How to distribute products to the Hispanic market in the U.S.
The Hispanic community in the United States is a fast-growing market of more than 62 million people (about 19% of the country's population), according to the U.S. Census Bureau. The states with the highest Hispanic concentration, such as Florida, Texas, California, Arizona and New Mexico, represent significant opportunities for consumer goods companies looking to expand into this segment. However, success in this market requires a route to market (RTM) strategy adapted to the cultural, geographic and socioeconomic characteristics of this community.
1. Hiring consumer goods brokers
One of the most common ways to enter the U.S. market is to hire brokers. Brokers are intermediaries who help manufacturers place their products in stores through established relationships with buyers at large chains such as Walmart, Target, and Kroger. Brokers facilitate negotiations, make sure products meet retailer standards and manage the commercial relationship.
The traditional retail channel remains one of the most effective ways to reach the Hispanic community, especially in states such as Florida and Texas, where there is a high concentration of supermarkets specializing in Latin products. Large companies such as Goya Foods, the leader in food products aimed at Hispanics, have used this model to build a solid distribution network across small supermarkets, neighborhood stores and regional chains such as Fiesta Mart in Texas or Sedano's in Florida. These retailers focus on products that resonate culturally with Hispanic consumers, and Goya has capitalized on this approach to build its leadership.
Advantages:
Access to an established network of contacts: Brokers already have solid relationships with buyers at major supermarket chains, specialty stores and retailers in the U.S. This means the product presentation and approval process can be faster and more effective, because buyers trust the brokers they already work with.
Knowledge of the local market: A broker brings a deep understanding of U.S. regulations, consumption trends, local preferences and legal requirements. They can advise on the adjustments your product needs to be competitive, from presentation and packaging to optimal price points.
Management of the sales process with key accounts: Brokers usually handle negotiations, terms of sale and commercial conditions, reducing the administrative burden on the manufacturer. They can also help with inventory planning and coordination with distributors.
Logistics and distribution experience: A broker can be key in coordinating logistics, making sure the product is available and well distributed in the market. This is especially useful for companies that are not familiar with the complex U.S. logistics network.
Time savings: Entering the U.S. market without a broker can be a long process, since it requires identifying buyers, building contacts and going through lengthy approval processes. A broker significantly shortens this time because it already has access to the right buyers.
Disadvantages:
High commissions: Brokers generally charge a commission on sales that can range from 5% to 10% depending on the agreement. This can reduce the company's profit margins, which matters especially for low-margin products such as consumer goods.
Less control over the sales strategy: By relying on a broker, companies lose some control over how their product is sold and positioned in the market. The broker decides how and where the product is presented, which may not fully align with the manufacturer's vision.
Dependence on the broker: Companies can become too dependent on their brokers to manage retailer relationships. If the broker stops working with the company or the relationship deteriorates, the company could lose access to important distribution channels.
Conflicts of interest: Some brokers represent multiple brands, even in the same product category, which can lead to conflicts of interest if the broker prioritizes one brand over another because of more attractive commissions or longer relationships.
Lack of marketing focus: While brokers focus on distribution and sales, they are generally not involved in promoting or marketing the product. Companies that need to build a strong brand presence will still have to invest in advertising and marketing, which means additional costs beyond broker commissions.
Success story: Tajín
Tajín, the Mexican seasoning brand, is an example of how working with a broker can accelerate growth in the U.S. Tajín hired Acosta, one of the largest and best-known consumer goods brokers in the United States, which offers sales, marketing and supply chain management services for products in categories such as food, beverages, household products and personal care. Acosta has relationships with almost every major U.S. retailer, including Walmart, Target and Kroger, and helped Tajín not only secure shelf space but also adjust its marketing and distribution strategy to maximize sales in a highly competitive market.
Other large U.S. brokers that are popular with consumer goods manufacturers include Advantage Solutions, Crossmark and Daymon Worldwide, which work with brands such as Cheerios, Yoplait, Nescafé, Stouffer's and Colgate-Palmolive, among others.
2. Direct sales to retailers
Selling directly to retailers is a viable alternative for foreign companies looking to enter the U.S. market, but it requires significant investment in commercial structure, logistics and marketing. Companies that choose this route may be drawn by higher gross operating margins, but they must be prepared to handle the high upfront costs of setting up operations in the U.S., comply with strict regulations, manage distribution across a vast geography and compete with established local brands.
Some of the main difficulties of this model include:
Local sales team: The sales team must have experience dealing with buyers at large retailers. U.S. retail chain buyers are extremely selective and demand products that meet high standards of quality, delivery and sustainability. The negotiation process can also be complex, and companies must be able to sustain long-term relationships with retailers.
