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"with the controversy with Mario been called a racist because he was wearing a sombrero and poncho"
Can I get a citation on the extent of that 'controversy'? Change.org petitions, mass Youtube downvotes, organized boycott calls, or even a hashtag?
"And we all know that Nintendo want to avoid any bad press."
But slightly changing the boxart would not avoid any of that press. If Nintendo genuinely feared what a handful of random nobodies on Twitter were saying, they would not be leaving the outfit and associated mechanics in the final product.
"And a lot of companies these days been trying to cater to these loud mouth busy bodies because they're the ones who speaks the loudest."
Nintendo caters to the persistent vocal minorities who spam social media? That must be why they localized Mother 3 in the west and cancelled Federation Force.