The downfall of America’s favorite sriracha brand
America’s favorite sriracha brand, Huy Fong’s hot sauce, was an instant hit.
David Tran, a Vietnamese refugee, brought it to America in the 1980s. By 2020, the business was valued at $1 billion and had estimated sales of $131 million.
But not every story has a happy ending.
Huy Fong differentiated itself from the market by using red jalapeños, a difficult commodity to grow at scale since they have a much longer growing cycle than green jalapeños.
The result: A distinctive balance of sweet, sour, and spicy taste.
Huy Fong relied on one critical business partner, Underwood Ranches, to meet all of its jalapeño needs. The partnership worked beautifully for 28 years until a dispute over the financial terms ended the relationship. Tran couldn’t find a new grower that could reliably meet its jalapeño requirements and suspended production in 2020.
Competitors quickly filled the void. Huy Fong has since had to stop and start its business numerous times due to supply chain issues, with the latest stoppage in March 2024.
In the end, Huy Fong has not been able to replicate the original taste. It’s allegedly not as hot as it used to be.
The rise and fall of this billion-dollar sriracha empire could be an important lesson in sole-source relationships as much as the importance of trust and communication in any business relationship.
