My guess as to why it's successful is that it's always been moderately priced and Huy Fong is recognized as the originator of the "Americanized Sriracha" sauces.
If a company tries to sell a cheaper version - then it feels like a cheap knock-off. And as everybody can afford to buy the original, why wouldn't you?
If a company tried to sell a more expensive premium product in flashier packaging - then it would feel inauthentic. What are you paying more for?
Plus whilst they've not paid for advertising, they've performed an excellent job of ensuring I'm aware of their history. I've no idea of the history of say Tabasco or Franks - but I've many times heard the history of this plucky little immigrant founded company (and this thread is just a continuation). Maybe the key is to just have a likable story - and let others tell it.
It reaches a point where it has economy of scale and specific taste profile developed that it is very hard for others to break into the market. Similar to bake beans for those living in UK.
The cost of ingredient is so low in the overall of things, restaurants, owner, vendors or whatever are not willing to switch ingredients and risk losing their customers. Tabasco is similar because majority of their business actually resides in Food Services sector and not consumers. The basic rule of thumb in Food offering, dont FUCK with your recipes.
I remember when I was still in the Food sector I was trying to import and distribute Sriracha for years in the late 00s and very early 10s. Every time the answer has been not enough capacity. Demand outstripping Supply in most of their important / domestic ( US ) market. Importers have to rely on non-official parallel import channels. Somehow I think it went internet viral by mid 10s, which in turns generate further interest. And a whole positive feedback loop was formed. Worth noting is that these things takes a long time to make. I dont know about Sriracha but Tabasco takes up to three years. Once you factor in capacity planning and sourcing of quality chillies ( and assuming yields are good ), that is why supply takes time to catch up.
Unfortunately these type of investment takes a very long time and are not something VC likes to invest in. But for me they are sometimes far more interesting and fascinating than most tech.
The Tabasco story is really interesting and it's essentially the Sriracha of the late 1800s and early 1900s. Tabasco is a private, family-owned company. They still grow all the seeds for its pepper crops on the same island they did in the 1800s [1]. Some family members were friends with Teddy Roosevelt [2]. I remember hearing, but cannot find a source right now, that Roosevelt like the sauce so much he had it included in military ration kits.
I don't think the likable story is key. Until recently, most of the many millions people buying the sauce didn't know anything about its origin. It was just the cheap sauce alone in its category that you could find everywhere.
Yep. They have a product people like and those people like it so much they do the marketing for them. It is the dream of any company to not have to do traditional marketing and advertising.
And what more would I possibly want from their product? It is a good product at a reasonable price. People are going to go with what they like.
All you have to do at this point is not mess that up. Don’t try to increase profit margins by raising prices or changing the formula. And don’t do anything that is going to lower brand recognition.
The biggest risk to Heinz ketchup, for example, is their premium price. Restaurant owners often go with a different ketchup because Heinz costs significantly more. Obviously Kraft-Heinz has determined that they can make more money this way and since they have strong brand recognition it probably won’t harm them.
Sauce and condiment companies that establish a franchise tend to be enormously profitable in general (see also pre-KHC Heinz or Lee Kum Kee). The product is very cheap to make, and as you note a bottle of sauce is pretty inexpensive (and contributes almost nothing to the cost structure of a full meal) so customers aren’t all that price-sensitive. These facts are a recipe for fat margins and high ROIC.
Aside, but if you ever find yourself in or near southern Louisiana, the Tabasco headquarters at Avery Island is actually a pretty fun outing. Lots of tasting (pre covid anyway), a self-guided factory tour, and some cool nature.
One thing that helped is it became the standard in pretty much every Pho restaurant I've ever been to. I don't know if that was intentional or not, but if definitely makes any alternative brand seem inauthentic.
The part that strikes me is that they still have the same 10 distributors since the 80's.
The "local Chinese restaurant" is a much more franchised thing than most people are aware of, and those 10 distributors meant it already ended up throughout the country and allowed everyone to try it for free. This is likely the secret to it's success.
The only similar product I can think of is Mountain Dew Baja Blast. Though it did get some advertising, by automatically being available in every Taco Bell it became a minor craze. It's not an easily reproducible concept though.
according the same thread, they also had a sole jalepeno supplier all the way up until 2017 when "the partners had a falling out. Huy Fong now sources from 3 suppliers."
"No trademark" is misleading. They have trademarks. Without them I expect exact clones would take their sales. The bottle and logo are quite distinctive and trademarked. The thing they didn't trademark is the name Sriracha.
No comments yet pointing out what I think is the important point: Siracha is the established brand.
If anyone wants to compete with Siracha they would be best served by using marketing. That Siracha gets to skip spending on marketing after having developed a green field market just speaks to their competitive moat. They produce a high quality product at reasonable prices, if anything there isn't room to compete if not on marketing.