Office or subsidiary in the U.S.: Most large retailers prefer to work with companies that have a physical presence in the U.S. This makes logistics, audits and compliance easier and reduces the risk of missed deliveries or inventory problems. Setting up a U.S. office involves considerable costs in infrastructure, staff and operations.
Local distribution centers: Many large retailers, such as Walmart, require companies to ship their products through specific distribution centers or regional warehouses. This means building relationships with third-party logistics providers (3PL) or building your own storage and distribution infrastructure in the U.S.
High logistics costs: Logistics in the U.S. can be expensive, especially if the company is trying to distribute nationwide. Transportation, storage and inventory management costs can considerably reduce profit margins. Foreign companies must assess whether they can absorb these costs and whether demand justifies the investment.
Just-in-time compliance: Many retailers work with just-in-time inventory models, where suppliers must deliver products exactly when needed to avoid excess inventory. This requires precise logistics planning and the ability to fill orders quickly and efficiently.
Price: Retailers look for products that balance quality and competitive pricing. Foreign companies must analyze whether they can compete on price with local products.
Scalability: Large retailers expect companies to scale quickly if demand for the product grows. This means having enough production capacity to supply large volumes in a short period.
Exclusivity or brand agreements: Some retailers seek exclusive agreements for certain products, which can be an advantage for foreign companies if they negotiate a good deal. However, it can also limit the company's ability to sell in other chains or channels.
Main advantages:
Control over the commercial relationship: By negotiating directly with retailers, companies have more control over the terms of the agreement, pricing strategy, distribution and product presentation. This allows them to tailor sales and marketing strategies to the specific needs of each retailer.
Better gross margins: By removing intermediaries such as brokers or wholesale distributors, companies can capture a larger profit margin because they do not pay third-party commissions. This is particularly important for consumer goods that operate on tight margins.
More control over the brand: Direct sales give manufacturers full control over marketing strategy and brand positioning in stores. This includes shelf placement, promotions and the way the product is presented to the shopper.
Success story: Siete Foods
Although Siete Foods, a gluten-free, Mexican-style food company, has succeeded in selling directly to retailers such as Whole Foods, it faced the challenge of building a solid commercial and logistics infrastructure in the U.S. To do so, it hired a local sales team, built direct relationships with buyers and worked with logistics partners to manage nationwide distribution.
3. Wholesale distributors
Selling through wholesale distributors is an effective strategy for consumer goods, especially for fast-moving, low-margin, ethnic or niche products, and for brands looking to enter the U.S. market without costly in-house infrastructure. Brands such as Goya, Jarritos and Iberia Foods have used this strategy to expand their U.S. presence quickly. However, companies must be prepared to accept lower margins and give up some control over their product and brand in exchange for the scale and access that wholesale distributors provide.
Success story: La Fe Foods
La Fe Foods, a brand known for its Latin products, uses a network of wholesale distributors and sub-distributors in the U.S. to reach a wide range of supermarkets and specialty stores, mainly on the East Coast. Some of La Fe's main distribution centers are in Wood-Ridge, New Jersey; Miami, Florida; and Atlanta, Georgia, covering the territory from Massachusetts to Florida. This structure allows it to reach both local supermarkets and large retailers in these regions.
It also works with major wholesalers that help place its products in specialty stores and supermarkets, ensuring efficient distribution and product freshness. GraceKennedy Foods USA, La Fe's parent company, is leading an expansion strategy that includes new investments in infrastructure to improve its distribution network, allowing it to extend its reach to new markets in the Midwest and on the West Coast.
Advantages:
Access to a broad network of stores: Wholesale distributors already have established relationships with a wide range of retailers, allowing companies to reach many stores without negotiating with each one individually.
Fast scalability: Wholesale distributors let brands scale quickly without complex in-house infrastructure. This is especially useful for foreign companies looking to expand in the U.S. market without high operating costs.
Lower logistics costs: Wholesalers handle storage, transportation and inventory management, reducing the operational burden on the manufacturer. This benefits brands that lack the capacity or resources to manage their own supply chain.
More efficient inventory management: Wholesale distributors buy products in bulk and manage them in their own warehouse network, allowing companies to focus on production without worrying about retail distribution.
Disadvantages:
Lower profit margin: Wholesalers usually buy at lower prices, which means manufacturers must be willing to give up part of their margin in exchange for mass distribution.
Less control over the product and the brand: When relying on wholesale distributors, companies have less control over how their products are presented in stores, their shelf placement and the promotions that are run.
Dependence on the wholesaler's network: If a wholesaler has problems with its distribution network, or if demand for the product is low in certain markets, the manufacturer can lose sales opportunities in key regions.
4. E-commerce and online marketplaces
Selling through e-commerce (D2C) and online marketplaces has become highly relevant in the U.S. market, giving consumer goods manufacturers a direct path to the end consumer without relying entirely on traditional intermediaries such as brick-and-mortar retailers or distributors. This strategy is particularly effective for emerging or foreign brands looking to expand in the U.S. without building a complex physical distribution and sales infrastructure.
