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Latino Grocery Chain Profits With Changing Demographics

Evening Edition
Audio

Aired 2/20/13

A family-owned supermarket chain in Southern California is growing thanks to changing demographics.

— Customers are raving about the recently opened Northgate Gonzalez supermarket in San Diego’s Barrio Logan.

“I bring my aunt here to get all the Mexican products,” Pati Chavez said in Spanish as she packed her shopping cart with the day’s purchases.

Trapped between a shipyard and one of California’s busiest highways, Barrio Logan residents used to have almost nowhere nearby to purchase fresh fruits, meats and vegetables. So neighbors were ecstatic when the Anaheim-based supermarket chain decided to build a big, airy store on an empty lot here.

As the Latino and Asian populations in the United States grow, supermarkets that carry the products they want are growing with them.

Many of Northgate's customers come specifically for the large selection of speciality products from Latin America.

The family-owned Northgate Gonzalez chain currently includes 37 stores in Orange, Los Angeles and San Diego counties, and the company plans to open three to five new stores a year.

The so-called ethnic supermarket industry has seen its revenues grow around 2 percent annually during the past five years, while the supermarket industry as a whole has been losing money, according to Nikoleta Panteva, senior analyst at the market research firm IBISWorld.

Northgate Gonzalez Markets has something else going for it: the strategy of opening stores in low-income and minority neighborhoods aligns with a national health initiative spearheaded by none other than First Lady Michelle Obama.

The chain’s success is a classic tale of the entrepreneurial immigrant. Miguel Gonzalez and his late father, also Miguel, migrated to the U.S. from a small town in Jalisco, Mexico in the late 1960s.

Miguel Gonzalez recruited his 12 brothers and sisters to get the first Northgate market going in 1980. Most of them still work in the company, along with dozens of their children.

They both worked in a wire factory before opening the first Northgate Gonzalez Market in Latino-heavy downtown Anaheim in 1980.

Miguel Jr. said they knew nothing about grocery stores when they started. After he sold his house and his father refinanced his to open their first store, they had $240 left to run it.

Miguel enlisted his 12 brothers and sisters to help out.

“For, I think it was about a year a half, we only used the family to work,” he said.

His father, who was a good cook, made the hot carnitas and chicharrones their customers loved. A couple of brothers ran the meat counter while the sisters worked the cash registers.

Now, the chain employs close to 5,000 people, the majority of them Latinos.

The newer Northgate Gonzalez stores have bulk food sections, like you find in health food stores. They sell a wide selection of prepared foods — carnitas, ceviches, salsas and aguas frescas.

Cumbia plays over the speaker system and television screens in the meat department show soccer games and Mexican talk shows.

Many of the family’s stores are located in underserved neighborhoods where more mainstream supermarkets have either failed or never showed an interest in opening.

That strategy has paid off, and recently caught the eye of Michelle Obama. Last year, she spoke at a Northgate Gonzalez store in Los Angeles to promote a new California loan fund designed to entice supermarkets to open in areas with little access to fresh food.

Northgate Gonzalez was the first recipient of loans from the California FreshWorks Fund, to the tune of $20 million.

“We just think they're a phenomenal operator,” said Tina Castro, director of impact investing for The California Endowment, one of the health advocacy groups behind the fund.

“Their stores are beautiful, they offer a tremendous selection of produce and they really care about their consumers and engage with the communities that they're based in,” Castro said.

Northgate Gonzalez’s efforts to improve their customers' health include in-store cooking demonstrations and a line of foods identified for shoppers as healthy choices.

Back in Barrio Logan, customers say the love the beautiful produce, huge selection of meats, prepared Mexican dishes and tortillas made in-store from scratch.

A reviewer on Yelp called Northgate Gonzalez, “Whole Foods Market for the working class Latinos.”

One shopper said what he loves most is when he hits his local Northgate Gonzalez market on the weekend, it’s like being in Mexico.

Comments

Avatar for user 'Missionaccomplished'

Missionaccomplished | February 21, 2013 at 10:04 a.m. ― 1 year, 8 months ago

Whole Foods for the working class??? LOL Only in the sense that North Gate is anti-union.

North Gate is a derivative of the old El Tigre in south San Diego. And don't let them fool you, they DO NOT cater to the working class. Their prices are as high as Vons or Albertson's save for the discounts with the club cards--and NG has NO club cards. Their produce is only average or less. I don't know who is their produce buyer or if this is done on a district or corporate level, but more than twice since the NG opened in Chula Vista have I had to return fruit due to frost damage. Thier bananas are ALWAYS 69 cents per lb. Seafood is expensive and there are never any sales. Other prices are about the same as the big chains. So I don't really know what all the excitement is about.

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Avatar for user 'CaliforniaDefender'

CaliforniaDefender | February 21, 2013 at 12:41 p.m. ― 1 year, 8 months ago

What a lousy advertisement. This is not journalism nor is it even truthful.

"Barrio Logan residents used to have almost nowhere nearby to purchase fresh fruits, meats and vegetables."

False.