Interestingly, the Huy Fong version of sriracha is no longer available in Finland due to it containing certain sulfites that are not allowed in spice sauces.[1] There are several competing sauces available, though. I remember wondering why it had disappeared from the shelves and only finding this one news article about it.
This reminds me a Chinese chili sauce brand called Lao Gan Ma. [1] The founder is a woman, who started the business as a road side shop selling hand made chili sauce. Now it sales more than half a billion dollars per year.
They do not run advertisement too. The founder also insisted on some distinguished principles such as not taking any debt, not own supplier money, and not getting listed in stock market.
The sauce is often named as a necessity for Chinese studying or working aboard. You can simply mix it with rice or noddles and have a delicious meal.
If you like spicy Chinese food, you should give it a try.
Tragically, I stopped being able to get this sauce a couple years ago when the EU blocked imports due to one of the ingredients (I'm struggling to find a source atm though).
It was magic! It made Irish cuisine bearable.
The alternatives - Flying Goose, etc. are oversweet, underspiced, and dreadful.
I first heard about Sriracha years ago through Matthew Inman, a.k.a. The Oatmeal. Then Exploding Kittens happened and while (to my knowledge) it doesn't feature the condiment, I'm sure many people checked out the rest of the artist's work.
Now that Sriracha made its way to Poland I finally managed to get a taste.
It's spicy enough to not be offensive to the average consumer, but I think The Oatmeal oversold it on its palate-burning capabilities.
Not quite. Sriracha is probably the most marketed sauce in existence... just not advertised directly from the "original" manufacturer.
Fast food chains, chip companies, beef jerky, almonds, other seasonings and more all spend a considerable amount advertising their products include Sriracha.
Sriracha's popularity mostly began when these companies started to introduce products with it to everyday people. It's not like Sriracha didn't exist prior to 2010...
I would be surprised if Huy Fong Foods, the company behind the popular US variation, didn't have something to do with the initial deals that got all this going. Clever marketing, indeed.
Existence proof for a particular isn't hard to come by. Lots of companies (including google & facebook, ironically) blew up without sales or marketing playing a significant role.
The "modern economy" OTOH, is big. Advertising (either selling or buying) a core piece of the business model of many of the largest companies. Everything that touches them touches advertising and everything that touches them is a massive part of the economy.
This might suggest that advertising needn't be essential, not that it isn't. Wikipedia & Linux might suggest that IP and shareholders needn't be necessary to the modern economy. But IP and shareholders certainly are, currently, necessary to the way it works.
The sauce business started in the early 1980s, almost 40 years ago. A lot has changed in the last 40 years. You wouldn‘t even be able to replicate this today because of food health rules.
Advertising is essential, you need people to know about your product somehow. People will not buy something they do not know, especially when there is competition.
The methods that are in use in current times on the other hand...
If anyone's in the sauce shipping game, try and get the Huy Fong one distributed in the UK. The market here is dominated by "flying goose" sriracha which is good, but not the same as the Huy Fong and there's a fair market for it here I think.
"No sales team" is a ridiculous summary. The full quote:
"No sales team (Tran has mostly maintained the same 10 distributors and wholesale pricing from the 80s)"
"10 distributors" is the sales team. Just because the distributors (who are large and who have probably hundreds if not thousands of their own sales staff) are doing the sales doesn't mean there isn't the process of a human being either calling or visiting stores to get them to buy the product. In other words, sales.
Getting a product to market is hard, and a large part of that difficulty is DISTRIBUTION. If a company can find some good partners like distributors to handle that, good for them, but nobody can make any amount of meaningful revenue without sales, despite fake exhortations to the contrary.
Yesh "no sales team" always makes me laugh when it turns out to actually mean "ten companies specialised in selling to retail outlets do our sales" (or in other cases "we give our sales team a different job title"). Channel sales is still sales.
The best part for me, is that since introducing Sriracha into my weekly ( if not daily ) diet, my acid reflux has dropped to zero...? unexplained benefit?
I am a hot sauce tragic with more than a dozen bottles of various concoctions at my disposal. But confess to putting Sriracha on at least half of the things I think need some pep. All hail Sriracha!
(My second place is Blair's Ultra Death which is amazing. I dole it out in pea-sized portion. I bought that bottle in .. oh my God ... 2014!!! Don't tell my mom.)
I realize they may not advertise but they also sell through resellers... who at least from my google searching [1] do appear to advertise this product (delicious as it is) very heavily...
[+] [-] goldcd|4 years ago|reply
If a company tries to sell a cheaper version - then it feels like a cheap knock-off. And as everybody can afford to buy the original, why wouldn't you?
If a company tried to sell a more expensive premium product in flashier packaging - then it would feel inauthentic. What are you paying more for?
