Latinos flex economic muscle

By Matthew Garrahan in Los Angeles

Published: April 26 2008

Successive waves of immigration have turned the US Hispanic population into an important political force that is likely to play a key role in November’s presidential race – particularly in western states, such as California, Arizona and Nevada.

But as the US slides into recession, Latinos are also beginning to flex their economic muscles. More than 500,000 will gather in downtown Los Angeles on Sunday for a free street party to celebrate the Cinco de Mayo Mexican holiday, where the spending power of Latino consumers will be coveted by a growing number of corporate sponsors.

When the party was first held in Los Angeles in 1990 there were seven sponsors. This year, close to 120 companies ranging from AT&T, Walt Disney and State Farm insurance will be putting their brands and products in front of Hispanic consumers.

“As a consumer group, Latinos were always overlooked before,” says Ross deVol, director of regional economics at the Milken Institute, a Los Angeles-based research organisation.

“But now we’re seeing companies waking up and recognising that Latinos are a huge consumer market. You can’t be a successful company selling products to consumers without trying to tap the Latino market, and the sponsorship at Fiesta Broadway reflects that.”

The Los Angeles event, dubbed Fiesta Broadway, is being held a week before the actual anniversary of Cinco de Mayo, when the Mexican forces defeated the French in 1862. With 36 city streets cordoned off for the party it is one of the biggest Latino street carnivals in the US, which reflects California’s demographic mix. In the next 20 years people of Hispanic origin will become the dominant ethnic group in the state, representing more than 40 per cent of the population.

Antonio Villaraigosa, the city’s mayor and one of the most high-ranking Latino politicians in the US, will address the crowds and is backing an extensive voter-registration drive.

“We’re going to highlight the importance of registering to vote as part of your civic duty,” says Mr Villaraigosa, who has actively supported Hillary Clinton’s presidential campaign. The growth of Fiesta Broadway from a “small festival” to one of more than 500,000 people “demonstrates the increasing influence of this community”, he says.

California used to be a swing state but Mr Villaraigosa says the recent Democratic primary shows how Latinos have redrawn the state’s electoral map. “Latinos are 20 per cent of the electorate but they voted in high propensity numbers as if they represented 30 per cent. There are 2m new Latino voters in this state that has become overwhelmingly Democratic.”

While the US economy is slowing down, Peter Bellas, a partner and founder of All Access Entertainment, which is organising Fiesta Broadway, says: “The Hispanic market seems to have gathered steam”. “Hispanic marketing is booming,” he adds, pointing to the growing number of Fiesta Broadway sponsors. “I’m dealing with blue-collar, working-class individuals from large families, which often have multiple incomes. For some reason they seem to be resilient [to the economic downturn].”

The Spanish language services of MTVand ESPN, the sports cable channel, will also be heavily promoted at the festival. “There are 44m Hispanics in the US and by 2020 there will more almost 60m,” says Lino Garcia, president of ESPN Deportes. “Right now, Hispanics are 15 per cent of the population but represent 50 per cent of the growth [in new citizens]. That’s a real opportunity for us.”

Copyright The Financial Times Limited 2008