--:-- [Sound of a podcast intro]
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Laura Cooper: We got some plums, some limes, some mangoes.
--:-- Jessica Mendoza: That's our colleague Laura Cooper. She's at a farmer's market in Houston.
--:-- Laura Cooper: The market is in a predominantly Hispanic neighborhood. Many of its stalls sell goods imported from Mexico – things like herbs and dried chilies, spicy candy for piñatas, and traditional ceramic products.
--:-- Jessica Mendoza: In one of the stalls, Laura met a vendor named Isabel Aguilar.
--:-- Isabel Aguilar: Isabel was helping a customer buy some moringa seeds, which are used to make tea.
--:-- Laura Cooper: Over the last few months, business at her stall hasn't been great. Isabel says she's noticed that her customers are buying less.
--:-- Isabel Aguilar: They're nervous to spend money. The prices of goods have gone up, and customers have told me that they're struggling. Some have lost their jobs. Others have had their work hours cut. So they're tightening their belts.
--:-- Laura Cooper: And another reason customers aren't spending is fear. Fear of deportation.
--:-- Isabel Aguilar: After Immigration and Customs Enforcement, or ICE, ramped up operations in the community in February, many customers stopped coming.
--:-- Laura Cooper: And Isabel gets it. She doesn't have legal status. And she's been avoiding stores that are rumored to be unfriendly to immigrants, or where she's heard there's a high police presence.
--:-- Isabel Aguilar: No corro riesgos. Así es que se han cambiado las cosas de algún modo.
--:-- Laura Cooper: Trato de no ir a los lugares que se mencionan, pues, para no... Pues porque si no nos quieren, pues respeto eso también.
--:-- Isabel Aguilar: Ni modo.
--:-- Laura Cooper: Isabel says she'd rather not run any risks, and she's changed where and how she shops. Sometimes she just stays home.
--:-- Jessica Mendoza: Like Isabel, many Latinos are hunkering down, and that lost economic activity is hurting some companies' sales.
--:-- Laura Cooper: Here's our colleague Laura Cooper again.
--:-- Jessica Mendoza: The main thing we learned is that people are scared. They are not spending money. Whether that has to do with concerns about immigration and ICE, which we heard a lot, or it has to do with people having their job hours cut so they're spending less.
--:-- Laura Cooper: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Jessica Mendoza: It's Wednesday, June 18th. Coming up on the show, Latino consumers are pulling back, and businesses are feeling the effects.
--:-- Jessica Mendoza: Normally, our colleague Laura Cooper covers the beverage industry, the companies behind drinks like Coke, Sunny D, and Gatorade.
--:-- Laura Cooper: What brought Laura to Houston was a data point that caught her eye from one of the companies she covers, Constellation Brands.
--:-- Laura Cooper: Constellation, which owns Modelo and also Corona, they talked about how they had a drop in sales.
--:-- Laura Cooper: When we say, like, their sales are down, by how much? You know, it's not a humongous number.
--:-- Laura Cooper: Constellation beer sales to retailers fell 1 in their most recent reporting quarter, which was back in April.
--:-- Laura Cooper: Though 1 sounds like not a big number, that's significant because it's the first time that their sales have fallen since 2013.
--:-- Laura Cooper: The drop in sales came largely from Latino consumers, a group that makes up about half of Modelo's customer base in the U.S.
--:-- Laura Cooper: Modelo is currently the most popular beer in America.
--:-- Laura Cooper: So because the Hispanic population is so important to Constellation, they have been open on their earnings calls talking about the softness.
--:-- [Sound of a podcast clip]
--:-- Laura Cooper: Welcome to the Constellation Brands Q4 fiscal year 2025 earnings call.
--:-- Laura Cooper: They also have done a lot of talking to people out in different markets to ask them, are you going to the supermarket? Where are you going? Are you drinking beer? Are you having parties?
--:-- Laura Cooper: And the fact is, a lot of consumers in the Hispanic community are concerned right now.
--:-- Laura Cooper: Two-thirds of them are concerned about higher prices on things like food, gas, and other essentials.
--:-- Laura Cooper: Over half are concerned relative to immigration issues and how those impact.
--:-- Laura Cooper: A number of them are concerned about job losses in industries that have a high Latino employment base.
--:-- Laura Cooper: Another company that reported a loss in sales is Coca-Cola.
--:-- Laura Cooper: And like Constellation, the company has seen Latinos pull back on spending because of inflation and economic uncertainty.
--:-- Laura Cooper: But Coca-Cola also had the added situation of a social media boycott.
--:-- Laura Cooper: Coca-Cola is now being boycotted, guys.
--:-- Laura Cooper: Essentially, earlier this year, there was a video circulating on social media that purported that Coca-Cola had called immigration on its employees.
--:-- Laura Cooper: Coca-Cola has said many times that this is false.
