Census Data Provides Outlook For Future

Ethnicity, demographic changes could impact nutraceutical strategies.

By Greg Kitzmiller

The U.S. is changing. Some of these changes have been revealed in the 2000 census data. An important part of marketing planning is understanding customers and knowing the market. The changes highlighted in the recently released census data make more than interesting reading. These data may affect how we do business in the future.

Why write about the population change as opposed to industry dynamics? The ONLY potential for our products is in people. Changes in the population, when studied, can create changes in thinking about strategy. An in-depth look at baby boomers several years ago showed that they truly have shaped changes, from attitudes about healthcare providers to interest in natural products. The new census data suggests there may be several components of the population driving future trends. Let’s exam some basic facts from the 2000 census data.

The first major news is the growth of the total population. It is significant that not only is the U.S. population large but that it increased by nearly 33 million between 1990 and 2000. This is the largest ten-year population increase ever! This equals four times the population of New York City being added to our country in just ten years. We talk of the baby boom and its significance to the population. The baby boom increase measured between the 1950 and 1960 census was 28 million. The latest ten-year growth topped that by nearly five million. This time, however, it was not all births; it represents a combination of births, a slowing death rate and net migration, as well as changes in census coverage. This suggests the marketer must think through very carefully who the target market for a product is. There is plenty of diversity of age, race and background among this rapidly increasing population.

What does this growth mean to a marketer of nutraceuticals? We live in a dy­namic land of 281 million individuals. This is a land unlike other large populations of India, China or Russia, where in the population there is much poverty. In our population the standard of living is high, discretionary income is high and it is a land of diversity. If a marketer targeted 1% of that population with one usage occasion per week, low for supplements but high for foods, the marketer would net nearly 150 million usage occasions for his or her products in a year. If that product sold for $.25 each usage occasion, that would result in a $37 million business. This is truly a land of business opportunity. Yet we can’t get starry eyed with the sheer size. It may be the dynamic aspect of the population and its diversity that is far more interesting.

Where are all those new people? Every state grew in size for the first time in any census collection. Eight states had population growth of greater than one million people. More significant, those eight states accounted for half of the total U.S. population increase. California and Texas each grew by approximately four million people each! Florida grew by three million. Georgia, Arizona and North Carolina each grew by greater than 1.4 million. Washington and Colorado each grew by about a million. Clearly the South and West are the driving forces in the U.S. population change. In percentages, each of those eight states had double-digit increases, with Arizona growing by a whopping 40% in ten years.

Without inspecting the demographics further one can already see the aging seniors and the Hispanic population having a tremendous impact in these mostly warm or temperate climates. If you are familiar with the culture of California and Texas, the independence of thought, the dynamics of Florida with Hispanics, retirees and those working in the tourist industry, we can start picturing some very important customers for products in these states. Is it a wonder that leading retailer trends toward natural products supermarkets have come from these areas?

If we named runners up, at just fewer than one million in growth, they would be New York and Illinois at over 900,000 each and Virginia at just under the 900,000 mark. Now we begin to see the impact of growth of traditional metropolitan areas. The biggest gain in actual population by metropolitan areas came from: 1) New York metro, 2) Los Angeles metro, 3) Chicago metro and 4) Washington metro. In percentage increase (it is difficult for a megacity of New York to grow by a huge percent but it did grow by just over 10%), the top increases came from Las Vegas at 83%, Naples at 65%, Yuma at 50%, and the following, all between 40–49%: McAllen, Austin, Fayetteville, Boise City, Phoenix, Laredo and Provo-Orem. The sun belt rules in percentage growth of metro areas. Significance? Selling a natural sun block? Or consider again the seniors and Hispanics as driving forces on foods and supplements.

By now you may be asking yourself what grew the least. There were two states plus the District of Columbia with less than 1% growth. North Dakota and West Virginia grew but not by much. And while metropolitan Washington DC grew rapidly, the population in the District actually declined, unlike any state in the U.S. And just to help you shake out of any mold of “most people must be like me,” if you are living in Connecticut or Massachusetts your states ranked 39th and 28th respectively in growth.

What about the Hispanics? Due to changes in the census questionnaire in 2000, questions on race and Hispanic origin are not directly comparable from 1990 to 2000. But that may not matter. Thirty five million persons responded that they are Spanish/Hispanic/Latino in 2000, while 34.7 million persons responded that they are black/African American/Negro. Ten million are Asian, while 211 million are white. Thus, while 75% of the population identify themselves as white, 25% identify themselves as a member of another race.

One key consideration, not reported in these data, is the number of people who only speak Spanish or who speak Spanish as their first language. It is possible that over 10% of Americans are more easily reached with Spanish than English. While there are some cultural differences between those whose country of origin or that of their parents is Mexico or Cuba, Puerto Rico or Central America, they all understand Spanish. How many nutraceutical marketers are ignoring them? NW

Greg Kitzmiller is a marketing faculty member at Indiana University’s Kelley School of Business, Bloomington, IN. He is also co-director of the Global Business Information Network (GBIN) at the Kelley School of Business. He combines international and domestic strategic and marketing management experience with university teaching, professional speaking, executive education and consulting. Mr. Kitzmiller can be reached at 1309 East Tenth St., Bloomington, IN 46405-1701; 812-855-1004; Fax: 812-855-6440; E-mail: [email protected].