Cover Story Vol 57: Sriracha

01
Jun

SRIRACHA: THE AMERICAN DREAM

Sure, Sriracha is a delicious, world-famous hot sauce, but it’s also something more: It’s an entrepreneurial wunderkind. It’s the American Dream, bottled up and sold.

When you grab a bottle of Sriracha — like so many of us do — squeeze it and spread it all over your food, do you know what you’re really doing?

No, you’re not just adding some spicy flavor to your lunch or dinner.

You’re actually tasting the American Dream.

Does that sound like we’re exaggerating? A hot sauce? The American Dream? Trust us, it’s absolutely true.

As much as Sriracha has become a ubiquitous part of our lives these days, how much do you really know about Sriracha? What’s its story? Where did it come from? And how did this hot sauce that does almost no marketing or advertising become so damn popular?

Oh, there are many questions to be answered about sriracha. We’ll get there, but know this first off: The Sriracha story is one that any entrepreneur from any background can relate to. It’s a story about innovation, about making products that resonate with people, about following your heart and about holding onto your values.

This is about so much more than a delicious sauce. But none of the rest would work if the sauce wasn’t, in fact, delicious.

 

HOW IT ALL BEGAN

If the man who invented Sriracha was louder and wanted to make a bigger deal of himself, everybody in this country would probably know him. But that’s never been David Tran’s style.

He didn’t invent Sriracha because he thought it was a business idea that would make him rich. He invented Sriracha because he wanted it and if he didn’t make it, who would?

Tran, now 72, came to the United States from Vietnam in 1980. He had nothing at the time — no money, no job, not even a hot sauce he loved. He began his journey in Los Angeles, which had a thriving Southeast Asian community, but it didn’t have the type of hot sauces he loved back home.

So he made one. He had done the same in Vietnam and figured it was needed even more in the U.S. So he started by selling it on the street in 1980. His sauce — made with fresh jalapeno peppers — soon built enough momentum that he would deliver it to local markets, which would sell it on their shelves. And just like that, a company was born.

So Tran formed Huy Fong Foods, with no idea of what it would become. He chose the name because the ship he traveled to the U.S. in was named the Huey Fong — so it was natural for an immigrant bringing a new product to his new country to name it after what got him there.

“I started the business with my eyes closed. There were no expectations at all,” Tran told Quartz back in 2013, back when he came out to seclusion and started to grant more interviews.

By then, Sriracha had gone from a side-of-the-street hot sauce company to one of the most-sought after condiments in the world. Sure, ranch is nice and popular, but Sriracha packed a kick you couldn’t get anywhere else.

Tran and Huy Fong Foods are naturally mysterious. He’s not one of those moguls who goes around talking about his sales figures and how much money he’s making. But in 2013, it was reported that Huy Fong Foods sold 20 million bottles of Sriracha, which is $60 million worth. By 2015, sales had reached $80 million.

That’s no small business. That’s an empire.

 

THE SECRETS OF SRIRACHA

There are a number of things that makes the Sriracha story almost unbelievable and we’ll start with this one.

  • Since 1980, when he started selling the hot sauce, Tran has never raised the price. It costs what it costs. If production costs go up, he eats that cost. If he moves to a bigger plant and needs to buy a bunch of equipment — like he did in 2012 when he opened a $12 million, 650,000-square foot factory — he doesn’t pass that onto consumers.
  • Tran has never advertised his product, yet word-of-mouth has made sales jump basically every year it’s been around. Some years, sales increase by as much as 20 percent, according to the Los Angeles Times.
  • One thing that Tran won’t compromise: he only uses fresh peppers in his sauce. So he can’t import them from anywhere. Instead, he has a long-standing relationship with a SoCal farm that grows all of its peppers. Underwood Family Farms is about an hour from the Sriracha factory. Pepper season is only about 10 weeks and in that time, all the peppers for the year will be harvested. Just how much? Well, it was 100 million pounds in 2013.
  • Even though Sriracha is a huge product, it spent so long playing by old-school rules. It didn’t have social media accounts until recently. It didn’t employ sales people. It sold directly to a handful of wholesalers, who spread the sauce all around the country. But if you ask Huy Fong Foods how many stores its products were in, it wouldn’t have known.
  • There’s no trademark on Sriracha, which is one of the reasons you see the flavor pop up on other types of products frequently. Tran doesn’t mind either. He says it encourages other businesses to use his product to create new things — whether it’s someone making Sriracha-flavored chips, someone making T-shirts with their famous Rooster logo or someone making Sriracha Halloween costumes.

“Everyone wants to jump in now,” Tran told the Los Angeles Times in 2015. “We have lawyers come and say ‘I can represent you and sue’ and I say ‘No. Let them do it.'”

 

THE AMERICAN DREAM

David Tran, if he wanted to, could be an ever richer man that he already is. He’s courted all the time by companies that want to buy Huy Fong Foods and take over Sriracha.

He’s not interested in that idea. In fact, his answer is:

“People who come here are never interested in the product, only in the profits,” as he told Quartz in 2013.

Remember, he wasn’t trying to become a millionaire; he was trying to make a hot sauce he was passionate about. There’s a lesson in there. And you don’t have to look too deep to find it.

Money isn’t exactly the main motivator in Tran’s life. Rather, he wants to make great hot sauce, make customers happy and continue to provide for his family. Eight members of Tran’s family work for Huy Fong Foods, including his son who is now the president of the company and his daughter, who is vice president.

Now think about this: The Sriracha story is what every person who ever starts a business wishes would happen. Tran went from having nothing to having an empire at his fingertips.

Tran went from an immigrant who came to the U.S. looking for “life, liberty and the pursuit of happiness” and turned that into a world-renowned brand and business that will provide for his family for generations.

If that’s not the American Dream, what is?


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