Thread
Huy Fong's Sriracha hit revenue of $150m+ a year...with no sales team, no trademark and $0 in ad spend.
Its creator is Vietnamese-American David Tran, making the sauce's success a tale of immigrant hustle and a product that literally sells itself.
Here's the story🧵
Its creator is Vietnamese-American David Tran, making the sauce's success a tale of immigrant hustle and a product that literally sells itself.
Here's the story🧵
The Sriracha story traces back to the 1930s.
In a Thai town called Sri Racha, a housewife named Thanom Chakkapak created a paste of chili peppers, distilled vinegar, garlic, sugar and salt.
Variations of this recipe have travelled across the globes in the decades since.
In a Thai town called Sri Racha, a housewife named Thanom Chakkapak created a paste of chili peppers, distilled vinegar, garlic, sugar and salt.
Variations of this recipe have travelled across the globes in the decades since.
One variation was created by David Tran, a major in the South Vietnamese army.
In 1978, the Tran family joined 3k+ refugees and fled Communist Vietnam on a Taiwanese boat called the Huey Fong (means "Gathering Prosperity”). The boat inspired the business name Huy Fong Foods.
In 1978, the Tran family joined 3k+ refugees and fled Communist Vietnam on a Taiwanese boat called the Huey Fong (means "Gathering Prosperity”). The boat inspired the business name Huy Fong Foods.
Tran landed in the US and ended up in LA.
At the time, Sriracha was absent from California. So Tran brought his recipe, swapping out chilis for a local ingredient: jalapeños.
He filled recycled baby jars and sold product out of a Blue Chevy Van, making $2.3k the first month.
At the time, Sriracha was absent from California. So Tran brought his recipe, swapping out chilis for a local ingredient: jalapeños.
He filled recycled baby jars and sold product out of a Blue Chevy Van, making $2.3k the first month.
To really make the product stand out, Tran slapped a Rooster logo on everything he sold.
Why? He was born in 1945: The Year of the Rooster.
He would later design the famous squeeze bottle and added a green cap as a sign of "freshness".
Why? He was born in 1945: The Year of the Rooster.
He would later design the famous squeeze bottle and added a green cap as a sign of "freshness".
The sauce's popularity took off in the early-1980s among Asian restaurants and grocers. He kept upgrading manufacturing to meet demand:
◻️ 1980: a 5k sq ft building in Chinatown LA
◻️ 1987: a 68k sq ft warehouse in Rosemand, CA
◻️ 2010: a 650k sq ft warehouse in Irwindale, CA
◻️ 1980: a 5k sq ft building in Chinatown LA
◻️ 1987: a 68k sq ft warehouse in Rosemand, CA
◻️ 2010: a 650k sq ft warehouse in Irwindale, CA
Sriracha's success has come with:
◻️No sales team (Tran has mostly maintained the same 10 distributors and wholesale pricing from the 80s)
◻️No ads (Sriracha's cult-like status comes from "word of mouth")
In 2019, sales hit $150m (10% of the US hot sauce market).
◻️No sales team (Tran has mostly maintained the same 10 distributors and wholesale pricing from the 80s)
◻️No ads (Sriracha's cult-like status comes from "word of mouth")
In 2019, sales hit $150m (10% of the US hot sauce market).
With so few ingredients, Tran prioritizes the best ones to win the market.
Timing fresh jalapeños is tough: the ripening window (green to red) leaves no room for error.
Due to the harvesting seasons, Huy Fong may make a whole year's supply of Sriracha in a 10-week span.
Timing fresh jalapeños is tough: the ripening window (green to red) leaves no room for error.
Due to the harvesting seasons, Huy Fong may make a whole year's supply of Sriracha in a 10-week span.
For 28 years, Tran maintained his exacting quality standards with one exclusive jalapeño supplier.
In 2017, the partners had a falling out (lawsuits were involved). Huy Fong now sources from 3 suppliers. Its factory runs 16hrs a day and goes through 100m lbs of chilis a year.
In 2017, the partners had a falling out (lawsuits were involved). Huy Fong now sources from 3 suppliers. Its factory runs 16hrs a day and goes through 100m lbs of chilis a year.
Tran never trademarked "Sriracha", but he did trademark the green cap and rooster. This is why so many competing brands have a "Sriracha" sauce (Heinz, Tabasco).
The Sriracha founder doesn't care about the competition, calling them "free advertising".
