What created the suspicious scarcity of one of the worlds favourite fiery condiments, Sriracha Hot Sauce?
While much of the world speculated about climate change affecting jalapeño supply chains, or other spicy conspiracies.. (hot sauce loving aliens anyone?), the truth is far more human—and frankly, a little heartbreaking.
It’s the tale of two business owners, whose partnership fueled the rise of Huy Fong Foods’ Sriracha Sauce to global fame. But like many great stories, it ended in flames—not the good, flavourful kind either.
The Beginning: A Pepper Empire Built on Trust
Craig Underwood, a Californian farmer, and David Tran, a Vietnamese immigrant with a hot Sriracha recipe like no other, were unlikely partners. Their entire business relationship was built on trust and handshakes—no formal contracts.
For nearly three decades, Underwood supplied all the red jalapeños that fueled Huy Fong’s Sriracha, turning it into one of America’s top hot sauce brands, with its iconic rooster and green-tipped bottles becoming household staples—even making it to the International Space Station.
The Fall: “That’s One Way to Ruin a Vacation”
While vacationing in Hawaii, Underwood got a call that would not only ruin his trip but his business… forever. A dispute over payments for the upcoming pepper season led to an abrupt end to the partnership with Huy Fong Foods. What was once a handshake empire quickly became a legal battlefield, with both men accusing the other of various betrayals.
Despite Underwood taking legal action and winning millions in damages, both businesses took a fairly decent hit – one which neither would ever recover from. Huy Fong’s factory stood idle without enough jalapeños, while Underwood’s jalapeño fields were left without a buyer. The result? A nationwide Sriracha Sauce shortage, panic-buying, and knock-off sauces flooding the market.
Adding insult to injury, the absence of Sriracha on the supermarket shelves opened the door for hot sauce rivals, and they’ve made themselves at home.
How Could This Have Been Avoided?
- Put It in Writing! As endearing as handshake deals are, some relationships—especially ones involving millions of dollars—need a little more paperwork. Contracts might not seem as friendly as a nod and a handshake, but they save friendships, businesses, and, in this case, the world’s hot sauce supply. If Underwood and Tran had a written agreement, they could have avoided their bitter dispute over payments, and they might still be making Sriracha together today.
It’s worth noting that if either wanted to sell (or had a need to exit) their business, they would find that prospective buyers see this relationship as an absolutely huge risk unless there was a solid contract around this. Buyers have a “risk lens” which founders often forget. - Diversify, Don’t Depend Underwood made the classic mistake of putting all his peppers in one basket. Sure, focusing on Sriracha paid off big—until it didn’t. By having multiple buyers or growing a wider variety of crops, Underwood could have spread out his risk. Diversifying might not sound as exciting, but it’s definitely the key to surviving unexpected business breakups. There is always an issue in concentration, whether that’s from customer or supplier angle.
…You always need a plan B as a backup – it’s also good to have a plan C and D as well. - Have an Exit Strategy No one likes to think about a breakup when everything’s going well, but having a clear exit strategy or dispute resolution plan can prevent things from getting messy. What happens if one party wants out? How do you handle disagreements? These are the kinds of questions that should be answered long before someone’s shouting about jalapeños.
- Bring in the Pros Successful partnerships, much like a perfectly balanced delicious hot sauce, are a delicate blend of ingredients. Sometimes, the recipe for long-term success involves bringing in experienced professionals—whether they’re lawyers, accountants, or even mediators. A neutral third party *might* have helped Underwood and Tran smooth over their disagreements before they reached boiling point.
A Bittersweet Ending
There’s something sadly ironic about the state of affairs for these two once-powerful partners. Underwood has acres of peppers but now has no major buyer. Tran has a sprawling factory but no steady supply of chilies. And we, the hot sauce-loving public, are left scrambling for overpriced bottles of the good stuff – or stocking our pantry with alternatives.
Ultimately, the Sriracha shortage wasn’t just about the peppers. It’s about human relationships, and what happens when two people forget that business, like a good hot sauce, needs the right balance of heat, sweetness, and structure. And while both men might still be pointing fingers, one thing’s for sure: no one really wins with an ending like this.
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