The Great Sriracha Feud | Showdown | 2

Summary

Business Wars — The Great Sriracha Feud | Showdown | 2

Podcast: Business Wars (Wondery)
Host: David Brown
Release Date: September 17, 2025

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Episode Overview

This episode delves into the fiery split and subsequent legal and business battle between Huy Fong Foods, creators of the iconic Sriracha sauce, and their long-time jalapeño supplier, Underwood Ranches. Through dramatic recreations and industry analysis, the episode explores how a partnership that fueled the rise of America’s favorite hot sauce unraveled, leading to lawsuits, supply crises, a market-wide shortage, and a permanent shift in the hot sauce landscape.

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Key Discussion Points & Insights

1. The Breakdown of a Vital Partnership

• The episode opens with the tense 2016 meeting between Donna Lam (COO of Huy Fong Foods) and Craig Underwood (Underwood Ranches), where Huy Fong demands a new payment structure that would force Underwood to sell at a loss ([00:02]–[04:20]).
  • Quote:
    • "You're asking us to operate at a loss." — Craig Underwood ([03:12])
  • Huy Fong proposes buying chilies through a new intermediary, "Chilico," at a lower price, further eroding trust.

2. Immediate Consequences for Underwood Ranches

• After refusing the deal, Underwood faces catastrophic financial consequences: leases, unprepped land, and the prospect of laying off half his staff ([07:13]–[10:40]).
  • Quote:
    • "We're going to have to lay off half our staff." — Underwood ([10:21])
• Underwood feels blindsided and believes Huy Fong abandoned the deal without fair warning.

3. Huy Fong’s Perspective and Strategic Moves

• Huy Fong, meanwhile, tries sourcing peppers from Mexico and using pepper mash, but quality and risk concerns persist.
• The company’s rationale: They’d protected Underwood from risk for years and feel betrayed by his refusal to negotiate ([11:00]–[13:00]).

4. Legal War: Lawsuits and Countersuits

• Huy Fong audits payments and sues Underwood for overpayment, while Underwood countersues for breach of contract, seeking $20 million in damages ([14:00]–[17:00]).
  • Quote:
    • "I was such a fool trusting them. I wonder how long they were planning this." — Craig Underwood ([16:22])

5. Underwood’s Reinvention & Entry into Sriracha Market

• With finances dwindling, Underwood pivots: growing new crops and launching his own sriracha sauce, touting his history as Huy Fong’s original pepper supplier ([18:20]–[20:30]).
• His sauce, though less garlicky, gains attention during the Sriracha shortage.

6. The Jury Sides with Underwood Ranches

• In 2019, a jury rules that Huy Fong breached its contract, awarding Underwood $23.3 million. Huy Fong appeals, but the verdict stands ([21:40]).
  • Quote:
    • "When the verdict came in, I had tears in my eyes." — Craig Underwood ([22:34])

7. Supply Chain Crisis and Sriracha Shortage

• Following the fallout, Huy Fong struggles to source enough quality peppers, leading to massive Sriracha shortages in 2022 and again in 2024 ([24:00]–[26:10]).
  • Scarcity spurs hoarding, price gouging, and pushes customers to look for alternatives.

8. Opportunity for Rivals: Rise of Tabasco’s Sriracha & Others

• McIlhenny Company (Tabasco) and others seize on the gap, launching marketing campaigns (e.g., "srirachashortage.com") and establishing Sriracha as a category, not just a brand ([28:19]–[30:30]).
  • Quote:
    • "Many people don't even know that any other company makes Sriracha." — Lee Susan, McIlhenny Co., ([28:34])
• Taste tests and social media challenges flood the internet as consumers seek out new favorites.

9. Return of Huy Fong Sriracha — and Brand Damage

• Sriracha finally returns to shelves after months, but customers complain that the flavor has changed, leading to further negative press ([32:42]–[34:00]).
  • Quote:
    • "There is zero spice to it, and I'm let down." — Disappointed customer ([33:24])

10. Long-Term Impact: Erosion of Trust and Market Dominance

• Loyal customers and farmers feel burned, and even after supply resumes, competitors—including Underwood and Tabasco—gain permanent footholds.
• By late 2023, McIlhenny’s Sriracha outsells Huy Fong’s in the U.S. ([38:30]).
• Negative word-of-mouth persists, while a new generation (Gen Z) discovers Sriracha through viral scarcity, suggesting both a challenge and an opportunity for the brand ([41:30]–[43:00]).

