Latin Flavor

Last week MegaMex Foods, a joint venture between Herdez del Fuerte of Mexico and Hormel of the U.S., licensed its Herdez brand to Utz Quality Foods. Utz—which has distributed MegaMex Foods including Chi-Chi’s tortilla chips and Chi-Chi’s and Herdez salsas and dips since 2018—will now produce and market Herdez-branded white, yellow, and blue tortilla chips and chili-lime, hot and spicy, and regular pork rinds in the U.S.

The deal marks the latest of a number of brand-extension deals in the food category over the years involving brands with appeal to and recognition among Hispanic consumers:

• Tapatio, which has roots in the California Hispanic community since the 1970s but has steadily gained general-market awareness as well, signed Brand Central as its licensing agency for foods and non-foods in 2014. Since then it has forged deals for a number of products, some skewing more toward Hispanic consumers and others toward the general population. Examples of the former include Micheladas Antojitos beer mixer, from New Castle Beverage, and duros, a puffed wheat snack, from Fasttrak, which also makes popcorn. Other items include chips (with Frito-Lay), meat and poultry (Colorado Premium), sunflower seeds (Thanasi Foods/Big’s), salsa and nacho cheese sauce (Express Trading), powder spice packets (Jel-Sert), ramen noodles (United Exchange), sour cream and dips (Scott’s Brothers), and canned sardines (StarKist). One of the most recent products is Van Holten’s pickles-in-a-pouch, signed in April of this year.
• El Mexicano, a California-based marketer of deli meats, desserts, drinkable yogurts and smoothies, and especially cheeses including queso fresco, panela, cotija, and oaxaca, licensed Contessa Premium Foods for canned tunas packed in water and oil. Consumer Strategies brokered the deal, which began in 2013, on behalf of Contessa.
• Goya Foods, which markets Hispanic-focused products across many shelf-stable and frozen categories, licensed Beech-Nut Nutrition in 2013 for a line of baby foods, including corn cereal, rice pudding, and fruit and vegetables such as guava, mango, and squash. Goya also paired with the Breyers brand several years earlier for ice cream and ice cream bars in flavors such as dulce de leche and mango and cream.
• Novamex licensed the Jarritos brand several years ago to Jel-Sert for freeze-and-eat treats sold at retail chains such as HEB and Walmart. The product was available in Jarritos soda flavors including pineapple, tamarind, strawberry, and mango.
• Cadbury Schweppes Americas’ Clamato brand (now part of the Keurig Dr. Pepper corporate family) and Anheuser-Busch’s Budweiser brand paired for Budweiser & Clamato Chelada and Bud Light & Clamato Chelada, emulating a drink Latino consumers had long been making at home. (At the time, 60% of Clamato sales were purchased for use as a mixer.) After a regional test, the products went national in 2008.
• Cholula, a Mexican hot sauce brand that entered the U.S. market in the 1980s and was recently purchased by private equity firm L Catterton, has also been paired with other compatible foods over the years, with one example being Kettle Classics chips (now owned by Utz).

Many of these partnerships no longer exist. But others, including Bud’s Chelada, which has been going strong for more than 10 years, can still be found on store shelves.

As of 2019, several signs suggest there is potential ahead for additional brand-extension deals similar to those mentioned here. First, sales of Hispanic foods and beverages are growing in the U.S. A 2017 report from Packaged Facts predicted the total at retail will reach more than $21 billion by 2020, representing a 4.8% compound annual growth rate from 2015 to 2020.

Second, while such products are typically meant to appeal primarily to Hispanic consumers, they also have growing crossover appeal to U.S. shoppers in general. Technomic and Smuckers released a report in 2018 that found that 48% of consumers overall and 63% of millennials would like to see more regional Hispanic snack offerings in restaurants.

And finally, on the licensing side, more and more Hispanic-focused properties of all types are entering the licensing business and a growing number of deals are being done, both with Hispanic specialist licensees and mainstream marketers. Perhaps the Herdez-Utz deal is a sign of more such activity to come in the food and beverage brand-extension segment.

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