How Did The Sriracha Shortage Happen?

Huy Fong Foods, owner of the iconic green-capped sriracha hot sauce, has been experiencing a shortage of red jalapeño chili peppers, a key ingredient in the sauce, for about three years. The company has cited weather-related issues to be the cause. But Huy Fong Foods' former pepper supplier of 28 years, Underwood Ranches, told CNBC there's a lot more to the story.

Chapters:
00:00 — Introduction
02:45 — Short supply
04:45 — Building a business
06:30 — Supplier relations
09:20 — Pivoting
12:25 — Looking ahead

Produced and Edited by: Ryan Baker
Shot by: Andrew Evers
Animation: Jason Reginato
Senior Managing Producer: Tala Hadavi
Additional Sources: The Associated Press, The New York Times, Los Angeles Times

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How Did The Sriracha Shortage Happen?

[harrisoakley]

The Huy Fong's kid got their business and MBA degree. They tried to find the cheapest supplier of pepper. However, the MBA school did not teach them the meaning of loyalty.

[mycowboyways]

Walmart did a deal like this with pickles. finally the producer/grower got tired of being lowballed by Walmart about his prices. He secretly started contracting all the cucumber production he could and when he declined to meet Walmarts production price they cut him off. What they didn't count on was no other company could ramp up production because now one guy held all the cucumber production for 3-5 year and wouldn't sell to anyone working with Walmart. Finally Walmart caved but it cost them dearly. And they deserve it.

[Mscents]

Asian American here. I’m with the farmer. It’s so uncharacteristic of the founder to do shady business like he did on this one and I believe his relatives who’s helping him run the business are the ones behind it. He’s never the greedy kind from interviews I’ve seen of him. He’s had a GREAT relationship with his supplier for a long time which helped grew his business tremendously. Why would you suddenly risk losing this relationship? Loyalty is very important and rare in business and what helps you grow your business but in only takes one act of GREED to destroy it. Most will never get it back ever again because they will always be wary of you and have trust issues with you.

[kevinmach]

I'm more impressed you got a grocery store to not only answer a phone, but also assist you in finding out whether or not they had a product.

[ninjanerdstudent]

I had a bunch of bottles in the cupboard that I forgot about. After hearing of the shortage, I started using it. I forgot how good the stuff is. It goes with pizza, tortilla chips with hummus, tostadas, or just about anything.

[erictaylor]

My dad tried growing Jalapeño Peppers in his garden and they came out tasting like bell peppers, no heat at all.
He worked with a guy who made his own hot sauce (it was really really good btw) and he asked how much water my dad gave them. Turns out you have to stress the plants, giving them just enough water to keep them alive. The more water you give them beyond what they need to survive the lass hot they will me.
Dad's next batch were very hot.

[jesse]

So much respect lost for Huy Fong. I’m 100% with the farmer.

[AwokenEntertainment]

wow.. definitely many lessons about loyalty and relationships to be learned from this story

[bullfrogger]

Huy Fong should have honored their end of the agreement. I can't imagine having a thousand acres of chiles and suddenly no buyer. Then to find out they allowed you to grow them, knowing full well that they had no intention of taking delivery, would be grounds for war. There are places where if you do a neighbor like that, you'll wish you had sold out and moved. You would have to drive 2 towns over to get a cup of coffee.

[sethyta]

the only thing harder to find than the sauce, is actual info about what's been happening. thank you.

[fcon]

I live in the city next to Irwindale (where the processing plant is), and my wife works in that city. I think it was in 2013, the owner had a big celebration and invited the public to come in and see the plant. Every person on the tour got a medium sized bottle of siracha, siracha ice cream, got to see dragon dancers, take handfuls of free jalepeno peppers, and meet the founder and take pictures with him. I have a picture of him with my family. He had an important message for all of us... America was truly the land of opportunity and he was very greatful to this country. I dont know why things got bad, but he seemed to be a great guy.

[csr]

You can find sriracha hot sauce anywhere. Huy Fong brand is the one you have a hard time finding cause they now use a different suppliers, then from the farm that use to supply them that was located 50 miles away. Their sauce doesn’t taste the same anymore

[chinchye]

never ever mess with your suppliers! You would think this is 101 but many businesses bizarrely doesn’t understand this rule. (especially small businesses). When the going gets bad, it is easiest to stop paying your suppliers as a stop gap measure. But this almost ensures the start of a death spiral.

[quailsale]

It's important to note that the city of Irwindale INVITED the company to build the new plant there, and the residents & farmers celebrated the new jobs! Then the city shut the plant down because of the smell of crushed peppers. That's a pretty 🍆move!

[songsan]

They say there are usually 2 sides of a story in a disagreement. Watching this video it seem the reporters are more in favor of Underwood since one of the reporter stated she known the underwood owner for a long time.

Would be interesting to get the Huy Fong's side.

My family used to own a Chinese restaurant for about 25 years and we would buy boxes of these big Huy Fong Sriracha and put into our tables. There would be customer's that would just snatch the bottles and take them home. During that time each bottle cost us about $2 each. My daughter just brought 2 bottles of them at Amazon for $40. Wow.

[aashilr]

FYI you can get Sriracha directly from Underwood Ranch. I recently bought their Dragon Sriracha which is same flavor as Huy Fong Sriracha. I also got their normal sriracha sauce & it's a bit too sweet, so definitely recommend the Dragon one.

[jonathanmein]

I worked for the company that produced most of the jalapeño seed that Underwood grew and remember when the lawsuit happened. We produced a lot of seed for them.

[blufilmsesa]

Story doesn't really add up. Don't think Huy Fong was money hungry enough to destroy relations with his long time supplier. He never patented his recipe. He never advertised his product. He never chased people down for copying his product. He never went after merchandising of his product. He always believed in seeing the ingredients going into his product; old school hard-worker and ethics kind of guy. Why would a basically retired immigrant, who built his fame through slow word-of-mouth... suddenly radically try to expand using drones for espionage??? Probably children taking over got involved.

[jmill]

Greed is what happened., They thought they could grow their own peppers and remove the need for other realized it's really hard and they can't and now its too late. If i was one of their farmers I'd hike my prices 😅

[jasonking]

What a bummer. My favorite sauce! When Sriracha returned recently, for a hot minute, I heard it tasted sour and disappointing. I think Underwood's pepper process was a major part of the success.