Dive Brief:

• Private equity firm KKR announced that it is combining two Hispanic grocery chains, Cardenas Markets and Mi Pueblo — which the firm acquired with Victory Park Capital last year — to become Cardenas Markets LLC, according to Chain Store Age. The resulting supermarket chain will be one of the largest Hispanic groceries in the country. 
• Each store brand will operate separately, but will be managed under one executive team led by CEO John Gomez. The launch will help both businesses maximize efficiencies, offer competitive pricing and invest in store experiences to improve overall quality, according to Progressive Grocer. 
• The company has locations throughout California and Nevada, and plans to launch a number of new store offerings in key Hispanic markets over the next few years. 

Dive Insight:

Analysts have predicted a rise in Latino-focused grocers as Latin populations grow in the U.S. Today, Latin Americans comprise approximately 17% of the U.S. population, a number that's expected to rise to 33% in the next generation. 

The National Council of La Raza, a Latino research and policy group, also reported that Hispanic shoppers spend more of their income on food than other groups, posing a prime opportunity for grocers. According to Nielsen, Hispanic consumers spend $175 more per year on fresh foods than the average shopper, and two-thirds of this demographic say they enjoy shopping. Nielsen also found that Hispanic millennials shop at ethnic grocery stores as a way to stay connected to their heritage. More than half (61%) said they shopped at cultural supermarkets at least once over the past year. 

Many Hispanic supermarkets are succeeding where traditional retailers have struggled. These stores offer a wide range of authentic products, ranging from custom meats to tropical produce and authentic prepared foods., earning strong customer loyalty. These markets can also attract non-Hispanic shoppers looking for unique cuisine, especially as demand for spicy dishes and authentic cultural dishes continues to rise. 

Because of these trends, it's likely that other retailers will begin to invest in Hispanic groceries like Cardenas Markets. Last month, Southeastern Grocers opened seven Fresco Y Mas markets in former Winn-Dixie locations in southern Florida. The grocer now operates 18 locations under the Fresco Y Mas banner. It will be interesting to see if these models continue to thrive as traditional grocers struggle, and to what degree.