Plus whilst they've not paid for advertising, they've performed an excellent job of ensuring I'm aware of their history. I've no idea of the history of say Tabasco or Franks - but I've many times heard the history of this plucky little immigrant founded company (and this thread is just a continuation). Maybe the key is to just have a likable story - and let others tell it.
[+] [-] ksec|4 years ago|reply
It reaches a point where it has economy of scale and specific taste profile developed that it is very hard for others to break into the market. Similar to bake beans for those living in UK.
The cost of ingredient is so low in the overall of things, restaurants, owner, vendors or whatever are not willing to switch ingredients and risk losing their customers. Tabasco is similar because majority of their business actually resides in Food Services sector and not consumers. The basic rule of thumb in Food offering, dont FUCK with your recipes.
I remember when I was still in the Food sector I was trying to import and distribute Sriracha for years in the late 00s and very early 10s. Every time the answer has been not enough capacity. Demand outstripping Supply in most of their important / domestic ( US ) market. Importers have to rely on non-official parallel import channels. Somehow I think it went internet viral by mid 10s, which in turns generate further interest. And a whole positive feedback loop was formed. Worth noting is that these things takes a long time to make. I dont know about Sriracha but Tabasco takes up to three years. Once you factor in capacity planning and sourcing of quality chillies ( and assuming yields are good ), that is why supply takes time to catch up.
Unfortunately these type of investment takes a very long time and are not something VC likes to invest in. But for me they are sometimes far more interesting and fascinating than most tech.
[+] [-] The-Bus|4 years ago|reply
The Tabasco story is really interesting and it's essentially the Sriracha of the late 1800s and early 1900s. Tabasco is a private, family-owned company. They still grow all the seeds for its pepper crops on the same island they did in the 1800s [1]. Some family members were friends with Teddy Roosevelt [2]. I remember hearing, but cannot find a source right now, that Roosevelt like the sauce so much he had it included in military ration kits.
[1] https://www.cbsnews.com/news/tabasco-hot-sauce-industry-60-m... [2] https://www.theodorerooseveltcenter.org/Blog/Item/John%20Ave...
[+] [-] rattray|4 years ago|reply
It remains a differentiated product based on its core feature, taste.
[+] [-] dystroy|4 years ago|reply
[+] [-] etempleton|4 years ago|reply
And what more would I possibly want from their product? It is a good product at a reasonable price. People are going to go with what they like.
All you have to do at this point is not mess that up. Don’t try to increase profit margins by raising prices or changing the formula. And don’t do anything that is going to lower brand recognition.
The biggest risk to Heinz ketchup, for example, is their premium price. Restaurant owners often go with a different ketchup because Heinz costs significantly more. Obviously Kraft-Heinz has determined that they can make more money this way and since they have strong brand recognition it probably won’t harm them.
[+] [-] marban|4 years ago|reply
[+] [-] intuitionist|4 years ago|reply
[+] [-] Xavdidtheshadow|4 years ago|reply
Aside, but if you ever find yourself in or near southern Louisiana, the Tabasco headquarters at Avery Island is actually a pretty fun outing. Lots of tasting (pre covid anyway), a self-guided factory tour, and some cool nature.
[+] [-] dcolkitt|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] forrestthewoods|4 years ago|reply
My grocery store has a half dozen Sriracha sauces. Some I like less, some I like more. They’re all pretty different in flavor.
[+] [-] clav3|4 years ago|reply
[+] [-] hogFeast|4 years ago|reply
[+] [-] boomboomsubban|4 years ago|reply
The "local Chinese restaurant" is a much more franchised thing than most people are aware of, and those 10 distributors meant it already ended up throughout the country and allowed everyone to try it for free. This is likely the secret to it's success.
The only similar product I can think of is Mountain Dew Baja Blast. Though it did get some advertising, by automatically being available in every Taco Bell it became a minor craze. It's not an easily reproducible concept though.
[+] [-] hhmc|4 years ago|reply
This is interesting (but also makes sense) -- do you happen to have an article?
[+] [-] ChrisMarshallNY|4 years ago|reply
[+] [-] shbooms|4 years ago|reply
[+] [-] gjs278|4 years ago|reply
[deleted]
[+] [-] modeless|4 years ago|reply
[+] [-] Danieru|4 years ago|reply
If anyone wants to compete with Siracha they would be best served by using marketing. That Siracha gets to skip spending on marketing after having developed a green field market just speaks to their competitive moat. They produce a high quality product at reasonable prices, if anything there isn't room to compete if not on marketing.
[+] [-] Ndymium|4 years ago|reply
[1] https://yle.fi/uutiset/3-11251204 (in Finnish)
[+] [-] bhy|4 years ago|reply
They do not run advertisement too. The founder also insisted on some distinguished principles such as not taking any debt, not own supplier money, and not getting listed in stock market.