--:-- Laura Cooper: However, the videos and others like it have spread all over social media.
--:-- Laura Cooper: So that obviously had an impact on sales.
--:-- Laura Cooper: But altogether, you know, the boycott, the pullback by Hispanic consumers and like, you know, general inflation issues led to Coca-Cola having a volume drop of 3 percent in North America last quarter.
--:-- Laura Cooper: And that's generally not something that you'll see.
--:-- Laura Cooper: Coca-Cola is a pretty strong performer.
--:-- Laura Cooper: And that kind of shows the impact that's happening there.
--:-- Laura Cooper: And I say that impact goes beyond Constellation and Coca-Cola.
--:-- Laura Cooper: Hispanic spending has been falling across all kinds of industries.
--:-- Laura Cooper: So what other companies are seeing this trend? How widespread is it?
--:-- Laura Cooper: So it's pretty widespread.
--:-- Laura Cooper: Like I said, we've seen it from Constellation brands, which makes Modelo, but we've also heard about it from companies like toothpaste maker Colgate, you know, Wingstop.
--:-- Laura Cooper: To the Hispanic consumer, lower middle income, and where we saw a meaningful pullback in our business.
--:-- Laura Cooper: Boston beer, which makes Twisted Tea and Truly Seltzer. A pullback from the Hispanic consumers.
--:-- Laura Cooper: They're just not going out as much.
--:-- Laura Cooper: So I think that it really spans different retailers and different kinds of things.
--:-- Laura Cooper: So not just beverages.
--:-- Laura Cooper: The Hispanic population has been one that companies want to court.
--:-- Laura Cooper: They want Hispanic consumers that are a huge part of the U.S. population to be buying their products, right?
--:-- Laura Cooper: This is a huge buying group that is really important from a corporate perspective.
--:-- Laura Cooper: Laura talked to analysts, company executives, store owners, and Latino shoppers.
--:-- Laura Cooper: And she heard that across the country Latinos are changing shopping habits in large part because of immigration enforcement.
--:-- Laura Cooper: Specifically in places like Southern California and Texas many immigrants are avoiding liquor stores because of the show ID to make a purchase and they may not want to do that even if they are legally here because they might have a family member or a friend that they think might be put in danger.
--:-- Laura Cooper: There's also situations where Latino shoppers are shifting their shopping to large retail chains, and that's kind of in an effort to blend in in a crowd instead of going to smaller or bodegas or, you know, supermarkets that might primarily serve Hispanic consumers.
--:-- Jessica Mendoza: After the break, Laura goes to a community in Texas that's feeling the financial impact of ICE enforcement firsthand.
--:-- Laura Cooper: Okay, we're going to make a right on 2.3 miles on Hercules Road.
--:-- Laura Cooper: And then we have to do some kind of squiggly thing.
--:-- Laura Cooper: Laura visited a cluster of rural communities in Liberty County, about 40 miles northeast of downtown Houston.
--:-- Laura Cooper: It's a wooded, flat area of Texas that's grown quickly in recent years.
--:-- Laura Cooper: New businesses and homes of all kinds are everywhere, attracting scores of immigrants.
--:-- Laura Cooper: This would kind of be the American dream to live in one of these homes.
--:-- Laura Cooper: These are cute houses, but they vary, right?
--:-- Laura Cooper: Like, that's a trailer that's been converted into a house.
--:-- Laura Cooper: There's a lot of trailers.
--:-- Laura Cooper: Since 2023, the area has been the target of scrutiny from conservatives in Texas.
--:-- Laura Cooper: Some have called the area a haven for undocumented immigrants.
--:-- Laura Cooper: And in February, ICE and the Texas Department of Public Safety, or DPS, launched a high-profile operation.
--:-- Laura Cooper: Tonight, ICE agents descended on a controversial development in Liberty County, targeting criminals and illegal immigrants.
--:-- Laura Cooper: The governor's office said they arrested over 110 undocumented people during the operation.
--:-- Laura Cooper: On her trip, Laura met with a local businessman, Dennis Kim.
--:-- Dennis Kim: I'm curious, what's the best seller here in terms of beverages? Is it Modelo?
--:-- Dennis Kim: Yeah. Modelo, for sure. But everybody, like the contractors, yeah, yeah, everybody.
--:-- Dennis Kim: Dennis grew up in the region, and he's seen it transform over the years.
--:-- Dennis Kim: As the area attracted more Latinos, he's updated what he sells to meet their needs.
--:-- Dennis Kim: Well, I mean, take for example here, we have all like Hispanic inspired like quesos and cheeses.
--:-- Dennis Kim: I mean, this is from, you know, San Salvador, Honduran.
--:-- Dennis Kim: You know, we have different type of, you know, crema or chips.
--:-- Dennis Kim: Like we have a section of imported chips.
--:-- Dennis Kim: And honestly, like these Cheetos, it tastes like Cheetos, but it has more of a corn taste.
