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, PHILIP MORRIS U. S. A. f To: From: Subject: . 1 1)J y ~ t Mr. Paul Gauvin 7,~ r VV'~wio r~ ~,'C Myron Johnston ~ ~ The Hispanic Market* ~~ INTRODUCTION Da te: February 10, 1983 In her memo of October 28, 1982, Louise Wu described trends in the brand and type preferences of Hispanics. In this memo I have attempted to describe the various Hispanic subgroups in terms of age, socio-economic status and residence, as well as smoking prevalence, cigarette consumption, and brand and type preferences. The early tabulations from the 1980 Census of Population showed a total of 14,605,883 Hispanics in the United States. Of these, 60 percent are Mexican, 14 percent Puerto Rican, six percent Cuban, eight percent of Central or South American ancestry, and 12 percent "Other Spanish." People of Spanish origin constituted 6.4 percent of the population of the United States in 1980 and are the fastest growing ethnic group. Of persons of Spanish ancestry, over 70 percent speak Spanish in the home, and of those who speak Spanish in the home 28 percent speak English not well (18.7 percent) or not at all (9.5 percent). Where Do They Live? The population of Spanish origin is heavily concentrated in certain areas. Geographically, 31.1 percent of the Hispanic population lives in California, 20.4 percent in Texas, 11.4 percent in New York, 5.9 percent in Florida, and 4.4 percent in Illinois. In terms of density, the highest concentration is in the Southwest. Persons of Spanish origin constitute 36.6 percent of the population of New Mexico, 21.0 percent of the population of Texas, ~19~i9 percent in California, 16.2 percenn Arizona, and 11.7 percent of ~population of Colord!!'6. In no other state do they account for more than ten percent of the population. *In this memo, the terms "Spanish Origin,", "Spanish," and "Hispanic" are used interchangeably. Data sources used for this memo include tabulations of data from the 1980 Census of Population, various issues of Current Population Reports of the Bureau of the Census, issues of Monthly Vital Statistics Reports from the National Center for Health Statistics, the Public Use Tapes from the U.S. Public Health Service, and the data tapes from the 1981 and 1982 Tracking Studies conducted by the Marketing Research Department. lNTER-OFFICE `CORRESPONDENCE RICHMDND, YIRGIN A ~

2 ighty five percent of the persons in the United States of_Spanish origin live in nine states. The states, with their Hispanic population and t~ent of the population of those states that is of Spanish origin is as follows: ' Hispanic Population Percent State (Thousands) Hispanic California 4544 19.2 Texas 2986 21.0 New York 1659 9.4 Florida 858 8.8 Illinois 636 5.6 New Jersey 492 6.7 New Mexico 476 36.6 Arizona 441 16.2 Colorado 339 11.7 No other state has more than 165 thousand persons of Spanish origin. California The single largest concentration of people of Spanish origin is in southern California. Nearly one-seventh (or 2.1 million) of all persons of Spanish origin in the United States live in Los Angeles County, and another million live in other cities in the 400 mile-long urban corridor that stretches along the Pacific from Santa Barbara to San Diego. The counties, their Hispanic population and the percent of the total population that is of Spanish origin is as follows: ount Hispanic Population (Thousands) Hispanics as Percent of Total Population ~ Los Angeles 2066 27.6 7' q8s Orange 286 14.8 t~q3Z San Diego 275 14.8 San Bernardino 165 18.5 Riverside 124 18.8 Ventura 113 21.4 Santa Barbara 55 18.5 _ ~ 2~ --~-- ~3~~,t ~ These counties, with 3.1 million Hispanics, contain nearly 68 percent of the Hispanic population of California. Another 580 thousand people of Spanish origin live in the San Francisco-Oakland and San Jose SMSA's (Standard Metropolitan Statistical Areas), where they constitute 12.7 percent of the population. Roughly 90 percent of the persons of Spanish origin in California are Mexican.

