Huy Fong Foods: Srirach-anamoly

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.”

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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.

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All hail the rooster! ;)

10 comments

  1. This was a really interesting post! My family loves Sriracha, but I never knew any of the history and background on the company. I feel like the brand has a sort of hipster image, which could be the reason that it succeeded so well without social media. It was cool to use because it wasn’t being advertised all of the time and not everyone knew about it. I wonder if he would have eventually turned to social media if the lawsuit never happened. These days it is so rare for companies to not use some form of social media. I would be interested to see if demand increased once he started using social media.

    1. I wondered the exact same thing you thought… would he have taken to social? I’m really not so sure. I would bet that the demand for the sauce has gone up since he refined the website and got into social.

  2. This is a really great example on how social media is not always key for marketing. Sometimes products get well known by themselves. Everyone in the USA knows how Sriraca works, and where to get it. The product is powerful enough by itself, it does not need more marketing. Maybe if they started a instagram account, twitter account, etc. They would probably not see any difference. This is a product that talks by itself.

  3. I liked how you went very in depth into the history of the company and its relationship with social media and its customers. I had no idea about the product’s history, so I appreciated your explanation. Very cool that your turned one of your own favorite products into a blog post. I would be curious to know how they got the word out about their social media. I could see how newer customers would become fans if they were searching for information on the product and stumbled across the social media platforms. But I wonder how many longtime, loyal customers know about the presence?

  4. ajsalcetti · ·

    Nice post. I don’t personally use Sriracha as I go with other hot sauces instead, but certainly know about them and heard about the lawsuit. While he hasn’t had any direct marketing campaign or social presence until more recently, I’m sure this lawsuit gave indirect marketing in the newspapers; I’d imagine other than the people in the town where the factory was would be intrigued and not too concerned, and if they are as fanatical as the ones who carry it on their keychains, then all this did was get free marketing out. I also recall them having an issue with a knockoff brand, and that people could only spot the correct bottle by the color of the top. While this knockoff probably ate into their market share, this was more free marketing for them company, and in fact, since this seems to have almost a cult following, people would ensure they buy the proper brand and further his premium quality of product.

    1. Great point about the free marketing, I couldn’t agree more. Even the knockoff dilemma must have added to the cult, you’re absolutely right.

  5. Wow, it took this post to make me realize how little I’ve seen of Sriracha in the advertising world. And yet, everyone loves it, and everyone has it. The extent to which the fandom has blown up in the past few years is even getting ridiculous: Sriracha t-shirts, Sriracha costumes, Sriracha on-the-go, Sriracha baby outfits.. the list goes on. I also totally agree that, while David Tran’s values are commendable, he should look into increasing his prices. I know nobody likes a price hike, but slightly-more-expensive rooster sauce is better than no rooster sauce at all! Increasing product costs could run him out of business and knockoff brands could step in and steal market share. Here’s to hoping it all works out.

    1. While I agree that he’s long due for a price hike, I was simply talking fixed pricing. Why on earth would you charge a range of $1.99 to $7.99 per bottle, for different distributors? I know that some might purchase bulk, and so a discount will ensue… I just thought that $6 was a huge range. What’s nuts is that he really, genuinely doesn’t care about his margins haha.

  6. It’s crazy how certain events trigger marketing campaigns. I remember the lawsuit, but I had no idea that it was the main reason that he decided to change the company’s strategy. I was just skimming over the comments and I completely agree with Raul; I’m trying to think and I don’t remember ever seeing a Sriracha television commercial or any other type of advertising for the brand. Yet it truly has almost a cult following. One of my roommates from my undergrad put it on almost every meal he ate, regardless of what it was. Awesome post, it was interesting to get more of a background on this brand that’s somewhat of a mystery to most.

  7. hot take !! saucy opinion !! Great post. I think this is a great example of something that sells itself. When you have the best, you dont need to advertise, everyone does it for you. I think this is also why companies like Bentley dont need to advertise much.

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