By Lauren Cosby, Lisa Hu and Saloni Patil
The U.S. continues to evolve as a melting pot nation, and the demand for CPG manufacturers and retailers to adapt to and anticipate this change is high. Staying informed on multicultural insights is crucial for innovation and accelerating brand and product growth. In fact, IRI’s New Product Pacesetters research has identified that not addressing the changing the population mix is a key ingredient in reducing total year one sales for new products.
According to U.S. Census data1, the population of people who are two or more races is estimated to be the fastest-growing racial or ethnic group over the next few decades, with Hispanics* and Asians leading closely behind. The inherent racial and ethnic diversity of Generation Z is driving the projected growth rates for both multi-racial and Hispanic populations in the United States. Over the next 30 years, the share of the population who are two or more races is projected to more than triple, growing from approximately 8.5 million in 2016 to 25.2 million in 2060. As new products launch every day, this cultural shift is a key factor in building and marketing a brand.
* Hispanic is considered an ethnicity, not a race. The percentages above do not equal 100 because Hispanics may be any race. Source: U.S. Census Bureau, 2017 National Population Projections
Last month IRI released the 2018 New Product Pacesetters Report
, and it indicates that small companies are not only acting fast, they’re also acting with purpose. Rather than trying to be all things to all consumers, companies big and small succeed by understanding evolving consumer behavior and investing in innovation and new business practices to deliver the right products efficiently to receptive audiences. With this theme in mind, we took a deep dive into how different ethnicities responded to the food and beverage New Product Pacesetters, the most successful product launches last year.
Using IRI data,we found that the top ten New Product Pacesetters in food and beverage showed some clear racial and ethnic skews. Kinder Joy, which is well-known in other parts of the world but new to the U.S. market, brought an interactive experience of both toy and candy. Asians index the highest on this product, followed closely by Hispanics, showing that its adoption is almost a microcosm of the changing U.S. demographics. When looking at generational demographics, Kinder Joy is most popular with millennials across the different racial and ethnic groups, a prime target for Kinder Joy.
As shown above, Hispanic millennials spend 129% more than the average consumer (average = 100; over-index is 120 and above; under-index is 80 and below) Source: IRI Shopper Loyalty, data ending May 19, 2019
In the carbonated soft drink category, African Americans index highest for both New Product Pacesetter Beverage products – Gatorade Flow and Mountain Dew Ice. Asians skew the lowest for both carbonated soft drinks and sports drinks but, interestingly, both Asians and Hispanics skew higher than other racial and ethnic groups for the energy drink category, with Red Bull taking first place with the highest spend.
We took a closer look at another New Product Pacesetter, Oui by Yoplait. There is notable movement among Asians, led by Generation X. This strays from the yogurt category slightly, which tends to skew higher among Caucasians, driven by millennials. Looking at trial and repeat behavior, we see that while other groups try Oui by Yoplait more than Asians, both Asians and Caucasians are more loyal to the brand as they show the highest purchase repeat numbers. Strawberry varieties are the most popular among Asians, followed by mango.
Lays Poppables is a brand that has explored different flavors and ingredients. Poppables in sea salt and white cheddar are made with turmeric, an ingredient that is well-known for its anti-inflammatory properties. Innovative flavors such as Creamy Jalapeno have made Poppables a favorite with most racial and ethnic groups, but especially among Asians.
Analyzing these trends through the lens of race and ethnicity is important because it provides another layer of insight as to who is leading the spend and usage for product categories. Cultural preferences may play a role in purchase decisions, making it crucial for businesses to understand the demographic drivers for their products. How are you leveraging multicultural insights to craft personalized marketing strategies for your audience?
To learn more about multicultural trends and how they impact your brands and innovation, contact us at Lauren.Cosby@IRIworldwide.com, Lisa.Hu@IRIworldwide.com or Saloni.Patil@IRIworldwide.com.
IRI Shopper Loyalty Data ending 05/19/19
About the Authors
Lauren Cosby, Lisa Hu and Saloni Patil are product managers within the Market and Shopper Intelligence division at IRI. They focus on building new solutions for CPG, retail and over-the-counter health care companies that uncover deeper consumer insights and drive business growth.