3 New York Of the 1,659,245 persons of Spanish origin counted in New York in the 1980 Census, 84.7 percent lived in New York City, where they accounted for 19.9 percent of the population. An additional 369 thousand live in northern New Jersey (75 percent'pf the Hispanics' in New Jersey) and another 59 thousand in other counties that make up the New York SMSA. Thus the New York, Jersey City, Newark, and Paterson-Clifton-Passaic SMSA'a have a e anic population of over 1.8 mil n and represent the second largest concentration of persons of Spanish or n. e spanic population of the Boroughs and other portions of that area, together with their share of the total population, is as follows: Borough or SMSA Hispanic Population (Thousands) Hispanics as Percent of Total Population Bronx 397 33.9 Brooklyn 392 17.6 Manhattan 336 23.5 Queens 262 13.9 Staten Island 19 5.4 Other New York SMSA 88 4.3 Jersey City SMSA 145 26.1 Newark SMSA 132 6.7 Paterson-Clifton-Passaic SMSA 62 13.9 About 60 percent of Hispanics in New York state are Puerto Rican and another 30 percent are of Central and South American origin. Florida The third largest concentration of Hispanics is the Miami area. Of Florida's 858 thousand Hispanics, 581 thousand, or nearly 68 percent of the state's total, live in Dade County, where they constitute 35.7 percent of the population of the county and 55.9 percent of the population of the city of Miami. There is a much smaller conce tration (about 80 thousand) in the Tampa-St. Petersburg area, and the rest are dispersed throughout the state, primarily in other metropolitan areas. Florida's Hispanic population is, of course, predominantly Cuban, although there are also large numbers of Puerto Ricans, Mexicans, Central and. South Americans, and persons of other Hispanic origin. Illinois Of the 636 thousand Hispanics in Illinois, 518 thousand, or over 91 percent of the total, are in the Chicago SMSA, and 422 thousand in the city proper. Even so, they constitute a relatively small proportion of the population--8.2 percent of the population of the SMSA and 14.0~percent of the population of the city. They are predominately Mexican ~.

4 Texas and the Mountain States While Hispanics in Florida, Illinois, New York, and, to a lesser extent, California, tend to be concentrated in relatively few major metropolitan areas, in Texas and the southern Mountain states they constitute about the same proportion of the 'population in non-metropolitan areas as in SMSA's. Hispanics in those states are overwhelmingly Mexican. Major concentrations of Hispanics in those states, and their percent of total population are as follows: Hispanic State and Population SMSA (Thousands) Hispanics as Percent of Total Population Texas San Antonio 482 44.9 Houston ) 449* 14 5 Galveston-Texas City . Brownsville-Harlingen-San,Benito \ 392* 79 5 McAllen-Pharr-Edinburg J El Paso 297 . 61.9 Dallas-Fort Worth 250 8.4 Corpus Christi 158 48.5 Austin 94 17.6 Laredo 91 91.5 Other Southwest Phoenix, Arizona 199 13.2 Denver-Boulder, Colorado 173 10.7 Albuquerque, New Mexico 164 36.1 Tucson, Arizona 111 21.0 Las Cruces, New Mexico 50 52.1 *Combined adjacent SMSA's The Hispanic Populations It should be remembered that there is not one single monolithic Hispanic market. There are, instead, three distinct Hispanic subgroups (Mexican, Cuban, and Puerto Rican) and two other subgroups, Central or South American, and "Other Spanish." This last group is a catchall and includes people of Spanish.origin from the Philippines, Spain, and elsewhere. Many data sources combine these last two subgroups for analytical purposes, and that convention has been followed in the brief descriptions that follow, although where availability of data permit, data will be shown separately for the two components of this subgroup. ,

