May 27th, 2011

Kraft Aims Kool-Aid Ads at a Growing Hispanic Market

The New York Times

IN a 2010 report by the Association of Hispanic Advertising Agencies that rated the top 500 American advertisers, Kraft Foods earned the rating of “follower.” Had Kraft, which had spent 3.8 percent of its ad budget on Hispanic media in 2009, spent just 3.6 percent, it would have been rated a “laggard.”

The top rating, “best in class,” went to 40 companies — including State Farm, J. C. Penney and Levi Strauss — that spent more than 11.8 percent on the Hispanic market, which at the time corresponded to the portion of Hispanics in the population.

This year, Kraft says it will triple spending on Hispanic marketing over last year. Kraft declined to provide figures, but confirmed that the percentage of overall spending would be in the double digits.

Kool-Aid, in a first for any Kraft brand, has allocated the majority of its 2011 marketing budget to reach Hispanics. Television commercials that began running this week on networks including Univision and Telemundo feature families drinking the beverage at festive occasions.

In one spot, at a backyard pool party, Kool-Aid Man, the brand mascot, jumps off the diving board as the slogan “Donde está la diversión, está Kool-Aid” (“Where there’s fun, there’s Kool-Aid”) appears on the screen.

The commercials are by Ogilvy Rojo, part of Ogilvy & Mather, a WPP agency. The family settings in the spots grew out of consumer research indicating that Latina mothers like to “organize sessions for bonding, like eating dinner together or going to the park,” said Sivonne Davis, Kool-Aid senior brand manager.

Depictions of family get-togethers appeal to Latino parents “who are really worried about how fast-paced the American way of life is today, and that kids could be growing up too fast and being pulled away from home,” said Ms. Davis.

Other aspects of the campaign actually facilitate family gatherings. For 10 weeks starting June 5, Kool-Aid will sponsor a new family-friendly movie night, Cine en Casa, to be shown on Telemundo.

And, in a collaboration with Univision Radio, beginning July 23, Kool-Aid will sponsor outdoor screenings of Spanish-language movies in public parks in Los Angeles, Chicago, San Antonio, Dallas and Houston.

While Kool-Aid historically has developed commercials for the general market, then translated them into Spanish, in this case it may reverse the process.

“Typically we took a general market spot and translated it to the Hispanic market, but these are launching among Hispanic consumers and we’re testing to see if they could then be used for the general market as well,” Ms. Davis said.

Almost 20 percent of Kool-Aid drinkers are Hispanic, while slightly more than 20 percent are African-American, according to the brand. Sales are split about evenly between powdered mixes and ready-to-drink versions.

Hispanic adults are second only to African-Americans in consumption of fruit drinks, with 40 percent drinking powdered drinks (compared with 46 percent of blacks and 32 percent of whites) and 45 percent drinking prepared versions (compared with 46 percent of blacks and 27 percent of whites), according to Mintel, a market research firm.

Kool-Aid is forgoing television advertising for the general market for the rest of the year, focusing instead on in-store marketing and digital and print advertising.

Kool-Aid spent none of its total of $14.3 million in advertising on Hispanic media in 2008. In 2009, it spent $3.4 million of its total ad spending of $17.9 million on Hispanic media, and last year, it spent $2.8 million of $23.7 million, according to the Kantar Media unit of WPP.

Both the economic downturn and the Hispanic population surge are prompting brands to rethink their strategies, said Alain Groenendaal, chief executive of Wing, a unit of the Grey Group, owned by WPP, that focuses on Latino marketing.

“As the economy has not been so strong, brands have been digging into their numbers more to see where growth is going to come from,” he said.

“Most of the growth from one census to the next has been in nonwhites, and if brands are spending the same amount of money on a smaller and smaller group, they’re getting worse and worse R.O.I.,” said Mr. Groenendaal, referring to the return on investment from advertising.

A major initiative to court Hispanics encompasses 10 Kraft brands, including Kraft Singles, Oreo, Ritz and Trident gum.

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