Why Latino Consumers Are Spending Less

Summary

Summary of "Why Latino Consumers Are Spending Less"

Podcast: The Journal
Hosts: Ryan Knutson & Jessica Mendoza
Release Date: June 18, 2025
Produced by: The Wall Street Journal & Gimlet, in collaboration with Spotify

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Introduction

In the episode titled "Why Latino Consumers Are Spending Less," hosts Jessica Mendoza and Ryan Knutson delve into the declining spending patterns among Latino consumers in the United States. This trend is affecting various industries, from beverages to retail, and is influenced by a combination of economic pressures and heightened fears of immigration enforcement.

Economic Pressures and Consumer Behavior

Rising Costs and Reduced Spending

The episode begins with Laura Cooper's observations at a Houston farmer's market, highlighting the impact of increasing prices on consumer behavior.

Laura Cooper (00:08): "We got some plums, some limes, some mangoes, it looks like."
Jessica Mendoza (00:14): Describes Isabel Aguilar's struggles as customers become hesitant to spend due to rising costs and job insecurity.

Isabel Aguilar, a vendor at the market, notes a significant decline in customer spending:

Isabel Aguilar (00:14): "The prices of goods have gone up and customers have told me that they're struggling. Some have lost their jobs. Others have had their work hours cut, so they're tightening their belts."

The overarching theme is a combination of economic strain and fear driving Latino consumers to reduce their expenditures.

Impact on Major Brands

Major companies like Constellation Brands and Coca-Cola are experiencing noticeable declines in sales attributed to this shift.

Constellation Brands

Constellation Brands, owner of popular beers like Modelo and Corona, reported a 1% dip in beer sales for the quarter ending in April—the first decline since 2013.

Laura Cooper (04:13): "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."

Earnings calls reveal that Latino consumers, comprising about half of Modelo's customer base in the U.S., are contributing to this downturn due to concerns over higher prices and immigration issues.

Earnings Call Host (05:24): "Two thirds of [Hispanic] consumers 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."

Coca-Cola

Coca-Cola has seen a 3% sales drop in North America, influenced not only by economic uncertainty but also by a social media-driven boycott.

Laura Cooper (06:04): "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."

Despite Coca-Cola's denials, the rumor has significantly impacted its sales among Latino consumers.

Broader Industry Impact

The decline in Latino spending isn't confined to beverages. Various sectors, including toothpaste manufacturers like Colgate and fast-food chains like Wingstop, are witnessing similar trends.

Laura Cooper (07:44): "Boston beer, which makes twisted tea and truly Seltzer. So I think that it really spans different retailers and different kinds of things. Not just beverages."

This widespread pullback underscores the critical role Latino consumers play in the U.S. market and the challenges businesses face in retaining this demographic.

Fear of Immigration Enforcement

Community Impact in Liberty County, Texas

A focal point of the episode is Liberty County, a rapidly growing area northeast of Houston that has become a target for conservative scrutiny and immigration enforcement.

In February, a high-profile operation by ICE and the Texas Department of Public Safety (DPS) resulted in over 110 arrests of undocumented individuals:

Jessica Mendoza (10:31): "The governor's office said they arrested over 110 undocumented people during the operation."

Store Owners' Perspectives

Local business owner Dennis Kim of "Let's Go Market" shares firsthand how immigration enforcement has affected his business.

Dennis Kim (11:36): "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."

The presence of law enforcement discourages customers from visiting stores, leading to a substantial drop in foot traffic and sales.

Dennis Kim (10:54): "I mean, take for example here we have all, like, Hispanic inspired, like quesos and cheeses... Honestly, like these Cheetos. It tastes like Cheetos, but it has more of a corn taste."

After the ICE operation, Dennis observed a nearly one-third decline in sales, which has yet to fully recover:

Dennis Kim (11:53): "We noticed that 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."

Shifting Shopping Habits

Latino consumers are altering their shopping behaviors to minimize the risk of encountering ICE agents:

• Avoiding Smaller Stores: Preference is shifting towards large retail chains to blend into crowds, avoiding stores with a high Latino presence.

  Laura Cooper (08:34): "Specifically in places like Southern California and Texas, many immigrants are avoiding liquor stores because they have the show ID to make a purchase."

• Selective Store Visits: Some consumers opt to stay home to avoid potential encounters with law enforcement.

  Manuel Medina (Customer, 13:53): "When Manuel walks into a store, he walks in with apprehension because he might run into an ICE agent."

Community and Business Responses

Efforts to Reassure Consumers

When questioned about potential solutions to regain the trust and spending of Latino consumers, both hosts and business owners express uncertainty.

Laura Cooper (14:31): "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."

Businesses feel constrained as immigration policies and economic factors are beyond their control, making it challenging to implement effective strategies to reverse the trend.

Business Resilience

Store owners like Dennis Kim focus on optimizing their operations within the existing challenges, aiming to attract a broader customer base despite the environment.

Dennis Kim (15:37): "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."