An Albertsons is 1 mile away and Ralphs 1.5 miles away from this new store AND both are close to trolley stops if the short mile walk is too much.

But look across the street! There is Baja Produce and FOUR more markets nearby: Ponderosa, Rancho Fresco, La Central, and Crosby. All will probably go out of business now.

At least Mission did some real reporting here: Northgate Gonzalez is anti-union with high prices. But, "it's like being in Mexico." Sounds like fun.

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Avatar for user 'Crolley40'

Crolley40 | February 22, 2013 at 4:16 a.m. ― 1 year, 8 months ago

Not just from racial demographics change particularly noticeable in certain counties as S.D or L.A and the whole state of CA compared with Midwest, and peoples' demand for their ethnic eateries, greater social interraction, so called assimilative effect brings positive impact of advertising its diverse ethnic cuisinary. In addition to this transformation and attitude change of trying a new ones (of others) peopels' appetitie and inclination are getting more health aware, diversifying their diets away from traditional processed and fast foods to prefer greater home cooks. It's not just to resolve to be a vegetarian, or health conscious but (as Americans put higher trust on oriental medicines like acupuncture than before) they'd feel less weird & yuke trying what they have not tried before, like fried grasshopper tacco maybe?

Like a one (Korean mart)- Zion or something near convoy&mercury intersection with Balboa blvd, many ethinic marts and groceries sprawling have great advantage and potential in the aspect of potential number of consumers (which are ever more diversifying), and produces available by relatively cheap workforces (as migrant guest worker programs and legal basis for their residency in exchange for work programs plus new immigration reform measure to ensure their work permits), plenty of still vacant fertile soils to be alloted for harvest of ethnic veggies, and so called 'ideal variation' that import some of ethnic variety making skills from their country of origin, and combine that with more plentiful produces & livestocks raised and harvested in U.S - these can be relatively scarcer in ethnic country of origin!

Now the greater stake for ethnic markets' sales figure hike has to do with what marketing strategies restaurants and the community as a whole to utilize for people outside its ethnic boundary become more used to those ingredients and feel lesser shy shopping at those places. Farmers' market is one such beneficial opportunity outside conventional big chains for consumers to find greater choices grown by local and ethnic farmers. There're organic choices and healthier items at these ethnic marts also.

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Avatar for user 'Crolley40'

Crolley40 | February 22, 2013 at 4:21 a.m. ― 1 year, 8 months ago

I was gonna add that thanks to the effect of new FTA pact with U.S there'd be more choices of meats and produces, and other processed items directly imported from S.Korea, in addition to multiplying crop Hs & dairy produce available there. I think all these factors can be only beneficial to these ethnic chains.

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Avatar for user 'Crolley40'

Crolley40 | February 22, 2013 at 5:20 a.m. ― 1 year, 8 months ago

Since I had to be more specific in calculating positive outcomes & prospect of ethnic markets, to analyze what products will be potentially most popular to those who could not find those items at some as Albertson's, Ralph's, or Safeway.. I find some canned fish like tuna, or mackerel pikes.. Some Korean brand (Dong **-i won't specifiy, since it maybe sensitive) canned tuna has better quality and taste than U/S made like mermaid brand (chicken of the s), using better quality portion of yellowfin/ or bluefins with olive oil/ got lesser sodium version also. Some mushroom species wild & harvested in mountaineous regions of Washington St, aren't that wholly plentiful or well known to other ethnic population, but not that scarce to be unfit marketed at groceries, so they can be found at some ethnic chains, and can make excellent dishes i heard. Some seafoods as abalone, sea cucumber, sea urchin, blue crabs harvested from offshore Boston or Maine, Dungeness & king crabs not from local waters but perhaps air delivered from Alaska are good bets, since some pacific abalones & sea cucumbers can be stir fried and make good dishes also. And some of thse sea items are better quality than those found at other U.S chains. Dried seaweed can be more accessible at these ethnic chains near future due to higher N. of imports from Korea, and they are not easily perishable compared to other soft natural foods. John Hopkins in dietary publication (i'm not sure who' or what published) doctors found Korean seaweed soup has credible health effect especially to the pregnant women. Some of other produces and seafood & meat items are found none at other U.S chains! Ethnic markets from its enhanced marketing and keeping the order (price, sanitation in store, English specified tags so on) of their management seem to have ever brighter prospect..

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Avatar for user 'DeLaRick'

DeLaRick | February 22, 2013 at 1:02 p.m. ― 1 year, 8 months ago

I agree in principle with the substance of concerns regarding big-box stores' or supermarkets' unfair business practices. No one wants small markets located in depressed economic zones, where some owners have performed miracles just to stay open and keep providing services, to go extinct. However, anyone suggesting that Latinos should be forced to shop at Vons or Ralph's so that they can better assimilate is culturally-bigoted.

The marketing principle that people like familiar things and will spend money to purchase them is not revolutionary. Debates on how immigrants become residents and citizens is a worthwhile practice in civics. Believing that immigrants and ethnic minorities should suppress their culture on non-legal issues is close-minded and racist.

