Why Latino Consumers Are Spending Less

0:08We got some plums, some limes, some mangoes. That's our colleague Laura Cooper. She's at a farmer's market in Houston. The market is in a predominantly Hispanic neighborhood. Many of its stalls sell goods imported from Mexico. Things like herbs and dried chilies, spicy candy for piñatas, and traditional ceramic products. In one of the stalls, Laura met a vendor named Isabel Aguilar. Isabel was helping a customer buy some moringa seeds, which are used to make tea.

0:51Over the last few months, business at her stall hasn't been great. Isabel says she's noticed that her customers are buying less. She says they're nervous to spend money.

1:08or por qué todo está más caro. Isabel says the prices of goods have gone up, and customers have told her that they're struggling. Some have lost their jobs, others have had their work hours cut, so they're tightening their belts. And another reason customers aren't spending is fear, fear of deportation. After Immigration and Customs Enforcement, or ICE, ramped up operations in the community in February, Isabel says many customers stopped coming.

1:42— — And Isabel gets it. She doesn't have legal status. And she's been avoiding stores that are rumored to be unfriendly to immigrants, or where she's heard there's a high police presence.

2:11Isabel says she'd rather not run any risks, and she's changed where and how she shops. Sometimes she just stays home. Like Isabel, many Latinos are hunkering down, and that lost economic activity is hurting some companies' sales. Here's our colleague Laura Cooper again. The main thing we learned is that people are scared. They are not spending money. Whether that has to do with concerns about immigration and ICE, which we heard a lot, or it has to do with people having their job hours cut so they're spending less.

2:55Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Wednesday, June 18th.

3:08Coming up on the show, Latino consumers are pulling back, and businesses are feeling the effects.

3:30Normally, our colleague Laura Cooper covers the beverage industry, the companies behind drinks like Coke, Sunny D, and Gatorade. What brought Laura to Houston was a data point that caught her eye from one of the companies she covers, Constellation Brands. Constellation, which owns Modelo and also Corona, they talked about how they had a drop in sales. When we say, like, their sales are down, by how much? You know, it's not a humongous number. Constellation's beer sales to retailers fell 1 % in their most recent reporting quarter, which was back in April. Though 1 % sounds like not a big number, that's significant because it's the first time that their sales have fallen since 2013.

4:16The drop in sales came largely from Latino consumers, a group that makes up about half of Modelo's customer base in the U.S. Modelo is currently the most popular beer in America. So because the Hispanic population is so important to Constellation, they have been open on their earnings calls talking about the softness. Welcome to the Constellation Brands Q4 fiscal year 2025 earnings call. They also have done a lot of talking to people out in different markets to ask them, are you going to the supermarket? Where are you going? Are you drinking beer? Are you having parties? And the fact is, a lot of consumers in the Hispanic community are concerned right now.

5:01Two-thirds of them are concerned about higher prices on things like food, gas, and other essentials. Over half are concerned relative to immigration issues and how those impact. A number of them are concerned about job losses in industries that have a high Latino employment base.

5:24Another company that reported a loss in sales is Coca-Cola. And like Constellation, the company has seen Latinos pull back on spending because of inflation and economic uncertainty. But Coca-Cola also had the added situation of a social media bread boycott. Coca-Cola is now being boycotted, guys. Essentially, earlier this year, there was a video circulating on social media that purported that Coca-Cola had called immigration on its employees. Coca-Cola has said many times that this is false. This is unequivocally false. However, the videos and others like it have spread all over social media.

6:15So that obviously had an impact on sales. But altogether, you know, the boycott, the pullback by Hispanic consumers and like, you know, general inflation issues led to Coca-Cola having a volume drop of 3 percent in North America last quarter. And that's generally not something that you'll see. Coca-Cola is a pretty strong performer. And that kind of shows the impact that's happening there. And Laura says that impact goes beyond Constellation and Coca-Cola. Hispanic spending has been falling across all kinds of industries. So what other companies are seeing this trend? How widespread is it? So it's pretty widespread.

6:59Like I said, we've seen it from Constellation brands, which makes Modelo, but we've also heard about it from companies like toothpaste maker Colgate, you know, Wingstop. To that Hispanic consumer, lower middle income, and where we saw a meaningful pullback in our business. Boston beer, which makes Twisted Tea and Truly Seltzer. A pullback from the Hispanic consumers. They're just not going out as much. So I think that it really spans different retailers and different kinds of things. So not just beverages. The Hispanic population has been one that companies want to court. They want Hispanic consumers that are a huge part of the U.S.

7:41population to be buying their products, right? This is a huge buying group that is really important from a corporate perspective. Laura talked to analysts, company executives, store owners, and Latino shoppers. And she heard that across the country, Latinos are changing shopping habits in large part because of immigration enforcement. Specifically in places like Southern California and Texas, many immigrants are avoiding liquor stores because of the show ID to make a purchase. And they may not want to do that, even if they are illegally here because they might have a family member or a friend that they think might be put in danger.

8:20There's also situations where Latino shoppers are shifting their shopping to large retail chains. And that's kind of in an effort to blend in in a crowd instead of going to smaller bodegas or, you know, supermarkets that might primarily serve Hispanic consumers.