Conclusion

The episode concludes by emphasizing the intertwined nature of economic pressures and immigration fears in shaping consumer behavior within Latino communities. Without significant policy changes or shifts in economic stability, the downward trend in spending among Latino consumers is likely to persist, posing ongoing challenges for businesses reliant on this vital market segment.

Laura Cooper (15:02): "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."

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Additional Reporting: Ariane Campo Flores and Enrique Perez de la Rosa

Credits: The Journal is a co-production of Spotify and The Wall Street Journal.

Transcript

[Laura Cooper]

We got some plums, some limes, some mangoes, it looks like.

[Jessica Mendoza]

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 pinatas, 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. Over 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. 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. 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. Isabel 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.

[Laura Cooper]

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.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica mendoza. It's Wednesday, June 18th. Coming up on the show, consumers are pulling back and businesses are feeling the effects.

[US Bank Representative]

This episode is brought to you by US Bank. With US bank business essentials, you get more than just a bank. You get a dedicated partner that provides you a powerful combo of checking and card payment processing with quick access to the money you've earned. Proving that there's nothing as powerful as the power of us. Visit usbank.com today to learn more. Member FDIC Copyright 2025 U.S. bank.

[Jessica Mendoza]

Normally, 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.

[Laura Cooper]

Constellation which owns Modelo and also Corona. They talked about how they had a drop in sales.

[Jessica Mendoza]

When we say, like, their sales are down by how much?

[Laura Cooper]

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.

[Jessica Mendoza]

The 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.

[Laura Cooper]

So because the Hispanic population is so important to Constellation, they have been open on their earnings calls, talking about the softness.

[Earnings Call Host]

Welcome to the Constellation brand's Q4 fiscal year 2025 earnings call.

[Laura Cooper]

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?

[Earnings Call Host]

And the fact is, a lot of consumers in the Hispanic community are concerned right now. Two 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.

[Jessica Mendoza]

Another 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.

[Laura Cooper]

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. So 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% 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.

[Jessica Mendoza]

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?

[Laura Cooper]

So it's pretty widespread. Like 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 Wingstop to that Hispanic.

[Earnings Call Host]

Consumer, lower middle income. And where we saw a meaningful pullback in our business.

[Laura Cooper]

Boston beer, which makes twisted tea and truly Seltzer.

[US Bank Representative]

Pullback from the Hispanic consumers. They're just not going out as much.

[Laura Cooper]

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 US Population to be buying their products. Right. This is a huge buying group that is really important from a corporate perspective.

[Jessica Mendoza]

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.

[Laura Cooper]

Specifically in places like Southern California and Texas, many immigrants are avoiding liquor stores because they have the show ID to make a purchase. And they may not want to do that even if they are legally here because they might have a family member or friend that they think might be put in danger. There'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.

[Jessica Mendoza]

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

[Laura Cooper]

Okay, we're gonna make a right on 2.3 miles on Hercules Road, and then we have to some kind of squiggly thing.

[Jessica Mendoza]

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.

[Laura Cooper]

This would like, 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.

[Jessica Mendoza]

Since 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.

[US Bank Representative]

Tonight, ICE agents descended on a controversial development in Liberty county targeting criminals and illegal immigrants.

[Jessica Mendoza]

The governor's office said they arrested over 110 undocumented people during the operation. On 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.

[Laura Cooper]

I'm curious, what's the Best seller here in terms of beverages, Is it Matello beverages?

[Dennis Kim]

Yeah, Modelo, for sure. But everybody, like the contractors. Yeah, yeah, everybody.

[Jessica Mendoza]

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.

[Dennis Kim]

I mean, take for example here we have all, like, Hispanic inspired, like quesos and cheeses. I mean, this is from, you know, Salvador, Honduran. You know, we have different type of crema, our 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.

[Jessica Mendoza]

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.

[Dennis Kim]

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.

[Laura Cooper]

Have you had any, like, police or DPS in your parking lot?

[Dennis Kim]

Yeah, but usually, I mean, to be honest, for me, as an operator and convenience store, I guess I'm kind of used to it. But we always welcome the local police officers here, you know. Of course, of course. Especially in this current 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.

[Laura Cooper]

Right.

[Dennis Kim]

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.

[Jessica Mendoza]

Other 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 us 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. Manuel 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. On 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. That'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?

[Laura Cooper]

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, it's not a clear cut answer.

[Jessica Mendoza]

Right. It's not clear what a company can do to change the environment in which they're selling their products.

[Laura Cooper]

Right. That's not really something they can control at all.

[Jessica Mendoza]

What is this telling you about, like, what's going on in this Hispanic community?

[Laura Cooper]

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's gonna continue. It's just unless something changes and unless time is just what makes things better.

[Jessica Mendoza]

For Dennis Kim, the owner of let's Go Market, he says there's not much he can do about the current moment.

[Dennis Kim]

What could I possibly do? Honestly? These are all big level nationwide issues, right? So. And to me, like, in order to keep my head levels, I can only control what I 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 that's part of my everyday, you know.

[Jessica Mendoza]

That's all for today. Wednesday, June 18. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Ariane Campo Flores and Enrique Perez de la Rosa. Thanks for listening. See you tomorrow.