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Notable Quotes & Memorable Moments

• On the supplier relationship crumbling:
  • "We had a deal. What changed?" — Craig Underwood ([03:35])
• On the pain of transition:
  • "I don't know how we're going to get through this." — Craig Underwood ([09:30])
• On what built Huy Fong’s strength:
  • "They were a category creator, and to such an extent that many people don't even know that any other company makes Sriracha." — Lee Susan, McIlhenny ([28:34])
• On consumer reaction to Sriracha’s return:
  • "Isn't it great? It's finally back. Our long national nightmare is over." — Hanley Su, restaurant owner ([37:03])
  • "'Oh, you don't want Sriracha?' 'No, I want the other stuff...Cholimex. Can I get that instead?'" — Customer & Hanley Su ([37:12])

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Important Timestamps

• 00:02 — The pivotal 2016 negotiation & collapse of supplier relationship
• 07:13 — Underwood faces economic fallout, layoffs looming
• 14:00 — The lawsuits begin (Huy Fong vs. Underwood Ranches)
• 18:20 — Underwood reinvents, launches his own Sriracha sauce
• 21:40 — Underwood wins lawsuit, $23.3 million judgment
• 24:00 — Sriracha shortage hits, sparking national drama
• 28:19 — McIlhenny’s Tabasco strategizes to capitalize on Sriracha woes
• 32:42 — Huy Fong Sriracha returns, but customers notice changes
• 37:00 — Restaurant scene where customers prefer the new alternatives
• 38:30 — McIlhenny surpasses Huy Fong as top Sriracha brand

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Analysis & Conclusions

• Scarcity’s Double-Edged Sword:
  The shortage turned Sriracha into a sensation, but also opened the door for mass defection as new sauces were discovered to be as good—or better.

• Brand Erosion and Trust:
  Huy Fong’s reputation suffered permanent damage—not from price, but from perceived betrayal of quality and relationships.

• The Power of Alternatives:
  The crisis reshaped not just business relationships, but consumer habits. Competitors like Tabasco and Underwood Ranches thrived, and new consumer favorites (like Cholimex) gained ground.

• Lessons in Resilience:
  Both Huy Fong and Underwood Ranches showed adaptability, but the cost of broken trust lingers. As the episode notes, “rebuilding trust is going to take more than restocking shelves. It'll require consistency, communication, and—okay, here we go—actual marketing.” ([42:50])

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Tone and Style Notes

David Brown narrates with dramatic flair, using both historical fact and recreated dialogue for an engaging, almost cinematic listen. The episode keeps a brisk pace, but doesn’t shy from the profound emotion and stakes—making clear this isn’t just a business story, but one about trust, identity, and the high price of a broken partnership.

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Final Thought

The days when “Sriracha” meant only one bottle with a green cap may be over. But as Brown wryly puts it in closing:
“Deep down, I still like to think no one can kill the rooster.” ([43:36])

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For new listeners:
This episode provides a masterclass in how relationships, not just products, make or break iconic brands—and why in business, as in life, trust is everything.

Transcript

[A]

Wonder. It's late fall 2016, in Irwindale, California, 20 miles east of Los Angeles. Farmer Craig Underwood follows an assistant into the office of Donna Lamb. Lam is the chief Operations officer of Huy Fong Foods. Underwood strides right in. He's been to our office dozens of times before. Lamb's assistant gives him a tight lipped smile. She'll be right with you. Underwood nods and takes a seat. The collar of his shirt is soaked with sweat, betraying how nervous he is about this meeting. For nearly 30 years, Underwood has grown the vast majority of chili peppers that Huy Fong Foods uses in its signature sriracha. And as their sriracha has grown in popularity, Underwood has upped his chili production for Huy Fong. Thanks to their partnership, Underwood Ranches has become one of the largest jalapeno growers in the country. But while he was on vacation, Underwood got word from his coo, Jim Roberts, that Huy Fong wanted to change the terms of their arrangement. Their new request didn't make sense, but Underwood is certain they can work it out in person. They have to. Approximately 80% of Underwood Ranch's revenue comes from Huy Fong Foods. If he loses that income, Underwood's not sure his farm will survive. Lamb walks in, taking a seat behind her desk. Underwood greets her with a smile, hoping she doesn't notice that his hands are trembling. Donna, it's so good to see you.

