Dive Brief:

• Cardenas Markets has purchased seven Los Altos Ranch Market stores in Arizona from Northgate Gonzalez Markets, according to The Shelby Report. Both retailers are partial owners of Los Altos Ranch’s parent company, CNG Ranch LLC.
• Northgate said it sold the Los Altos locations so that it can focus on the Southern California market, where the majority of its stores are situated.
• Cardenas Markets, meanwhile, is focused on expanding its footprint beyond California, where it’s based. “Acquisitions and new strategic store locations are a key component of our growth strategy,” John Gomez, president and CEO of Cardenas Markets, said in a statement.

Dive Insight:

Hispanic grocers like Cardenas Markets and Northgate are in a very good position right now. Both have a large and growing population of Hispanic consumers to serve: According to Census data, there are 54 million Hispanics in the U.S, and that number is set to more than double over the next 40 years. Not only that, but research shows Hispanic consumers spend $175 more per year on high-value fresh foods than other consumers, according to Nielsen.

These retailers are reaching a significant number of non-Hispanic shoppers, as well, with foodies in areas like Southern California eager to experience the sensory feast that many of the stores offer.

Hispanic grocers are positioned for explosive growth, and both Cardenas and Northgate have solid strategies in place. Northgate wants to focus on the Southern California market, which has favorable demographics and clear differentiation from other supermarkets in the area. Oftentimes, when a traditional grocer isn’t able to cut it in ultra-competitive SoCal, a Hispanic grocer can move in and succeed.

Cardenas, on the other hand, wants to grow its footprint far and wide. The company, which was purchased by private equity firm by KKR last November, recently merged with Mi Pueblo Markets, and announced its intention to become the nation’s largest Hispanic grocer. The retailer also operates three stores in Nevada.

Mergers and acquisitions like this will likely be key to Hispanic retailers’ growth in the near future. Indeed, despite their popularity, Hispanice grocers can’t compete with traditional supermarkets through organic growth alone.

“You are going to see continued consolidation with independents that target Hispanic shoppers because they are going to need to start working together in a more comprehensive and structured way that’s scalable,” Diana Sheehan, director of retail insights with Kantar Retail, recently told Food Dive.

Hispanic grocers also have to navigate the sometimes-conflicting tastes of their first-generation Latino shoppers, who crave the products and services of their homeland, and second- and third-generation shoppers, who often have more American tastes. As these retailers grow beyond their core markets, striking that balance will be all the more important.