The sauce is often named as a necessity for Chinese studying or working aboard. You can simply mix it with rice or noddles and have a delicious meal.
If you like spicy Chinese food, you should give it a try.
[1] https://en.wikipedia.org/wiki/Lao_Gan_Ma
[+] [-] LordAtlas|4 years ago|reply
Edit: the Thai version is thinner, tangier and a toucher sweeter, and made from spur chillies, not jalapeños. [1] [2] [3]
[1] https://shesimmers.com/2010/03/homemade-sriracha-how-to-make...
[2] https://www.npr.org/sections/thesalt/2019/01/16/681944292/in...
[3] https://www.thrillist.com/eat/nation/what-is-sriracha-sauce
Not saying the Tran sauce is bad; just different.
[+] [-] CalRobert|4 years ago|reply
It was magic! It made Irish cuisine bearable.
The alternatives - Flying Goose, etc. are oversweet, underspiced, and dreadful.
[+] [-] CalRobert|4 years ago|reply
https://newsbeezer.com/swedeneng/sriracha-sauce-can-no-longe...
Some discussion at https://www.reddit.com/r/europe/comments/k3udmu/huy_fongs_sr...
[+] [-] randompwd|4 years ago|reply
Wow, what condescension.
Just dump some sugar and processed cheese on your food and you should feel right at home!
[+] [-] Deradon|4 years ago|reply
[+] [-] papito|4 years ago|reply
But hey, at least you have real cheese. American cheese is not cheese.
[+] [-] Tade0|4 years ago|reply
Now that Sriracha made its way to Poland I finally managed to get a taste.
It's spicy enough to not be offensive to the average consumer, but I think The Oatmeal oversold it on its palate-burning capabilities.
[+] [-] gbtw|4 years ago|reply
[+] [-] watertom|4 years ago|reply
As long as the founders and investors, are happy with their current sales numbers.
[+] [-] na85|4 years ago|reply
[+] [-] Alupis|4 years ago|reply
Fast food chains, chip companies, beef jerky, almonds, other seasonings and more all spend a considerable amount advertising their products include Sriracha.
Sriracha's popularity mostly began when these companies started to introduce products with it to everyday people. It's not like Sriracha didn't exist prior to 2010...
I would be surprised if Huy Fong Foods, the company behind the popular US variation, didn't have something to do with the initial deals that got all this going. Clever marketing, indeed.
[+] [-] dalbasal|4 years ago|reply
Existence proof for a particular isn't hard to come by. Lots of companies (including google & facebook, ironically) blew up without sales or marketing playing a significant role.
The "modern economy" OTOH, is big. Advertising (either selling or buying) a core piece of the business model of many of the largest companies. Everything that touches them touches advertising and everything that touches them is a massive part of the economy.
This might suggest that advertising needn't be essential, not that it isn't. Wikipedia & Linux might suggest that IP and shareholders needn't be necessary to the modern economy. But IP and shareholders certainly are, currently, necessary to the way it works.
[+] [-] tpetry|4 years ago|reply
[+] [-] austhrow743|4 years ago|reply
[+] [-] shoto_io|4 years ago|reply
[+] [-] csunbird|4 years ago|reply
The methods that are in use in current times on the other hand...
[+] [-] JohnWhigham|4 years ago|reply
[+] [-] turkeywelder|4 years ago|reply
[+] [-] cillian64|4 years ago|reply
[+] [-] mft_|4 years ago|reply
[+] [-] diplodocusaur|4 years ago|reply
https://helix.northwestern.edu/blog/2014/07/your-brain-capsa...
Not sure how well established the research on it is.
And there's also sugar.
[+] [-] forgingahead|4 years ago|reply
"No sales team (Tran has mostly maintained the same 10 distributors and wholesale pricing from the 80s)"
"10 distributors" is the sales team. Just because the distributors (who are large and who have probably hundreds if not thousands of their own sales staff) are doing the sales doesn't mean there isn't the process of a human being either calling or visiting stores to get them to buy the product. In other words, sales.
Getting a product to market is hard, and a large part of that difficulty is DISTRIBUTION. If a company can find some good partners like distributors to handle that, good for them, but nobody can make any amount of meaningful revenue without sales, despite fake exhortations to the contrary.
[+] [-] notahacker|4 years ago|reply
[+] [-] ConcernedCoder|4 years ago|reply
[+] [-] verytrivial|4 years ago|reply
(My second place is Blair's Ultra Death which is amazing. I dole it out in pea-sized portion. I bought that bottle in .. oh my God ... 2014!!! Don't tell my mom.)
[+] [-] taf2|4 years ago|reply
[1] https://www.google.com/search?q=sriracha
[+] [-] chrisweekly|4 years ago|reply
https://vimeo.com/ondemand/sriracha#_=_