[B]

Hi. Thanks for coming in.

[A]

Of course. I think there must have been some kind of misunderstanding about our arrangement for the next year. Obviously, this relationship is important to me, so I just wanted to come by and work this thing out.

[B]

I appreciate it. And yes, maybe some wires crossed. The thing is, we just can't pay the same prices we've been paying for the chili's.

[A]

Okay, but I thought before I left for Hawaii, we'd settled on a price of 13,000 per acre for 1700 acres. Maybe I'm misremembering. What are you thinking?

[B]

We can't justify going over $500 per ton.

[A]

Underwood feels like he's been punched in the stomach. I'm sorry, what? Underwood's mind races. Ten years ago, when Hui Fong wanted to boost production, he told David Tran and Donna Lamb that he couldn't plant the amount of chilies they wanted. It was too great a risk. If he had a bad year and the chili yield was less than he'd expected, he'd be in trouble. So they'd agreed to a compromise to pay him per acre planted rather than per ton of chilies produced.

[B]

Look, we can get pepper mash for $300 per ton from China, so $500.

[C]

Is a fair price.

[A]

Pepper mash is a fermented chili paste that has a long shelf life. Historically, Huifong has opted not to use it because Tran feels that fresh chilies are essential to his sriracha's distinct flavor. Underwood takes a deep breath, trying to stay calm. Be that as it may, it costs us on average $610 a ton to grow chilies. You're asking us to operate at a loss. Lamb shrugs.

[B]

This is what we can afford. You've been resourceful in the past in cutting your costs.

[A]

I'm sorry, I'm still confused. We had a deal. What changed?

[B]

Well, Hui Fong is no longer purchasing the chilies directly. We have a new company called Chilico which is purchasing the chilies for Huy Fong.

[A]

Okay, well, even if we accepted the $500 per ton offer, that's still a lot of money at the number of tons we typically provide. Does Chilico have the assets to ensure we would get our full payment?

[B]

Have we ever missed a payment in the past?

[A]

Huy Fong hasn't.

[B]

Then you can trust us.

[A]

So would Huifong guarantee a Chilico contract?

[B]

That's not Huifong's intention at this time. So do we have a deal?

[A]

Underwood stares back at her in shock. He came here confident he'd get this deal back on track, but now he's certain this decades long relationship is over. Underwood stands up. No. Underwood ranchers will not accept $500 per ton. Good luck with your pepper mash. As he walks out, Underwood's heart hounds he's just broken off the most important business relationship he's ever had and now he has no idea how he's going to keep his farm alive. Hey, let's talk about something we've all experienced. The stress of job hunting and hiring. Whether you're looking to hire or get hired, timing is everything. And that's where INDEED comes in. When it comes to hiring, Indeed is all you need. Their sponsor Jobs feature is fantastic. It helps job posts stand out by jumping to the top of the page, getting them in front of the right candidates faster. And you know what? The numbers don't lie. According to Indeed data, sponsored jobs posted directly on indeed have 45% more applications than non sponsored jobs. And there are no monthly subscriptions or long term contracts either. You only pay for results. Want to know something else? Amazing in the minute I've been Talking to you, 23 hires were made on Indeed. According to Indeed Data Worldwide, that's how efficient the their platform is. Look, there's no need to wait any longer. Speed up your hiring right now with Indeed and listeners of Business wars will get a $75 sponsored job credit. To get your jobs more [e-mail] BW just go to indeed.com BW right now and support our show by saying you heard about Indeed on this podcast. That's indeed.combw terms and conditions apply. Hiring Indeed is all you need.

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[A]

