The Story of Sriracha

Since starting Ernest Supplies in 2012, I've become fascinated with stories of other entrepreneurs and how they've made it.  Invariably, I've found that success is largely contingent on some level of calculated risk taking, producing something people can connect with and a few sleepless nights here and there.  

The two pieces of advice I always offer people when they ask me about starting a business is to (1) find something you love and are passionate about and make that your business; and (2) just get started - so many people with great ideas pull the plug without ever giving it a shot.

Check out this story from BusinessWeek about David Tran, the entrepreneur founder of Huy Fong, the maker of famous Sriracha hot sauce.

Sriracha Hot Sauce Catches Fire, Yet 'There's Only One Rooster'

By Caleb Hannan on February 21, 2013

The first thing you smell at the Huy Fong Foods factory in suburban Los Angeles is the overwhelming aroma of garlic, a key ingredient in the company’s signature product: Sriracha Hot Chili Sauce. The first thing you see, however, doesn’t make nearly as much sense. In the lobby is a blown-up picture of two astronauts—one Russian, the other Asian-American—hovering in zero gravity in the cramped confines of the International Space Station. Why it’s hanging there becomes clear on closer examination: An arrow superimposed on the photo points to a little green plastic cap, the top of a Huy Fong sriracha bottle floating in the background.

David Tran had the picture hung a few years ago. Tran is the 68-year-old founder and owner of Huy Fong, and the creator of the sauce that has brought his family-run business some fortune and fame as one of the fastest-growing food companies in America. Last year, the company sold 20 million bottles.

The NASA picture represents a milestone for Huy Fong. There’s a theory that space somehow dulls the taste buds. So to ensure its astronauts enjoyed a flavorful meal, the agency’s food sciences division began sending Huy Fong’s sriracha into orbit a decade ago. In the poster, the little green cap is hard to find, but it was all it took for one of the company’s fans, who e-mailed Huy Fong to say he had spotted it.

Such fan mail is not uncommon at Huy Fong—even though the company has never advertised in the U.S. It also has no Facebook (FB) page and no Twitter account, and the home page of its website serves as a kind of memorial to its nonchalant relationship to the wider world: It states plainly that it was last updated on May 10, 2004. Yet despite this aloofness, Huy Fong’s sriracha has earned a passionate following that’s helped make it an icon.

Like ketchup, sriracha is a generic term, its name coming from a port town in Thailand where the sauce supposedly was conceived. When people in America talk about sriracha, what they’re really talking about is Huy Fong’s version. It’s been name-checked on The Simpsons, is featured prominently on the Food Network, and has inspired a cottage industry of knockoffs, small-batch artisanal homages, and merchandise ranging from iPhone cases to air fresheners to lip balm to sriracha-patterned high heels.

Last April, market-research firm IBISWorld identified hot sauce production as the eighth-fastest-growing industry, behind for-profit universities and solar panel manufacturing. IBISWorld noted that in 2012 the industry’s revenue surpassed the $1 billion mark for the first time. It also had grown nearly 10 percent a year over the previous decade, recession be damned. That growth coincides with the burgeoning Asian population in the U.S., which expanded 45 percent in the 2000s, according to the most recent U.S. census. “As that subset grows, it not only demands more sriracha but spreads the word, too,” says IBISWorld analyst Agata Kaczanowska. “It leads restaurant owners to put it out there. And if it’s on the table, people are more likely to try it.”

Much of Huy Fong’s success stems from the simple fact that its sriracha tastes good. Last May, Cook’s Illustrated named it the best-tasting hot sauce on the market, ahead of rivals such as Frank’s Red Hot, Cholula Hot Sauce, and McIlhenny Co.’s Tabasco. Then there’s the clear squeeze bottle adorned with the strutting zodialogical symbol of Tran’s birth year, which has provided Huy Fong sriracha its nickname: rooster sauce. 

