you name it.” But undeniably, there is a concentration in the following three segments:
Within the Latin American Chamber, about a quarter of all of these businesses are in the construction industry. Beyond having the largest number of Hispanic owned businesses, it’s also that largest employer of Hispanics. This fact was made very clear during the last recession, when the construction industry lost 40% of its workers. Alejandro explains, “When the recession hit in 2008, our community was particularly [badly] hit, because it was a double whammy. On the one hand, we saw a lot of businesses close down. But also, a lot of people that work in construction lost their job; or saw their income reduce substantially, and many of them had to go to other industries to find work.” The construction industry is now experiencing a labor shortage as Hispanics have not return to the industry to replace workers who have left.
- Hospitality and Food service
“I’m sure that everybody has a favorite Mexican restaurant,” Alejandro observes. “For some reason, it’s an industry where a lot of immigrants start businesses. And, we are fortunate that Mexican food is very popular… But, there are also restaurants that serve food from other countries, like Colombia, like Peru, Puerto Rico. It’s a tremendous diversity. And I will encourage the listeners to be a little adventurous out there.”
Despite the emerging options, Mexican food really does dominate the market. CHD Expert, a foodservice industry data and marketing firm, reports that of the 26,000 U.S. quick-service and fast-casual restaurants with a Latin American theme, and all but 1.6 percent of them are Mexican. Fortunately, we have plenty of opportunities to try something new—the same article referenced above mentions that 80% of consumers eat at least one type of ethnic cuisine a month.
- Latino or Hispanic targeted
The Latin American Chamber has the catch-all category of companies that specifically serve the Hispanic market. In describing this segment, Alejandro says, “This can be very, very diverse, from those supermarkets and carnicerias that sell all of the foods, not only from Mexico, but from, again, across Latin America, and Central America. Businesses that are selling auto parts, businesses that are repair shops for vehicles; businesses that are selling insurance, or other services to the Latino community.”
Representing $20B in buying power in Georgia alone, smart businesses are seeing dollar signs. In its 2012 article, America’s Corporations Can No Longer Ignore Hispanic Marketing, Forbes Magazine makes the case that businesses have to develop a wholistic approach to targeting Latinos. Signs in Spanish are not enough. Evidence exists that the Hispanic market remains largely underserved. For example, $53 billion is attributed to “unbanked” Latino households, meaning these assets exist outside traditional banking and insurance markets.
Make New Alliances
Most mid-market companies are either intently focused on the Hispanic market, or they are not thinking about it at all. For those in the second category, how do you begin to consider this trend in your future strategies? Partnerships and alliances. For example, earlier this year, the Georgia Chamber of Commerce (past guest!) established a partnership with the Georgia Hispanic Chamber of Commerce to increase economic opportunity and mobility for Latinos in the state.
For the Latin American Chamber, the focus now is on increasing the number of Latino owned businesses that are certified as minority businesses, thus allowing them to pursue government contracts and large corporate bids. This sector is laden with possibilities for working together–subcontracting, joint proposals, or targeted co-marketing.
In a few decades, this country will be a nation of minorities, with Hispanics leading in both population and business growth. A key part of being a CEO is staying ahead of trends, which is what we strive to help you do at CEO Exclusive. The question we push you to ask is “Are you ready for this?” Are you ready for artificial intelligence? Are you ready for the Millennial take over? Are you ready for the aging population? Now, are you ready for the boom in Hispanic business ownership? Hopefully, your answer is “Sí!”