5 1. The Mexicans Largest of the groups are the Mexican-Americans, who account for about 60 percent of all people of Spanish ancestry in the United States. They are, as noted above, concentrated in the Southwest, with a much smaller concen- tration in the Chicago area. The degree of assimilation of any ethnic group into the dominant culture can be measured fairly well by the percent of that group that is of mixed ancestry (German-English, for example). While 46 percent of the total United States population is of mixed ancestry, over 88 percent of the Mexican-Americans are of single (Spanish) ancestry. They are more affluent than the Puerto Ricans but markedly less aff luent than the other two groups. They are the second youngest of the Hispanic subgroups, with a median age of 21.4 in contrast to the median age of 30.7 for the non-Hispanic populat~ Of all of the Hispanic subgroups, TRU08~4exicans are the least urban, although they are still more likely to reside in metropolitan areas than the non-Hispanic population: Of the Mexicans; 20.7 percent live in nonmetropolitan areas as opposed to 34.1 percent of persons not of Spanish origin. 2. The Puerto Ricans Second largest of the three main subgroups are the Puerto Ricans. They are only slightly more assimilated into the dominant culture than the Mexican- Americans (17 percent are of multiple ancestry) and are by far the poorest. They are heavily concentrated in the New York metropolitan area. Eighty five percent of the persons of Spanish origin in New York State live in New York City. In all of the state outside New York City, only 2.4 percent of the people are of Spanish origin. This is the youngest group of Hispanics, with a median age of 20.7. The Puerto Ricans also live almost entirely in metropolitan areas: Only 5.5 percent live in nonmetropolitan areas. 3. The Cubans Smallest of the three groups are the Cubans. They have retained their ethnic identity roughly to the same extent as the Puerto Ricans (again 17 percent are of multiple ancestry), but are close behind the "Other Spanish" in affluence. They are heavily concentrated in the Z" Standard Metropolitan Statistical area, where persons of Spanish origin (mainly Cuban) constitute 35.7 ercent of the population. They are the most urban of the groups:TIyM3 percent of Cubans in the United States live in nonmetropolitan areas. While only 11.8 percent of the non-Hispanic population of Florida lives in the Miami SMSA, 67.7 percent of the Hispanic population lives there. They are also the oldest of the groups, and their median age of 33.5 is higher than of the total non-Hispanic population. 400~

6 '4. The "Other Spanish" The remaining group is the one referred to as "Other Spanish," i.e. of Spanish origin but not of Mexican, Cuban or Puerto Rican origin. In contrast to the Mexican-Americans, 44 percent of this group is of multiple ancestry-close to the figure for the total U.S. population. They are more broadly distributed throughout the country than any of the other three groups, but, even so, tend to be concentrated more in the Northeast and West. As could be inferred from the high proportion with multiple ancestry, they are more assimilated into the dominant culture than any of the other three groups and are also the most affluent of the four Hispanic groups. Included in this group are the black Hispanics, of whom there were 391 thousand in 1980, or 2.7 percent of the total population of Spanish ancestry. This "Other Spanish" group is not what we think of when we refer to the "Hispanic" market. The Age-Distribution of Hispanics It is a very young population, with a median age of 23.2 years, as opposed to 31.3 years for all whites and 24.9 for blacks. While 27.6 percent of the non- Hispanic population is under 18 years of age, 41.2 percent of the Hispanic population is 17 or younger. Another illustration of the youthfulness of the Hispanic population is the proportion of the total population in various age groups that is of Spanish origin: Age Percent of Group Spanish Origin <5 10.2 5-9 9.2 10-14 8.1 15-19 7.6 20-24 7.4 25-34 6.8 35-44 6.1 45-54 5.2 55-64 3.6 65+ 2.8 The following table shows the age distribution of the Hispanic population (with the non-Hispanic population shown for comparison). Age Distribution of the Hispanic, Black and White Populations (March 1980 data) I Group Percent Percent Percent Median Under 18 18-65 65+ Age Mexicans 42.4 53.9 3.7 21.4 Puerto Ricans 44.3 53.0 2.7 20.7 Cubans 29.7 60.6 9.7 33.5 Central and South Americans' 34.4 62.4 3.2 25.1 Other Spanish 42.2 51.1 6.7 22.1 All Whites 26.9 61.2 11.9 31.3 Blacks 35.3 56.8 7.9 24.9