Tran grew up in Vietnam. In the 1970s, he had a small business making a similar hot sauce. He was of Chinese descent, and the Vietnamese government had been making life difficult for minorities. So in 1979, he used his modest savings from his business and bought some gold and a ticket on a freighter, the Huy Fong. His destination, freezing cold Boston, offered little in the way of familiar comforts. Within a year, he was making sriracha in Los Angeles.

Tran started Huy Fong in a tiny office in L.A.’s Chinatown, grinding jalapeño peppers by hand. It took him only a few days to come up with his recipe—a blend of jalapeños, vinegar, sugar, salt, and, of course, garlic—and it hasn’t changed much since. He figured he’d sell it to fellow Asian immigrants. “I had no idea Americans would ever even eat spicy food,” says Tran, and he determined from the start to keep the price low. It’s about $4 per 28-ounce bottle. As he likes to say, “I make sauce good enough for the rich man that the poor man can still afford.”

Tran’s father-in-law poured the sauce into glass bottles, a method the Trans had employed in Vietnam using baby bottles left behind by Americans. When it came time to make deliveries, Tran relied on an old blue Chevy van.

Restaurateurs liked his sauce because it never went bad—a bottle could be left on the table. Tran slowly built a following. Eventually he encountered enough demand that he moved his operation in 1987 into a large factory in suburban Rosemead, Calif., which had formerly housed Wham-O, the maker of Frisbees and hula hoops.

A few years after the Trans’ move, Kara Nielsen got her first glimpse of Huy Fong sriracha. She was a pastry chef at Lalime’s, a pricey restaurant in Berkeley, Calif. Rooster sauce wasn’t on the menu, but it was a favorite of the restaurant’s Asian cooks and was usually on the table when the employees sat down together for a meal. Nielsen, now a “trendologist” at CCD Innovation, a culinary consultancy in San Francisco, says that was a classic Stage 1 scenario in the five-stage process of unknown products turning into household names. Although sriracha was already a staple in Asian grocery stores, its emergence in the kitchens of fine-dining restaurants meant it was beginning to cross over.

“That’s where it started for me,” says Nielsen, “in the back of kitchens where Asian workers would put it on their food.”

Over the next decade and a half, Nielsen watched as sriracha moved into new places. The chef David Chang began carrying it on the counter of his Momofuku Noodle Bar in New York. Wal-Mart Stores (WMT) started selling it in Los Angeles and Houston in 2003, eventually distributing it to 3,000 more stores around the country. Chain restaurants such as P.F. Chang’s and Gordon Biersch began introducing sriracha-flavored dishes and dipping sauces. Bon Appétit named sriracha Ingredient of the Year in 2010. And in 2011, the sauce got its first mainstream kitchen bible: The Sriracha Cookbook, by Randy Clemens. “When I would tell someone I was working on a sriracha cookbook, they’d look confused,” says Clemens, whose second sriracha-themed book, aimed at vegetarians, comes out in July. “But the minute I said ‘rooster sauce’ there was instant recognition.”

In early 2011, a few months after Clemens’s book appeared, Matthew Inman, the Seattle-based creator of the popular online comic strip The Oatmeal, had an epiphany while eating a bad meal during an overseas trip. “I realized that sriracha could ‘save’ food, and that it was this unsung Mother Teresa of condiments,” he says. So Inman drew a comic of a smiling man hugging an overturned bottle of sriracha meant to look like Huy Fong’s. “Sriracha, you are a delicious blessing flavored with the incandescent glow of a thousand dying suns,” reads the caption. “I love you.”

Fans asked Inman to turn the picture into a poster, then a T-shirt. Last summer he added a wide assortment of sriracha novelties to his online store—popcorn, lip balm, air fresheners, and underpants. With more than 350,000 Twitter followers, Inman provides plenty of free advertising for the company.

