THELASTMILE Logistics Outside the Box SRIRACHA BRINGS THE HEAT Made from fresh chili peppers, the famous hot sauce—Sriracha Hot Chili Sauce—has recently been squeezed by supply shortages. But a steadfast customer base and red-hot demand keep prospects piquant.
HOUSEHOLD STAPLE Huy Fong Foods’ Sriracha Hot Chili Sauce is a pantry mainstay in the United States, accounting for an estimated 10% of the hot sauce market in 2019. SOME LIKE IT HOT The U.S. hot sauce industry continues to heat up, growing 2.5% over the past five years to hit $2.6 billion in 2023, according to marketing research company IBISWorld. NAMED AFTER A FREIGHTER Huy Fong Foods founder David Tran named his company after the freighter that brought him to the United States from Vietnam in the late 1970s. In 1980, Tran launched Huy Fong Foods in Los Angeles. KICKING OFF AS A ONE-PERSON OPERATION Tran operated a one-person supply chain in the early years. He made the Sriracha sauce, hand-filled each glass bottle, and fulfilled customer orders across Los Angeles’ Chinatown. Today, Huy Fong produces the hot sauce in Irwindale, California, making around 20 million bottles each year. Aside from its signature hot sauce, the company also makes chili garlic sauce and chili paste. DISTINCTIVE FLAVOR AND APPROACH Other companies, including Starbucks, Tabasco, and Trader Joe’s, offer their own versions of Sriracha since Tran never sought a trademark for the sauce. The Huy Fong Foods founder relies on word of mouth Huy Fong Foods sources most of its chilies from farms in California, New Mexico, and Mexico. The company uses about 50,000 tons of chilies every year. The chilies are transported to a processing facility in Irwindale, where they are washed, ground down, and mixed with sugar, salt, vinegar, and garlic. From the Huy Fong factory in California, the product is transported to distribution centers in the United States and around the world. Customers include retail outlets, supermarkets, specialty stores, and In 2022, adverse weather conditions, including droughts in Mexico, led to a severe shortage of chili peppers. As a result, Huy Fong Foods paused taking customer orders from April to September 2022. While it resumed some production in fall 2022, shortages are expected to continue in 2023. FIRING UP DEMAND ● Huy Fong Foods is now valued at $1 billion based on estimated sales of $131 million in 2020, according to IBISWorld. Tran remains the sole owner of Huy Fong. ● The global hot sauce market is expected to grow to $4.72 billion by 2029. and has never advertised. RED HOT CHILI PEPPERS online marketplaces. WHERE’S THE SAUCE?
Sources: Thomas; SBS News; IBISWorld; Los Angeles Times
120 Inbound Logistics • June 2023
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