I wasn't aware that people had to be coerced or tricked into buying Mexican food. People the whole world over appreciate and crave it. Take a look around and get with the times.

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Avatar for user 'Crolley40'

Crolley40 | February 24, 2013 at 4:35 a.m. ― 1 year, 8 months ago

I was able to receive much feedback and insights from the previous kpbs program Envision S.D which brought issue concerning mass raised inside fence & hormone injected cattles in imperial valley, or certain cross hybrid of chickens fed with corn, fish meals & chicken feather specified for consumer demand (to yield greater breast meat for instance), mostly grown inside factories but only in limited numbers grown with better feeds and environment to be marketed at local farmers' market, fishes 50percent of which we eat are farm raised (not wild ones as we hope for!), and the problem arised with such aquaculture and harmful environmental impact both in water degradation and dwindled wild stock (from imbalance in ratio of fish feed required to harvest farm raised ones). And in tackling this dilemma of natural fish feed scarcity, a new concern arised with alternative feeds as cattle parts, soy based protein, etc that can have human health concern of its own by potential transmission of mad cow disease for example. (and it said, certain fish as salmon on its farm raised one has as much or in greater quantity of omega 3 acid which's already known to be beneficial to cardiovascular disease, osperoporosis, or even recently found pretty effective remedy for brain degenerative D, or CTE. ) And finally, in calculation of economic viability in growing certain produces locally vs equally contentious issue with non organic ones (with pesticide & other chemical fertilizers), and peoples' preferrence selecting at local stores. But though it was such an informative program (in some aspect, arousing consumers' awareness), I regret it could cover beyond the status quo spotlighting peoples' buying pattern.

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Avatar for user 'Crolley40'

Crolley40 | February 24, 2013 at 4:35 a.m. ― 1 year, 8 months ago

There's much more in explaining why people opt to certain produces or meats when these appear to be less supportive of local economy, environment (regional water &soil conserv. in ecological aspect, but largely relevant with climate change issue also), and most consumers with basic knowledge in these issues already know their shopping preferrences will impact the local economy, and environment these ways, (though they'll opt not to specifiy upon request of their opinions- I'm not a environment & sustainability guy but already know these myself) but they at least know how to balance their budget supporting kids, and other living costs other than food purchase. Farmers' market- that I usd to love patron myself! for their organic & locally beneficial causes- isn't available 24-7 and can rarely be found in certain areas probably lower income districts or otherwise the products available if any in these areas can be lesser in ideal selections or quality of products than up scale districts for example. And as I observed those held every Tue at Santa Barbara, or well popular one held at San Luis Obispo higuerra st every Thur. some of their more descent commodities have higher price tag than ones found in conventional big chains. For instance, some sold at Trader Joe's are touted as grown less environmentally harmful ways like most dairy products, and poultry but significantly values more than those found in other stores. Well.. It's maybe indeed people's choice what suppliers make readily available to them like Australian imported orange than allegedly better tasting S.D grown ones which are exported to other corners outside U.S in good prices. But I see in more cases, the marketing pattern by suppliers has less to do with consumer preference but has more to do with the scarcity of it.. I mean the laternatives for consumers with limited amounts of money that could be spent to buy better quality and in some cases locally beneficial products. To finish by giving a simple anecdote, many consumers shopping at groceries and eating at restaurants in S.Korea has begun to buy and eat American beef in higher quantities and occasions than past not becuase their once had fear of mad cow disease has drastically disscipated now, but more likely becuase they more than ever find it less sustainable to buy domestic beefs- that people in no doubt know retain excellent taste and quality- particualarly at this recessed global economic period, and that's a long distance imported from U.S or Australia or some other European countries in the case of other meats like pork. Well .. how come the program has neglected this point from American consumers' persepctive?

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Avatar for user 'Crolley40'

Crolley40 | February 24, 2013 at 4:45 a.m. ― 1 year, 8 months ago

I rushed and see errors/ descent- decent/ lesser ideal selections

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Avatar for user 'Crolley40'

Crolley40 | February 24, 2013 at 5 a.m. ― 1 year, 8 months ago

Lowered distribution route & cost thru more number of co-op & certified vendors at farmers' market (than in turn create diversity in product choices for consumers) will motivate poeple to buy more locally and less of canned &processed items, fastfoods, or meat and produce imported outside U.S

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Avatar for user 'mpadilla'

mpadilla | February 26, 2013 at 10:26 a.m. ― 1 year, 8 months ago

This is what the American Dream is all about: The private sector is where your political leverage is; it is ,quite literally in this case, where both liberals and conservatives can break bread. Free-enterprise is where the dynamics of innovation and ingenuity create self sustainability, independance, and cultural preservation. The public sector is static and subject to policies that may work against a people.

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Avatar for user 'Missionaccomplished'

Missionaccomplished | February 26, 2013 at 2:07 p.m. ― 1 year, 8 months ago

The private sector is preacarious. More so than ever. Money needs to circulate, but other than that, it is a risky venture. Not for everyone. (Look at Fresh & Easy). As far as groceries go, that market has become overstaturated--even so one must go to more than one to purchase all we need.

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