David Tran is the CEO of Huy Fong Foods, producer of the legendary red bottle, green-capped Sriracha sauce. The”hipster ketchup” traces its origins from the mouths of foodies throughout the world straight back to Los Angeles, California, Tran’s home after emmigrating from Vietnam in the late 1970s. His motivation for first creating sriracha was very simple: lack of an adequate hot sauce for his pho. After realizing this missing piece in LA’s Asian community (many others wanted nothing more than great sauce for their delectable noodles), he crafted a chili sauce which he sold from the back of his van. Huy Fong Foods now enjoys a wonderful culture of transparency in manufacturing and brand cultivation overall, but this was not always the case.
The fact remains that Huy Fong Foods spent zero dollars and zero cents on sales representatives, marketing, and advertising until only a few years ago. Similarly, a complete lack of a social media presence accompanied this epic sauce that fills more than 20 million bottles per year. That’s right. No Facebook until 2014? Srirach-anamoly, if you ask me. Word of mouth marketing took the spicy goodness from van to production plant. It was also the sole reason for sriracha’s persistent double-digit sales growth, to the tune of $60 million in 2013. If you asked David Tran about his company’s remarkable success, he would mention how this wasn’t in his game plan when he arrived in America. According to an article by Quartz, he “started the business with [his] eyes closed” and with “no expectations at all.”
Now, Huy Fong Foods processes upwards of 10 million pounds of fresh jalapeño peppers during a season of only two and a half months. He is apparently so focused on the quality of his product that he refuses to raise the wholesale price of his coveted sauce. On average, food prices have tripled since 1980; these indicate a clear gap in Tran’s potential to increase his company’s cap in the billion dollar America hot sauce market. Tran has, in due course, received countless calls with lofty offers from investors. Some wish to purchase Huy Fong Foods on the spot, while others promise substantially higher returns than he sees already. He refuses them constantly, poignantly stating that “People who come here are never interested in the product, only in the profits.”
Despite his reluctance to propel the sriracha brand with a social media effort and sales representatives, an imminent lawsuit warned him otherwise. When he moved his factory to a bigger location in Irwindale, CA, he was “sued over concerns that fumes from grinding fresh chili peppers caused odors and eye-watering airborne irritants.” In order to save his company from this potentially brand-damaging fiasco, he opened his factory doors and began to take his sauce from its humble bottle into a full-fledged marketing effort. Today, he boasts a strong Twitter, Facebook, and Instagram following, along with a refined website. Today, his customers enjoy the transparency they imagined for many years. Along with his two additional hot sauces, he has licensed sriracha in 22 different places, with a total network of over 100 distributors.
Personally speaking, I am in love with sriracha sauce and was excited to learn about David Tran’s principles which have guided his company for decades. My favorite is his attention to detail with his product and his careful decision-making in terms of licensing. After all, what other food product could amass $60 million in gross revenue utilizing only word of mouth marketing? It truly transcends boundaries in that way. Another notable practice of Tran’s, one with which I don’t necessarily agree, involves his refusal to change wholesale pricing. His distributors name their prices, anywhere from $1.99 to $7.99 per bottle, and from the looks of things, this will not change for a long time coming. For now, he will stick to brand transparency and grow his consumer base. Eventually, his sriracha connoisseurs will carry it with them everywhere they go. After all, there are those who love sriracha, and those who need sriracha.
All hail the rooster! ;)