8:39After the break, Laura goes to a community in Texas that's feeling the financial impact of ICE enforcement firsthand.

8:57Okay, we're going to make a right on 2.3 miles on Hercules Road. And then we have to do some kind of squiggly thing. Laura visited a cluster of rural communities in Liberty County, about 40 miles northeast of downtown Houston. It's a wooded, flat area of Texas that's grown quickly in recent years. New businesses and homes of all kinds are everywhere, attracting scores of immigrants. This would kind of be the American dream to live in one of these homes. These are cute houses, but they vary, right? Like, that's a trailer that's been converted into a house. There's a lot of trailers.

9:36Since 2023, the area has been the target of scrutiny from conservatives in Texas. Some have called the area a haven for undocumented immigrants. And in February, ICE and the Texas Department of Public Safety, or DPS, launched a high-profile operation. Tonight, ICE agents descended on a controversial development in Liberty County, targeting criminals and illegal immigrants. The governor's office said they arrested over 110 undocumented people during the operation.

10:11On her trip, Laura met with a local businessman, Dennis Kim. He owns a convenience store called Let's Go Market and several other stores in the area. I'm curious, what's the best seller here in terms of beverages? Is it Modelo? Beverages? Yeah. Modelo, for sure. But it's everybody. Like, the contractors. Yeah, yeah, everybody. Dennis grew up in the region, and he's seen it transform over the years. As the area attracted more Latinos, he's updated what he sells to meet their needs. Well, I mean, take for example here. We have all, like, Hispanic-inspired, like, quesos and cheeses. I mean, this is from, you know, San Salvador, Honduran.

10:53You know, we have different type of, you know, crema or chips. Like, we have a section of imported chips. And honestly, like these Cheetos, it tastes like Cheetos, but it has more of a corn taste. Dennis says that when ICE came to town in February, his sales fell by nearly a third. Since then, sales are back up, but they haven't fully recovered as foot traffic continues to be slow. And if there's law enforcement in his parking lot, whether ICE or not, Dennis says his customers tend to stay away. We do notice that people are, you know, sometimes a little hesitant to come out when they see an influx of cars here, you know, like police officers or whatever, DPS and stuff like that, of course, yeah.

11:38Have you had any, like, police or DPS in your parking lot? Yeah, but usually, I mean, to be honest, for me as an operator and comedian story, I guess I'm kind of used to it, but we always welcome the local police officers here, you know? Are you scared? Of course, of course, especially in this current, like, context, you know? This is what I think. This is my honest opinion. I think majority of people have their papers, but they might have a relative that does not. Right. so they don't want their relative to get in trouble or something like that, you know? So I think that's what causes the fear.

12:17Other store owners told Laura they regularly see ICE agents in their parking lots, which often scares away customers. Store owners also said that they've seen parents send their U.S.-born children out to buy eggs, milk, and other essentials. Outside, Laura met with one of Dennis' customers, Manuel Medina. He stopped by for some gas and a bottle of mineral water. Manuel is retired on a limited budget, and he says he's had to cut his spending across the board.

12:55Manuel says that as prices for essentials go up, everyone in the middle class is struggling, not just Hispanics. But he says he's heard from many in his community who are staying home, hoping to avoid ice. And he says it's hitting Hispanic businesses hard.

13:15On weekends, food vendors would gather in the area, in parking lots and roadsides, selling tacos and freshly squeezed juice. But many of those businesses aren't showing up anymore. And when Manuel walks into a store, he walks in with apprehension because he might run into an ICE agent.

13:42That's the problem, Manuel says. People aren't shopping. And while deportations are going on, it will only get worse. So, Laura, given everything that's going on with economic pressures and the threat of deportation, is there anything that can be done to reassure Hispanic shoppers? So, that's a good question. I've asked a lot of people what they're doing to try and get to the consumers, and there's not really an easy answer, right? I've asked a lot of companies, what are you doing to bring back Hispanic consumers? And especially with a situation like immigration, like, it's not a clear-cut answer.

14:18Right. It's not clear what a company can do to change the environment in which they're selling their products. Right. That's not really something they can control at all.

14:29What does this tell you about, like, what's going on in the Hispanic community? I mean, the main theme that I got when we were out there was just like, there's a lot of fear. And there is a big tightening of the purse strings. Like, it's all about saving money and it's all about being safe. And in places like Houston, where there are new immigrants, I mean, the pullback is going to continue. It's just unless something changes and unless time is just what makes things better. For Dennis Kim, the owner of Let's Go Market, he says there's not much he can do about the current moment. What could I possibly do?

15:10Honestly, like, these are all big-level nationwide issues, right? So, and to me, like, in order to keep my head level, I can only control what I control. Like, for me, maybe the one thing I can control is to have the best possible business here and attract other customers here. I don't know. You know, that's part of my everyday, you know, plan.

15:52That's all for today, Wednesday, June 18th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Arian Campo Flores and Enrique Perez de la Rosa.

16:06Thanks for listening. See you tomorrow.