The United States will be the largest Spanish speaking country by 2050, but how important is Spanish for businesses in America?
Demographics of Spanish speakers in the US
Pure demographics are one of the biggest indicators of how Spanish for businesses is important. There are around 55 million Hispanics in the US, or roughly ⅕ of the population, which makes them the largest minority in the country. But the total number of Hispanics is expected to grow even more, with estimates indicating that around 30% of the population will be Hispanic by 2065.
Of course, not all Hispanics necessarily speak Spanish, especially in younger generations. But we’ve previously studied how Latin-American culture favors the upkeep of the language. Combining Hispanics and second language speakers, it’s possible that ⅓ of the American population will be able to communicate in Spanish.
We must take into account, surely, that most of these Americans will be bilingual. It won’t be strictly necessary to speak Spanish to reach them. But using Spanish over English may spark a different reaction, which is why we’re seeing more and more Spanish ads and media. Multilinguals associate each language with a different cultural experience, so their personality traits can also change. Some people report being more witty and outgoing when they’re speaking Spanish… and we won’t deny it.
Therefore, from a marketing standpoint, it’s impossible to ignore the power that Spanish has already conquered.
However, there are more layers to this story. The Hispanics are younger than other demographic groups: 21% of all millennials in the United States identify as “Latino” (even though approximately ⅔ were already born in the US, and almost all spend most of their lives in the US). For businesses who want to target young audiences, it might be a fatal mistake to bypass this mixed-culture experience and Latin-American narratives.
Purchasing Power of Hispanics in the US
Even when faced with the deniable demographic power of Hispanics in the United States, some businesses might dismiss them as mostly low-income, low-spending buyers. But according to Terry College’s “Multicultural Economy Report”, Hispanics outspend other groups in groceries, used cars, phone services and clothing. And they spend less on tobacco, health care, entertainment, furniture and personal insurance.
Hispanic adults spend, on average, 96$ per day, which is above the national average of 90$. The reason for this is in demographics: since they’re younger, they’re more likely to have children. And having children is a huge driver to spend more.
Overall, they made a 1.3$ trillion economic “contribution” to the consumer market in the United States in 2015. It comes down to this: Mexicans, the largest Hispanic market, spent 751$ billion. Puerto Ricans follow with 143$ billion and Cubans spend around 70$ billion. South Americans and Central Americans make up the remainder, purchasing around 117$ billion each.
Those trying to sell luxury items will also find interesting that affluent Hispanics spend more than their non-Hispanic mates. Affluent Hispanics (earning more than 100,000$ per year) represent around 12.2% of the total Hispanic population. Particularly, they outspend other groups in family activities, vacations, sporting events and high-end brands.
Hispanic Businesses: how do they affect the economy?
The purchasing power of Latinos is closely related to their roles in the American workforce. The most recent report we could find, Nera’s Making America Rich Again, from December 2016, tells us Latinos are more likely to be in the workforce and employed than the average population. They account for 17% of all workers, which means Spanish is certainly being spoken in American corporations. Their poverty rate is falling more rapidly than that of the rest of the population, and they’re the only minority group that’s less poor now than in 2007.
And perhaps more staggeringly, Latinos account for 21% of entrepreneurs. Their businesses were responsible for 46% of growth in employment from 2011 to 2015. Some suggest that this might be a direct consequence of their youthful demographic; we can’t help but think that their multicultural upbringing must be somewhere behind their incredible success.
Nonetheless, many of the Latino-owned businesses are smaller, family-owned companies. According to the State of Latino Entrepreneurship Research Report of 2015, they’re not yet living to their potential. In 2012, the opportunity gap was as large as 1.32$ trillion. What will happen in the future? No one can say for sure, but most scholars agree that Hispanic businesses are becoming one of the driving factors of the US economy.
Business with Spanish-speaking countries
One of the main trade partners is the United States speaks Spanish: Mexico. Around 80% of all Mexican exports go to the US, which accounts for 13.4% of all American imports: mostly vehicles, electrical and mechanical machinery and, apparently, glass-bottled beer. This puts Mexico behind China and just ahead of Canada. On the other hand, the 15.9% of all American exports went to Mexico. A good portion of these transactions is driven by American businesses that settled in Mexico for lower production costs: some estimates indicate 40% of each Mexican product is actually American.
But that’s not all there is in Mexico. Mexico is the world’s 11th most populous country and the Mexican economy is the 15th largest by GDP. American companies are starting to see the potential in this ‘emerging market’. In 2014, PepsiCo announced it would invest 5$ billion over the next 5 years in Mexico.
And Mexico is not the only emerging market receiving substantial amounts of foreign investment: Argentina (21st largest economy by nominal GDP), Colombia (32nd), Chile (38th) and Peru (39th) are also increasingly popular. Venezuela used to be in this lot as well, but due to the recent crisis and insecurity, investors are keeping a safe distance.
Colombia, in particular, has been establishing itself as a safe harbor for foreign investors. It’s a leading country when it comes to renewable energy and ecology and it’s experiencing a tech boom thanks to American companies. Facebook, Google and Microsoft have all opened offices in Bogotá recently.
The real treasure of Latin America, however, may be its soil and climate. The land is very fertile, and some regions see a harvest more than once per year.
At the moment, there seems to be a race between China and the United States to see which country can make the most profit out of their Latin American business ventures. In 2012, Latin American received 174 billion dollars in foreign investment, and most of it came from China and the US.
So, is Spanish for businesses really important?
Spanish is important for American companies, both domestically and abroad. The Hispanic market is too big to be marginalized, especially for certain businesses like clothing or high-end brands. And the business opportunities that lie for American corporations in their southern neighbors are too big to pass.
Do you want to learn Spanish? Check out our group courses here.
If you think learning Spanish would be beneficial for your work team, we also have Spanish for Corporations programs.