Last week, we discussed some of the key factors driving investment and interest in and around the BRIC markets. In contrast to the BRICs the US domestic market, while huge, may look a bit less exciting at first glance. Reports of GDP growth ranging from 1-3% are now hailed as positive developments, worries about an aging population and eroding tax base are driving the political agenda, and unemployment has been sustained at over 8% for some time. However, a compelling case can be made that there are domestic market segments in the US – ‘diamonds in the rough’ – which can provide some of the same compelling growth characteristics, without the risks inherent in the world’s developing markets.
Indeed, this topic was the theme at November’s Wall Street Summit in New York, where global CEO and corporate director Solomon “Sol” Trujillo gave a landmark keynote titled “Follow The Money“.
Putting the $1.1 trillion US Hispanic market into global perspective, Trujillo noted that in terms of economic clout, the US Hispanic market would soon be ranked as equivalent to the 11th largest world economy – on par with Brazil, Russia, India, and China (the BRIC countries). Perhaps more importantly, he also pointed out that US Hispanics actually have more per capita purchasing power than consumers in the BRIC countries, as well as those in G20 member nations South Africa, Mexico, Argentina, Korea, Indonesia, Saudi Arabia, Turkey, and Australia.
As a Cross-Cultural agency with a global footprint, we recognize the need for investors, brands and businesses to ‘follow the money’. Much of our business involves bringing US brands and businesses to International markets, or vice-versa; just as important is our work in targeting high-growth Cross-Cultural segments within the US and abroad. While there are important differences in each approach, there are also key parallels. In our campaigns for our clients, in segments ranging from Healthcare to Technology to Travel & Leisure, we’ve seen clearly that from an ROI perspective, targeting Hispanics (or other high-value ethnic communities in the US) can actually be just as profitable as expansion into emerging markets, and often with less variable results.
Let’s examine for a moment the way in which the G20 countries earned their seats at the “global table”. This was not done via shrewd political manipulation; rather it was a function of robust economic growth and wealth creation. Similarly, the US Hispanic market has delivered exceptional results. Just consider the facts: according to the 2010 Census, the US Hispanic market represents over 16% of America’s population ( 50 million+ consumers) – if it were a nation, it would rank just below Great Britain and Italy and just above Korea and South Africa as the world’s 24th largest. Every relevant measure shows a growing, connected, ambitious, family-oriented, upwardly-mobile, increasingly educated and productive population.
Furthermore, even the large size and purchasing power of the US Hispanic population is over-shadowed by its own long-term dynamics. Consider just a few key facts:
- Over the past decade, the non-Hispanic U.S. population grew a modest 9% while the US Hispanic population grew a whopping 43%;
- This rapid growth is a long-term trend – the US Hispanic population is expected to grow to 83 million in 2050, nearly a 60% increase;
- The US Hispanic population is younger – more than 34% are under 18, compared to only 24% of the broader US population; and, the broader US population is older – more than 14% are over 65, while less than 7% of Hispanics in this age bracket.
- Hispanics also have a competitive advantage in conducting business, with extensive relationships and business networks engaged with the $6.4 trillion dollar market and 575 million people in 21 Latin American countries.
Corporate America has been slow to comprehend the US Hispanic market’s transformation into an economic and political power. However, for those with access to the resources necessary to capitalize on this trend, there is significant opportunity. US and international businesses must re-calibrate their investment (or lack thereof) in these markets. By affirming their commitment to high-growth markets – not only the BRICs – these businesses have the world to gain. Or, at the very least, a sizeable, wealthy, and rapidly growing share of it.