From wondering I'm David Brown and this is business wars. In 1980, Vietnamese refugee David Tran started Huy Fong Foods in Los Angeles, California. At first he sold his homemade hot sauce around the city's Chinatown. But in the mid-80s, he developed a sauce he called Sriracha, a spicy, garlicky blend that became a mainstream hit, garnering devoted fans around the country. By the mid 2000s, We Fong Sriracha was on its way to becoming the third most popular hot sauce in the United States. The key ingredient to the condiment is red jalapenos. For years, Tran struggled to find a reliable supplier of these delicate peppers. But in the late 80s, he received a letter from Craig Underwood, the owner of Underwood Ranches, offering to grow the jalapenos for Huy Fong. Tran took Underwood up on the offer, and for over 20 years, Underwood supplied more and more of Huy Fong's peppers. As Sriracha became a sensation, Underwood upped his pepper production again. Both companies were raking in millions every year and continuing to grow. But in late 2016, the relationship ruptured, and now, without a reliable supplier and with its product soaring in popularity, We Fong Foods finds itself facing pressure from all sides. This is episode two showdown. It's early 2017 in Ventura County, California. Craig Underwood stares at his computer screen, his eyes bloodshot. His chief operations officer, Jim Roberts, sits next to him. Roberts face is pale. They've both been staring at this screen for Hours. But they can't make the numbers work. A few weeks ago, Underwood officially turned down Hui Fong's offer to grow chili peppers for $500 per ton. He stands by the decision. He can't operate at a loss like that. But now he's on the hook for 1700 acres of leased land with nothing to plant on it. Underwood rubs his eyes. I think we just have to accept that no matter how we move the numbers around, we just don't have the money in the bank to grow a new crop on spec. Well, maybe you should talk to the owner of the land again. There has to be a way we can get out of that lease. They are very clear they wouldn't let us out of the contract. Not on such short notice. And I don't really have a leg to stand on either. I committed to a 25 year lease because David and Donna always said that as long as I grew chilies, they'd buy them. Underwood stands and paces his office. You know, that's what pisses me off about this whole thing. If David and Donna wanted to change the deal, you know that's their right. But why couldn't they do it with a little bit of lead time? We've already prepped the soil. Yeah, we could have ramped down the amount of acreage we were growing peppers on, made supply deals with other companies, subcontracted out some of our leases. Anything but this. Yeah, leave us high and dry this late in the season. Even if we had the cash to plant a different crop, there's not much we can do starting this late in the year. Underwood looks out the window. I went to Hawaii thinking we had over $22 million in revenue coming in, and now we're going to lose around 8 million bucks. I don't know how we're going to get through this. I don't know either, but we will. It might take some time, but we can still try to sublease the land. Underwood nods. Yeah, but that still won't be enough. No, it. It won't. You know what we have to do. Underwood sits back in his chair. I don't want to do it, but I don't see a way around it. Roberts nods. So what's your math say? How many people do you think? Well, I hate to say it, but I don't see how it can be less than 45 people. So we're going to have to lay off half our staff. Underwood nods. The two men are quiet for a moment. Underwood sighs. I just don't understand. Everything was Going so good. We. Fong was making money. We were making money. Why did they do this? I don't know. I don't know. And maybe we'll never know. We just need to figure out how to move forward. Yeah, I know. You're right. I guess I better figure out how to tell 45 people they're losing their jobs. Underwood turns back to his computer and starts prepping to lay off half of Underwood Ranch's staff. The worst part is he's not sure it'll be enough. The farm could still go under if they don't figure out how to pivot fast. Roughly 75 miles away in Irwindale, Huy Fong is also struggling. They're producing sriracha using leftover pepper mash from the previous year and importing chilies from Mexico. It's working for now. But both David Tran and Donna Lamb know that could change. Even if they're buying chilies from multiple farms in Mexico, if something impacts the chili crop, they'll be without their most essential ingredient. They need to make sure they have a steady supply of peppers going into this next year. And they're hurt that Craig Underwood refused to negotiate with. They feel like they showed him goodwill for years by taking on all the risk. They paid top dollar for his chilies, and they'd paid by the acreage planted, not the yield grown. So if there was a bad crop one year, it was Hui Fong that ate the loss, not Underwood Ranches. But when they wanted to shift some of the risk, Underwood balked. It felt to them like he didn't even try to understand where Tran and Lam were coming from. There was a reason they were asking to change the way they did business. Tran set up Chilico as a way to give Donna Lamb, a long time loyal employee, a salary increase. But Tran's family, who sit on the board, objected to raising her pay. So Tran started Chilico and gave Lam 100% ownership. But Chilico won't pay the same price for peppers that Hui Fong had. Still, Tran and Lamb thought that after decades of working together, of paying millions of dollars every