The downfall of America’s favorite sriracha brand

What went wrong with the billion-dollar sriracha empire?

Good morning, Nerders. It’s Thursday, July 18th. In today’s newsletter, we cover:

  • What went wrong with the billion-dollar sriracha empire

  • Where are young people getting their financial content from

  • The problem with thrifting companies

TODAY’S STORY

America’s favorite sriracha brand, Huy Fong’s hot sauce, was an instant hit.

David Tran, a Vietnamese refugee, brought it to America in the 1980s. By 2020, the business was valued at $1 billion and had estimated sales of $131 million.

But not every story has a happy ending.

Huy Fong differentiated itself from the market by using red jalapeños, a difficult commodity to grow at scale since they have a much longer growing cycle than green jalapeños.

The result: A distinctive balance of sweet, sour, and spicy taste.

Huy Fong relied on one critical business partner, Underwood Ranches, to meet all of its jalapeño needs. The partnership worked beautifully for 28 years until a dispute over the financial terms ended the relationship. Tran couldn’t find a new grower that could reliably meet its jalapeño requirements and suspended production in 2020.

Competitors quickly filled the void. Huy Fong has since had to start and stop its business numerous times due to supply chain issues, with the latest stoppage in March 2024.

In the end, Huy Fong has not been able to replicate the original taste. Its new Sriracha bottles are allegedly not as hot as they used to be.

The rise and fall of this billion-dollar sriracha empire could be an important lesson in sole-source relationships as much as the importance of trust and communication in any business relationship.

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DATA BYTES

  • Almost 50% of young adults (ages 21-43) prefer to get their financial content from social media, which could be promoting untested advice as easily as it sources researched and verified guidance

  • A recent study of more than 1,000 stock-related TikTok videos found that 63% of them were misleading, and 95% did not contain any disclaimers about investment risk

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Not So Thrifty

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PREVIOUS STORIES

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  • Who is Behind the Surging Rent Prices in America? — A now-deleted video showed a RealPage executive saying in 2021 that the company’s software was driving double-digit rent increases nationwide.

  • Private Schools, Public Money — Taxpayers are on the hook for an estimated $6.2 billion in subsidies to fund private school education.

To read the web version of previous stories, click here

If you have any comments or feedback, just respond to this email.

Thanks for reading,
Kieran & Justin Ryan