Direct-to-Consumer (D2C): Through their own website, manufacturers can sell directly to consumers and remove intermediaries. Platforms such as Shopify, BigCommerce and WooCommerce make it easy for brands to set up their own online stores and personalize the customer experience.
Online marketplaces: Marketplaces such as Amazon, Walmart.com and eBay give manufacturers access to millions of consumers already on these platforms. These online stores have established logistics and sales infrastructure, which makes it easier for manufacturers to sell without managing distribution.
Although e-commerce has grown considerably, accounting for about 15% of total U.S. retail sales in 2023, purchases made in physical stores still account for more than 80% of the total. Despite the rise of online commerce, physical retail remains essential to a brand's success in this country.
Success story: I Love Chamoy
I Love Chamoy, a small company that makes sugar-free chamoy sauce, used Amazon and its own online store to reach U.S. consumers. Thanks to its digital marketing and e-commerce strategy, it scaled quickly without depending on large retailers or brokers.
Advantages:
Full control over the customer relationship and profit margins: manufacturers can build a direct relationship with consumers and collect data on their preferences, behaviors and needs. This information is crucial to improve the customer experience, personalize offers and increase brand loyalty.
Direct access to a massive audience through digital platforms: Selling through marketplaces such as Amazon or Walmart.com lets companies reach a much larger and more diverse consumer base than traditional channels. In 2022, Amazon was estimated to have more than 300 million active accounts worldwide, which makes it a very effective channel to reach millions of U.S. households.
Lower operating costs: Unlike traditional strategies that require physical infrastructure such as warehouses, local sales teams and complex logistics agreements, e-commerce lets manufacturers operate at lower cost. Digital marketing, although it requires investment, is also more flexible and less costly than in-store promotions.
Flexibility and agility: E-commerce lets brands test different marketing, pricing and promotion strategies in real time. This gives companies the agility to react quickly to consumer trends and adjust their advertising campaigns or sales strategies according to customer behavior.
Disadvantages:
Logistics and fulfillment management: Although marketplaces such as Amazon offer logistics services, including Amazon FBA (Fulfillment by Amazon), these come with additional costs. Companies that run their own online stores must manage logistics in-house or through third-party logistics providers (3PL), which can be costly and complicated, especially for foreign companies.
Fierce competition on marketplaces such as Amazon: brands compete not only with local companies but also with thousands of similar products from around the world. Manufacturers must invest in SEO (search engine optimization), digital marketing and competitive pricing strategies to stand out on these platforms.
In-house digital marketing experience and capacity: it is essential to know how to optimize company and product pages for search engines, social media and marketplaces, invest in advertising campaigns, and develop and manage subscription programs, among other things. A company used to brick-and-mortar retail may not master these skills.
Conclusion: choosing a route to market for the Hispanic market in the U.S.
For consumer goods companies looking to enter or expand in the U.S. market, particularly with a focus on the Hispanic community, choosing the right route to market (RTM) model is critical. Whether through brokers, wholesale distributors, e-commerce or strategic alliances with retailers, each option has its own advantages and challenges.
Using brokers can speed up entry into large retail chains, while working with wholesale distributors provides efficient access to broader markets, especially in specialty stores. On the other hand, e-commerce and marketplaces such as Amazon offer a direct and accessible path to a massive audience, while strategic alliances with retailers provide greater visibility and brand differentiation at key points of sale.
Successful companies such as Tajín, Siete Foods and Jarritos have shown that with a smart combination of these strategies it is possible not only to penetrate the market but also to resonate with the Hispanic community and beyond. The keys to success in this segment are a deep understanding of the consumer, solid logistics execution and the ability to adapt quickly to market trends.
Ready to take your business to the next level?
If your company wants to expand in the competitive U.S. consumer goods market, TMC Consultores is here to help. With our experience in route to market strategy and our understanding of the Hispanic market, we will help you design and implement the right plan to maximize your growth opportunities. Contact us today for a personalized consultation and find out how we can support your brand's success.
Which shopping mission and territory justify your entry model?
Avoid treating the Hispanic market as a homogeneous segment. Assess account, category and area together with their distribution, replenishment and activation economics, and test the initial portfolio before committing to national coverage.
Data to bring to a commercial review
Prepare your customer universe and active customers, sales by product and customer, visit frequencies, commercial terms and cost to serve. The scope should respond to the decision and the evidence available. TMC integrates assessment, design and implementation, with a pilot, owners and follow-up according to the project.
Related analysis
Book a meeting with TMC
Book an initial 30-minute meeting with TMC to discuss your company's commercial challenge. We will review your category, channels, current operation and available information to assess where a consulting and implementation project can add value.