7 The age distributions of these groups are shown in greater detail in Chart 1. Of particular significance is the very large proportion of the Mexican, Puerto Rican and "Other Spanish" subgroups that are under age 18, and therefore below what we generally regard as part of the "smoking age" population. This, of course, is due to the substantially higher fertility rates of those groups. The fertility rate (births per thousand women 15-44 years of age) f or Mexican women of 119.3 in 1979 (the latest year for which data are available) was 48 percent higher than for Puerto Rican women (80.7) and three times the rate for Cuban women (39.7). For non-Hispanics, the rate was 63.2. Similarly, data on family size show that nearly one out of ten Mexican families had seven or more persons in 1979, compared with fewer than one out of 35 non-Hispanic families. Socio-Economic Characteristics of Hispanics There are substantial differences in the socio-economic characteristics of the various'Hispanic groups, as alluded to above. The distributions of the various Hispanic populations, as well as for blacks and total whites (including Hispanics) by family incomes are shown below and in Chart 2. Income Distribution of the Hispanic, Black and White Populations (March 1980 data) .Percent Less than Percent $7,500- Percent $15,000- Percent $25,000 Median Group $7,500 $14,999 $24,999 and over Income A11 Hispanics 22.0 29.5 27.9 20.7 $14,569 Mexican 19.3 30.0 31.1 19.6 $15,171 Puerto Rican 41.8 26.5 18.4 13.3 $9,855 Cuban 14.3 27.7 28.1 29.8 $17,538 Other Spanish 18.3 30.5 25.5 25.8 $15,470 Whites 11.2 22.0 30.2 36.7 $20,502 Blacks 32.0 28.9 22.0 17.0 $11,644 Of the Hispanic subgroups, the income distribution of the Cuban population is most similar to that of the total white population, and the Puerto Ricans are by far the poorest of the groups. In view of the great differences between the Mexicans and Puerto Ricans in terms of income, it is rather surprising that the differences are much less marked in terms of occupation. The distributions by occupation are shown below and in Chart 3.

8 Occupational Distribution of the Hispanic And Non-Hispanic Populations (March 1980 Data) Occupational Class ' Mexicans Puerto Ricans Cubans Other Spanish Non- Hispanics Upper White Collar 12.4 12.6 21.4 21.5 28.2 Clerical and Sales 18.8 22.5 20.3 22.2 25.2 Craftsmen, Foremen 14.9 10.4 12.4 13.6 12.7 Operatives, Laborers 33.0 34.8 34.5 24.4 18.0 Farmers, Farm Labor 4.6 1.1 0.2 1.7 2.4 Service Workers 16.3 18.6 11.3 16.6 13.4 In view of their geographical distribution, it is reasonable that more of the Mexicans than of the other groups would be engaged in agriculture. Again, the distributions of Cubans and "Other Hispanics" are more like those of non-Hispanics than are the distributions of the Mexicans and Puerto Ricans. Hispanic Smoking Prevalence and Consumption Because the four subgroups of Hispanics differ so greatly in ter.ns of age, occupation, family income, and geographic location, it would not be surprising to find that they also differ in smoking patterns. This is indeed the case. The following table shows smoking prevalence for various racial and ethnic groups, including the four subgroups of Hispanics. Note that among males, smoking prevalence is about the same for Hispanics as for males in general, but that Hispanic females, and particularly the Mexicans, have a much lower smoking prevalence than non-Hispanic females. Percent Who Are Regular or Occasional Smokers Race or Ethnic Group Males Females Total All Whites 38.3 31.4 34.8 Non-Hispanic Whites 38.3 32.0 35.2 White Hispanics 38.9 22.5 30.7 Puerto Rican 42.2 27.5 34.8 Cuban 34.3 29.5 31.9 Mexican 41.3 18.9 30.1 Other Spanish 31.4 23.7 27.6 All Blacks 44.2 32.2 38.2 Black Hispanics 37.8 30.2 34.0 Orientals 36.4 16.8 26.6 American Indian 57.6 33.0 45.3 Other 39.1 27.6 33.4 Total 38.9 31.2 35.0