year in advance, Underwood would trust them. They thought he'd be willing to negotiate. His refusal felt like a slap in the face. The more Lamb and Tran talk it over, the more they believed this wasn't a spontaneous decision. They start to think that Underwood wasn't content to grow alongside them. They think Underwood had been trying to drive them to bankruptcy and start his own rival hot sauce company. And that's why he walked away from negotiations just before, the chilly season was set to start, leaving them scrambling to find a new supplier. So now, as they begin to look back at their past dealings with Underwood, they audit every payment they've made to Underwood Ranches over the years. And they discovered that Hui Fong overpaid Underwood by $1.4 million for the 2016 harvest. They decide to take action. Craig Underwood paces his offices furiously. Underwood Ranches has just been served. Wee Fong Foods is suing them. Underwood COO Jim Roberts sits in a chair, reading through the charges. Underwood fumes. This is complete and utter BS. We're on pace to lose $8.5 million because they decided to pull out of a deal they made. And they have the audacity to come after us because they think they overpaid us last year. Not only that. I heard through the grapevine they've been showing that drone footage they shot of our mechanical harvester to some potential chili suppliers. Are you kidding me? We allowed them to shoot that with the express understanding it stayed internal to we Fong. Well, the more I think about it, I think this was their plan all along. What do you mean? We worked with them for decades, and neither Donna nor David seemed to have more than a passing interest in our operations. Come on. How many times they come out here to visit the farm? I don't know. A handful? Exactly. I can count on one hand how many times I saw either of them at our fields. As long as the chilies were delivered on time and past quality control, they didn't care how we grew them. Yeah, that's true. And then during the harvest, right before they decide to cut ties, they're suddenly so interested that they go to the trouble of hiring someone to come out and shoot drone footage just to have in their archives. Come on. I don't buy that one bit. You know, you're right. God, I was such a fool trusting them. I wonder how long they were planning this. Well, they can't get away with it. I know. It was stupid. I didn't get a written contract from them, but they made a deal. You can't just break your word. Roberts raises his eyebrows. Are you saying what I think you're saying? You want to countersue? Underwood nods slowly. A lawsuit is a big undertaking. It could last years. And if Underwood loses, he'll be out a lot of money in legal fees with nothing to show for it. And the farm is already struggling. He'll have to rely on his wife's money to pay for lawyers. But this situation feels so wrong. He doesn't think that Hui Fong should get to break their word and jeopardize Underwood's business with no consequences. And if he wins, well, the money he'd likely be awarded in damages could go a long way to stabilizing the farm's finances. Underwood believes he can win. To him, it's clear cut. Wee Fong is to blame. All right, let's do it. Let's sue. Adrenaline courses through Underwood's body. By suing, he's ending any chance of ever mending the relationship with Wee Fong. He just hopes he's making the right decision. This episode is brought to you by Prize Picks. You and I make decisions every day, but on Prize Picks, being right can get you paid. Don't miss any of the excitement this season on Prize Picks, where it's good to be right. Look, I'm a hardcore Longhorns fan, and no matter the team, it's fun to be a fan and play Prize Picks. 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Download the app today and use code BW to get $50 in lineups after you play your first $5 lineup. And you gotta try it. This one's on us. Don't forget to use code BW to get $50 in lineups after you play your first $5 lineup. Prize picks, it's good to be right. This episode is brought to you by Square. You know, one of the things I love about small business is how they're such a part of having a sense of community. They're our friends, our neighbors. There's a packing and shipping store I use all the time. Great place. They know when I'm getting low on supplies. But more than just that, they know my name. They ask about the family. Same thing for an ice cream shop around the corner. I love hearing about how business is going and they're interested in what I do, too. These are not just businesses. They're places for connection and conversation, where how you been feels real. When we choose to spend our money at these neighborhood spots, we're doing more than just making a purchase. We're investing in our community, creating jobs, keeping our neighborhoods vibrant, alive, unique. That's why Square is proud to partner with over 4 million neighborhood businesses worldwide, providing them with the tools they need to thrive in today's economy. That means a lot to me, and it's just one reason we love to celebrate Square. Our communities thrive on small business, and Square gets it. You can go to square.com go bw to learn more. But look, before you do, make sure to go out there and support your favorite neighborhood spot. You'll be happy you did Square. See you in the neighborhood. In February 2018, Underwood Ranches countersues Huy Fong Foods. They claim that Huy Fong breached the contract and caused underwood ranches $20 million in damages. As the case moves through the court, Underwood Ranches works to get their business back on track. They manage to secure