$60 Million in Hot Sauce Sold By Word of Mouth

1x1.trans $60 Million in Hot Sauce Sold By Word of MouthIn the beginning, one of David Tran’s packaging suppliers claimed his product was too spicy. “How can you sell it?” Tran’s friends suggested he add a tomato base. And others thought that if Tran sweetened the flavor, his hot sauce would pair better with chicken.

But as with most visionaries, Tran held fast to his ideal and stood firm. “Hot sauce must be hot. If you don’t like it hot, use less,” he said. “We don’t make mayonnaise here.”

Tran, 68, founded Huy Fong Foods Inc. in L.A.’s Chinatown in 1980 and later introduced Sriracha sauce nationwide — his version of a hot sauce that originated in Si Racha, Thailand.

Frank Shyong with the Los Angeles Times claims Sriracha hot sauce spread from California to the rest of the nation.

“The fiery red concoction in the clear bottle with the distinctive green cap and rooster logo has since gone mainstream: Google ‘Sriracha’ and you’ll find such things as cookbooks, water bottles, iPhone cases and T-shirts.”

1x1.trans $60 Million in Hot Sauce Sold By Word of MouthWhen North Vietnam’s communists took power in South Vietnam, Tran, a major in the South Vietnamese army, fled with his family to the U.S. After settling in Los Angeles, Tran couldn’t find a job, so he decided to make his own hot sauce in a bucket, bottle it and sell it to people from his van.

Tran named his company after the Taiwanese freighter that carried him out of Vietnam. Huy Fong Foods, which is still privately owned, sold more than $60 million worth of sauce last year. And in more than two decades of operation, Tran hasn’t changed the wholesale price of his sauce.

A 28-ounce bottle sells for about $4, depending on the retailer. Shyong notes Tran was motivated by one particular business principle: Make a rich man’s sauce at a poor man’s price. Tran claims his revenue grows about 20% a year and Huy Fong Foods has never spent a dollar on advertising.

“My American dream was never to become a billionaire,” Tran said. “We started this because we like fresh, spicy chili sauce.”

That means increasing the chili content of each bottle and ensuring each pepper is as hot as possible, Tran said. To accomplish that, each chili is processed within a day of harvesting to ensure peak spiciness.

1x1.trans $60 Million in Hot Sauce Sold By Word of MouthBecause the sauce is named for the Thai city, the company cannot trademark the name.

“Roland Foods in New York makes its own variety, Sriracha Chili Sauce, in a similarly shaped yellow-capped bottle featuring two dragons instead of a rooster. Frito-Lay is testing a Sriracha-flavored potato chip, and Subway is experimenting with a creamy Sriracha sauce for sandwiches.”

But Tran said he’s not bothered by others trying to capitalize on the market his sauce orginally created. “We just do our own thing and try to keep the price low,” Tran said.

He’s turned down multiple offers to sell his company and refuses to go public. Tran is married with two children — his son is president and his daughter is vice president of Huy Fong Foods.

“This company, she is like a loved one to me, like family. Why would I share my loved one with someone else?” Tran said.

Tran is moving his business to a $40-million, 655,000-square-foot factory and headquarters in Irwindale, California that could triple its production capacity.

Spence Cooper
Inquisitive foodie with a professional investigative background and strong belief in the organic farm to table movement. Author of Bad Seeds: A FriendsEAT Guide to GMO's. Buy Now!
Spence Cooper