9 The sample is large enough that is it possible to calculate the smoking prevalence by age separately for whites, blacks and Hispanics. These data are shown below and in Chart 4. Hispanics Whites Blacks Age Group Males Females Males Females Males Females 17-24 27.6 24.3 34.6 33.9 35.6 30.1 25-34 46.9 24.6 45.1 34.6 49.7 36.3 35-44 44.6 24.6 44.1 38.5 49.8 39.0 45-54 45.5 20.7 43.5 34.6 51.9 39.1 55-64 40.8 16.3 39.0 30.0 48.3 33.3 65+ 22.9 16.8 21.8 16.4 29.0 9.7 As noted above, it is among the females that smoking prevalence differs most between Hispanics and non-Hispanic whites, thus Chart 5 shows the smoking prevalence by age and sex for these two groups. A couple of points are worthy of mention in regard to smoking prevalence by age: 1) The very low smoking prevalence of 17-24 year-old male Hispanics as compared to non-Hispanics in this age group is probably an artifact and due to the different age distributions of the two groups within the 17-24 age group, i.e., among non-Hispanics there are about the same number of people age 17 as age 24, but among Hispanics, because of the higher birth rate, 17-year-olds greatly outnumber 24-year-olds, and because younger people in this age group are less likely to smoke than the older ones, the reported prevalence for the 17-24 age group is depressed. 2) The fact that smoking prevalence among Hispanic females is flat through age 44, rather than showing the normal pattern of an increase from the youngest age group suggests that smoking prevalence among young Hispanic females is increasing. A more detailed analysis of smoking incidence reveals that this is indeed the case. Chart 6 shows the ages at which Hispanic females of three different age cohorts began to smoke. Young females are thus becomming an increasingly important segment of the Hispanic smokers. Hispanics differ from non-Hispanic whites not only in smoking prevalence but also in cigarette consumption per smoker. The average daily cigarette consumption of Hispanics is 14.8 per day, in contrast to 22.1 per day for non-Hispanic whites and 14.2 per day for blacks. Because a larger proportion of people of Spanish origin than non-Hispanics are under age 18, and because Hispanic smoking prevalence and average daily consumption are both lower, Hispanics are much less important in terms of smokers or cigarette sales than their numbers would suggest. Thus, while Hispanics constitute 6.4 percent of the total population, they constitute 5.3 percent of the population 18 and over and 4.6 percent of the smokers, and account for only 3.3 percent of cigarette sales. This same pattern, of course, is also true of blacks, although the difference is not as dramatic: Blacks account for 11.7 percent of the population and 7.8 percent of sales. The relative importance of Hispanics, blacks, and non-hispanic whites in terms of total population, population over age 18, smokers, and sales, is shown in Chart 7. I

There are also differences in average daily cigarette consumption per smoker among the various Hispanic subgroups. Mexicans, at 11.8 per day, have by far the lowest average daily consumption. Puerto Ricans and Cubans both average slightly over 18 cigarettes per day, and "Other Spanish" average slightly over 17 per day. Thus,• even within the Hispanic market, the relative importance of the different subgroups, in terms of both smokers and sales, is not what one would infer from population data. While the Mexicans account for 60 percent of the Hispanic population, they account for less than half of the cigarettes sold ~t4 to Hispanics. At the other extreme are the Cubans, who constitute f~..3 percen t of the Hispanic population but account for about ten ~~ percent of cigaretes sold to Hispanics.. The relative importance of the subgroups in these four measures is shown in Chart 8. Their Type and Brand Choices The Hispanics also differ from other whites in their choice of types of cigarettes. In general, they are more likely to smoke a menthol, and less OY likely than non-Hispanic whites to smoke a,,J(jQ__ ri garette or a low delivery brand. The following tables show the percent of non-Hispanic whites, Hispanics, Orientals, and blacks who smoke each type of cigarette. Percent Who Smoke Different Types of Cigarettes, Males Type Non-Hispanic Whites Hispanics Orientals Blacks Nonfilters 10.2 8.2 5.4 8.7 85mm Full Flavor 29.0 33.5 26.4 16.7 85mm Low Delivery 22.3 15.7 20.3 6.1 100mm Full Flavor 7.8 8.7 • 6.2 6.5 100mm Low Delivery 9.7 7.2 10.9 3.2 85mm FF Menthol 7.9 12.2 9.4 34.0 85mm LD Menthol 6.8 5.5 • 6.9 10.2 100mm FF Menthol 2.9 4.9 . • 9.4 9.2 100mm LD Menthol 3.5 4.0• • 5.1 5.4 Any Menthol 21.1 26.6 30.8 58.8 Any 100mm 23.9 24.8 i + 31.5 24.3 Any Low Delivery 42.3 32.5 43.1 24.9 t ow4s F1F k-7