--:-- Dennis Kim: Dennis says that when ICE came to town in February, his sales fell by nearly a third.
--:-- Dennis Kim: Since then, sales are back up, but they haven't fully recovered as foot traffic continues to be slow.
--:-- Dennis Kim: And if there's law enforcement in his parking lot, whether ICE or not, Dennis says his customers tend to stay away.
--:-- Dennis Kim: We do notice that people are, you know, sometimes a little hesitant to come out when they see an influx of cars here, you know, like police officers or whatever, DPS and stuff like that, of course, yeah.
--:-- Dennis Kim: Have you had any police or DPS in your parking lot?
--:-- Dennis Kim: Yeah, but usually, I mean, to be honest, for me as an operator and convenience store, I guess I'm kind of used to it.
--:-- Dennis Kim: But we always welcome the local police officers here, you know?
--:-- Dennis Kim: Are you scared?
--:-- Dennis Kim: Of course, of course, especially in this current context, you know?
--:-- Dennis Kim: This is what I think. This is my honest opinion.
--:-- Dennis Kim: I think majority of people have their papers but they might have a relative that does not Right So they don't want their relative to get in trouble or something like that you know So I think that's what causes the fear.
--:-- Laura Cooper: Other store owners told Laura they regularly see ICE agents in their parking lots, which often scares away customers.
--:-- Laura Cooper: Store owners also said that they've seen parents send their U.S.-born children out to buy eggs, milk, and other essentials.
--:-- Laura Cooper: Outside, Laura met with one of Dennis' customers, Manuel Medina.
--:-- Manuel Medina: He stopped by for some gas and a bottle of mineral water.
--:-- Manuel Medina: Manuel is retired, on a limited budget, and he says he's had to cut his spending across the board.
--:-- Manuel Medina: Manuel says that as prices for essentials go up, everyone in the middle class is struggling.
--:-- Manuel Medina: Not just Hispanics.
--:-- Manuel Medina: But he says he's heard from many in his community who are staying home, hoping to avoid ICE.
--:-- Manuel Medina: And he says it's hitting Hispanic businesses hard.
--:-- Manuel Medina: On weekends, food vendors would gather in the area, in parking lots and roadsides, selling tacos and freshly squeezed juice.
--:-- Manuel Medina: But many of those businesses aren't showing up anymore.
--:-- Manuel Medina: And when Manuel walks into a store, he walks in with apprehension.
--:-- Manuel Medina: Because he might run into an ICE agent.
--:-- Manuel Medina: That's the problem, Manuel says.
--:-- Manuel Medina: People aren't shopping.
--:-- Manuel Medina: And while deportations are going on, it will only get worse.
--:-- Laura Cooper: So, Laura, given everything that's going on with economic pressures and the threat of deportation, And is there anything that can be done to reassure Hispanic shoppers?
--:-- Laura Cooper: So that's a good question.
--:-- Laura Cooper: I've asked a lot of people what they're doing to try and get to the consumers, and there's not really an easy answer, right?
--:-- Laura Cooper: I've asked a lot of companies, what are you doing to bring back Hispanic consumers?
--:-- Laura Cooper: And especially with a situation like immigration, it's not a clear-cut answer.
--:-- Laura Cooper: Right. It's not clear what a company can do to change the environment in which they're selling their products.
--:-- Laura Cooper: Right. That's not really something they can control at all.
--:-- Jessica Mendoza: What does this tell you about, like, what's going on in this Hispanic community?
--:-- Jessica Mendoza: I mean, the main theme that I got when we were out there was just, like, there's a lot of fear.
--:-- Jessica Mendoza: And there is a big tightening of the purse strings.
--:-- Jessica Mendoza: Like, it's all about saving money and it's all about being safe.
--:-- Jessica Mendoza: And in places like Houston, where there are new immigrants, I mean, the pullback's going to continue.
--:-- Jessica Mendoza: It's just unless something changes and unless time is just what makes things better.
--:-- Dennis Kim: For Dennis Kim, the owner of Let's Go Market, he says there's not much he can do about the current moment.
--:-- Dennis Kim: What could I possibly do?
--:-- Dennis Kim: Honestly, like, these are all big level nationwide issues, right?
--:-- Dennis Kim: So, and to me, like, in order to keep my head level, I can only control what I control.
--:-- Dennis Kim: Like, for me, maybe the one thing I can control is to have the best possible business here and attract other customers here.
--:-- Dennis Kim: I don't know.
--:-- Dennis Kim: You know, that's part of my everyday, you know, plan.
--:-- Jessica Mendoza: That's all for today, Wednesday, June 18th.
--:-- Jessica Mendoza: The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Jessica Mendoza: Additional reporting in this episode by Arian Campo Flores and Enrique Perez de la Rosa.
--:-- Jessica Mendoza: Thanks for listening. See you tomorrow.