That popularity hasn’t been lost on Huy Fong’s competitors. For the past 160 years, McIlhenny Co., the rural Louisiana-based manufacturer of Tabasco, has been the standard-bearer of American hot sauce. Paul McIlhenny, the company’s sixth-generation chief executive officer, says he remembers when sriracha was purely a “West Coast thing.” Now he can pick up a bottle of rooster sauce at the local Walmart. While he won’t go into much detail, he confirms that McIlhenny is working on its own version of sriracha to compete with Huy Fong. “We’re just playing with it at the moment,” he says. “But we’re definitely looking at the Asian category.”

A few months ago, in a sign that sriracha has achieved broad acceptance (Nielsen’s Stage 5), Subway restaurants in Southern California began experimenting with a new sriracha-flavored sauce. Weeks later, Lay’s (PEP) announced a sriracha-flavored potato chip. Dave DeWitt, author of The Hot Sauce Bible, says he’s never seen anything like the rise of sriracha. Eighteen years ago when he started the Scovie Awards, billed as the world’s largest spicy foods competition, the event featured seven categories. Last year’s featured 62. “The number of players in the spicy foods game is endless,” says DeWitt. “There are even other srirachas. But there’s only one rooster.”

That rooster sits on every table in the bustling Vietnamese restaurant in Rosemead where Tran and Donna Lam, Huy Fong’s operations manager, meet me for lunch. As Tran makes a beeline for our table in the back, Lam assures me that no one in the crowded room knows that the man behind the sauce they’re all using walks among them. “Oh, no,” says Lam. “He’s too humble to tell anyone who he is.”

Seated, Tran and Lam order pho, the traditional Vietnamese soup. Then they squeeze a small amount of sriracha onto a plate beside their bowls. When I squirt a much larger amount of Huy Fong’s sauce directly into my soup, Tran’s eyes open wide. “I’ve never seen it that way,” he says.

After lunch, he heads to the Asian supermarket next door. Many stores in this suburb of L.A. use discounted Huy Fong as a loss leader to attract customers. (One advertises an industrial-size bottle offered for less than a dollar, about a 75 percent markdown.) As Tran takes in the store’s selection, he notes how his sauces vary in color. Some are orange, others red. It’s a quirk owing to the jalapeño hybrids he uses. The chilis are picked at different times during the season as they ripen and change color.

McIlhenny, the Tabasco maker, buys peppers mostly from farms in Latin America. As a way of insulating Huy Fong from fluctuations in the price of peppers and ensuring the freshest product possible, Tran’s only supplier for the past 20 years has been Underwood Family Farms, an hour north of L.A. The relationship allows him to grind the chilis on the same day they’re picked, but Underwood’s limited acreage also restricts how much he can sell. “Since 1980 we’ve always had more buyers than product,” he says. “We can’t promise something we don’t have.” It’s one reason, he says, that he doesn’t advertise.

While some companies compete with Huy Fong by mimicking its signature package—many picture animals such as sharks and geese and have colorful caps of their own—others don’t bother pretending to be legitimate. In 2005, Huy Fong customers on the East Coast began complaining that their sriracha tasted funny. After hiring private investigators, Tran discovered that the owner of a local electronics retailer had been selling Chinese-made counterfeit sriracha in bottles that were identical to Huy Fong’s. Eventually, Tran hired Rod Berman, an intellectual-property lawyer who had previously represented Citizen Watch Co., the Puerto Rican boy band Menudo, and the owners of the rights to the Smurfs cartoon franchise. Berman says he now writes four to five infringement complaints for Huy Fong a year. “I’ve done lots of counterfeiting work in my time,” he says. “But this is the first time I’ve represented someone who makes such an inexpensive product. And the first time I’ve ever represented someone who makes something edible.”

The newest symbol of Huy Fong’s success is a 655,000-square-foot headquarters and factory in nearby Irwindale, one of the largest structures built in Los Angeles County in the past few years. While Tran and Huy Fong won’t speculate about how much more sriracha they’ll be able to produce there, they say it’ll be a lot more. “I always say I don’t want to get too big,” says Tran, after a walk around the new production floor. “But this is OK.” Huy Fong will move into its new building this spring. Visitors will still get to see that picture of two sriracha-loving astronauts floating in space.