subleases for some of the acreage they're no longer using to grow peppers. They also start growing other crops, including tomatoes, Brussels sprouts, and pumpkins. Despite these moves, the farm is on pace to lose $6 million in 2018. But Underwood pivoted in the past, and so he decides to pivot again. He's going to make his own Sriracha sauce. You know, entrepreneurs often wait too long hoping things will go back to normal. Underwood didn't wait for a miracle. When his primary customer disappeared, he started planting tomatoes and Brussels sprouts, then decided to roll out his own branded Sriracha. That kind of agility separates the survivors from the casualties. The faster you move from reaction to reinvention, the more likely you are to stay in the game. It's a bigger undertaking than he initially realized. His company develops the recipe, designs the bottle, gets a canner's license, and goes through food safety training. But there's one aspect that's easier than he imagined. Coming up with a name. David Tran named his sauce after a town in Thailand that inspired the flavor profile. But the United States makes it harder to trademark names with locations in it, and Tran never tried in the past. As Competitors began to make their own versions of sriracha. It didn't bother Tran that other companies also called their sauces Sriracha. He actually thought copycatting the name was essentially free advertising. And for years, none of those competitors made much of a dent in Huifong's market share. Their sauce was the sriracha sauce of note. Customers looked for the rooster logo and the bright green cap on the bottle. But Underwood Ranches has a stronger pitch to customers about why theirs is the true rival to Wee Fong Sriracha. They're the original source of its peppers, and they know chili peppers better than any other sauce maker out there. In 2019, Underwood starts selling its sriracha at farmers markets alongside their vegetables. It's not an exact duplicate of Huifong's version. Underwood's version is less garlicky, with more of an emphasis on the pepper and slightly darker in color. Off the bat, it gets mixed reviews. People complain that it's one note it doesn't have the garlicky, vinegary, spicy blend of Hui Fong sriracha. Instead, the taste of the peppers dominates. But Underwood's entry into the sriracha market enrages Wee Fong Food, and the feud spills over to social media. On Twitter, we Fong Foods accuses Underwood Ranches of hypocrisy in suing Huifong for damages. When they now have their own sauce. They tweet, Underwood expects HF to pay back the golden goose that they themselves killed. Underwood's case goes to trial in 2019. It lasts three weeks. When it's over, the jury sides with Underwood Ranches. Although the jury acknowledges that Underwood Ranches did receive roughly 1.5 million in overpayment from Huy Fong, they rule that Huy Fong breached their contract. In November 2016, the jury awards Underwood Ranches $23.3 million. As the jury reads their findings, Craig Underwood gets emotional. He bet everything on this lawsuit, and he won. When the verdict came in, I had tears in my eyes. Huy Fong Foods appeals the decision, but the judgment is ultimately upheld. It's a setback for Huy Fong Foods, but it's not devastating. The company is doing quite well. Demand for Sriracha sauce remains high. In 2019, Huy Fong's annual revenue surpasses $150 million, representing 10% of the total hot sauce market in America. But there's trouble on the horizon. Just like in the 1980s when Tran started Hui Fong, he's having difficulty sourcing peppers. Their new suppliers are primarily out of northern Mexico. It works well for a while, but then in 2021, the region experiences a severe drought. And in April 2022, Huy Fong Foods has to suspend production of the sauce for approximately four months. They simply don't have enough peppers to produce Sriracha. It's a major blow to restaurants that have come to rely on the sauce for their signature dishes. In their letter to customers, Huy Fong Food squarely places the blame on the drought. Unfortunately, the letter reads, this is out of our control. But Craig Underwood sets the record straight. He tells NBC Los Angeles that Sriracha would be readily available if Hui Fong was still doing business with him and that his plentiful chili crop is proof. During the shortage, chefs and home cooks ration out the bottles of sriracha already on their shelves. Some restaurants get creative, giving away free meals to customers who donate unopened bottles of sriracha. But the shortage drags on for several months, and this creates an opportunity for some of Huy Fong's biggest rivals to finally make their mark. It's 2022 on Avery Island, Louisiana. McIlhenny Company's chief sales and marketing officer, Lee Susan, is holding a meeting. McElhenny is the maker of Tabasco, the best selling hot sauce in the United States. Susan sits at the head of a board table, a legal pad in front of him. Well, by now we've all heard about We Fong's chili pepper problem. This is an opportunity for us, I think, and I don't want to waste it. McElhenny launched their own version of Sriracha back in 2014, but sales never really took off. But now they have a key advantage over We Fong. McIlhenny sources its peppers from multiple continents, so they're not as affected by the drought in Mexico. They have the pepper suppliers necessary to quickly ramp up production of their version of Sriracha. Susan looks at an intern sitting in the corner. He senses a teaching opportunity. Jane, why do you think Hui Fongs maintained its dominance in the Sriracha market? The intern looks up, surprised that Susan is speaking to her.