The Sriracha founder doesn't care about the competition, calling them "free advertising".
The Sriracha founder also won't budge on taste.
A supplier once told David Tran that his sauce was too spicy. A friend suggested to “add a tomato base” to make it sweeter.
Tran replied: “Hot sauce must be hot. If you don’t like it hot, use less. We don’t make mayonnaise here.”
A supplier once told David Tran that his sauce was too spicy. A friend suggested to “add a tomato base” to make it sweeter.
Tran replied: “Hot sauce must be hot. If you don’t like it hot, use less. We don’t make mayonnaise here.”
One competitor is back in Thailand: The Winyarat family purchased the original recipe in 1984 and creates "Sriraja Panich".
It uses Thai cayenne peppers instead of jalapeños but has struggled to make in-roads in the US.
It uses Thai cayenne peppers instead of jalapeños but has struggled to make in-roads in the US.
The universal appeal of Huy Fong's Sriracha is encoded in the label, which includes 5 languages.
In the US, the sauce has clearly achieved cult status (and was even named Bon Appetit's "Ingredient of the Year" in 2009).
In the US, the sauce has clearly achieved cult status (and was even named Bon Appetit's "Ingredient of the Year" in 2009).
Investors have been knocking on Tran's door for decades.
In November 2020, Choulala hot sauce was acquired by spicemaker giant McCormick & Co. for $800m (on $92m sales).
A similar price / sales multiple (~9x) for Huy Fong easily nets a $1B+ valuation.
In November 2020, Choulala hot sauce was acquired by spicemaker giant McCormick & Co. for $800m (on $92m sales).
A similar price / sales multiple (~9x) for Huy Fong easily nets a $1B+ valuation.
Tran doesn't need the money. His motto is "a rich man's sauce at a poor man's price" (he caps retailer selling price <$10).
"My American Dream was never to become a billionaire. We started this b/c we like fresh, spicy chili sauce.”
His children will keep the legacy going.
"My American Dream was never to become a billionaire. We started this b/c we like fresh, spicy chili sauce.”
His children will keep the legacy going.
If you enjoyed that, I write other interesting threads 1-2x a week.
Follow @TrungTPhan to catch it in your feed.
Here's one you might like:
Follow @TrungTPhan to catch it in your feed.
Here's one you might like:
PS. I also write a Saturday newsletter on tech, business and great memes:
• Why is Linkedin so cringe?
• The psychology of Apple packaging
• McDonald's $42B real estate empire
Check it out: trungphan.substack.com/
• Why is Linkedin so cringe?
• The psychology of Apple packaging
• McDonald's $42B real estate empire
Check it out: trungphan.substack.com/
Sources
LA Times: latimes.com/business/la-fi-himi-tran-20130414-story.html…
Whale Bone Mag: whalebonemag.com/sriracha-panic-shortage/…
Bloomberg: bloomberg.com/news/features/2019-04-06/thaitheparos-sriraja-panich-sriracha-comes-to-the-u-s-market…
TIFO:todayifoundout.com/index.php/2017/09/invented-sriracha-hot-sauce/…
"Siracha" Doc: srirachamovie.com
LA Times: latimes.com/business/la-fi-himi-tran-20130414-story.html…
Whale Bone Mag: whalebonemag.com/sriracha-panic-shortage/…
Bloomberg: bloomberg.com/news/features/2019-04-06/thaitheparos-sriraja-panich-sriracha-comes-to-the-u-s-market…
TIFO:todayifoundout.com/index.php/2017/09/invented-sriracha-hot-sauce/…
"Siracha" Doc: srirachamovie.com
FINAL NOTE: When Huy Fong moved to Irwindale, the City of filed a lawsuit alleging that the sauce-making released "odors and eye-watering airborne irritants".
A judge threw out the case in 2014 and now Huy Fong lets people tour the factory to judge for themselves.
A judge threw out the case in 2014 and now Huy Fong lets people tour the factory to judge for themselves.
FINAL FINAL NOTE: There has been a chili shortage since the beginning of this year. Here's a letter from Sriracha to its suppliers. Not sure where its at now, but I'm still seeing Sriracha bottles on shelves. 
I did the opposite of Tran (and my parents): going from North America to Vietnam in my 20s...and had zero entrepreneurial success and couldn't even get a job teaching English.
đź”—trungphan.substack.com/p/im-making-a-tv-show
đź”—trungphan.substack.com/p/im-making-a-tv-show