[B]

They were the first to market.

[A]

Yes, but that's not all. Keep on going with that thought.

[B]

They built up brand loyalty.

[A]

They did do that, that's true. But more than that, they were a category creator, and to such an extent that many people don't even know that any other company makes sriracha.

[B]

Oh, like people thought Huifong Sriracha was the only one that they didn't realize it was just a type of sauce.

[A]

Exactly. This way of thinking about Sriracha created what we call an economic mode around Huy Fong's product. Consumers had no need to look for other versions of Sriracha, but now that.

[B]

It'S not on the shelves, they might be open to looking for other versions.

[A]

Exactly. So I want to get pitches for the best ways to let the public know that even if we Fong Sriracha is having production issues, that doesn't mean they have to forego their favorite sauce. McElhenny is here for them. An executive raises his hand. You know, just because I know the ad agency is going to ask, do you think we should call out the Wei Fong shortage specifically? I don't think we should mention Hui Fong by name, but I think we can acknowledge the shortage. Sure. Susan leans forward at the table. This is our opportunity to become the dominant player in the Sriracha space. Now, let's not waste this. There's a lot of room for growth here. In September 2022, McIlhenny launches a website called srirachashortage.com it features a red background with big white letters that say looking for something. Peeking up from the bottom is a bottle that looks a lot like Huy Fong's Sriracha sauce. Except the discerning customer may notice that the cap of this bottle is olive green rather than bright green, signaling that it is McElhenny's version. McElhenney sees a jump in sales, and they're not the only ones. The message that Sriracha is a category, not a brand is getting out. And on social media, people are holding taste tests to figure out how to fill the Hui Fong gap.

[D]

This is what's going to happen. I'm going on Amazon. I'm buying every single Sriracha bottle I can freaking find. We're doing a taste test test. We're going to find the Sriracha that tastes the most like Sriracha. So you know what to buy.

[A]

McElhenney's Sriracha Shortage website wasn't just Clemmer. It was strategic. They didn't try to out hot Hui Fong. They offered certainty in a moment of scarcity. You know, the smartest brands don't just fill a space on the shelf. They fill gaps for customers. And if you can become the answer to a consumer's problem, you don't need to mention your competitor by name. The market's going to figure that out every time. If Huifong wants to maintain its status as the market leader in the category it created, it's going to need to figure out how to get its sauce back on the shelves as soon as possible, but it may already be too late.

[E]

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[A]

Exclusions and detailsmobile.com.

[F]

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[A]

Approximately 18 months after Huifong sent its letter warning of the shortage, its Sriracha starts returning to shelves and the wholesale price drops back down. Customers rejoice. They post victorious photos of securing multiple bottles of Sriracha on social media. Chefs stock up on the product, but soon some customers start to have concerns. Something's wrong with Sriracha. The older version has bright red color and smooth texture.

[D]

The newer version has bright orange and grainy texture. Texture.

[B]

So people say not only does it have a different color, but it has a different flavor.

[A]

There is zero spice to it, and I'm let down. Huifong insists that variations in taste and color are inevitable when a product relies on a fresh ingredient. Every batch of Sriracha is a little different from the last, they say, because every batch of chilies is slightly different from the last. Not all customers buy that explanation. Many believe that Hui Fong tried to save money on its chili peppers and the result was a lesser product. It's hard to know if the peppers Huy Fong is sourcing are objectively lower quality than what they bought from Underwood Ranches. But it's clear that the relationship Huy Fong once had with its customers has shifted. Now, I don't know about you, but as a fan, I remember this moment really well. The Sriracha shortage became a viral event, turning ordinary customers into hot sauce hoarders. And it seemed like every other YouTuber was a taste tester. Scarcity can boost visibility, but only if the product holds up when it returns. When the new batches from Hui Fong disappointed, all that curiosity turned into criticism. If demand builds and the quality drops, customers don't stick around. They move on. Scarcity marketing is only effective if it's scarcity. That's the problem, not quality. Trust me, your fans are going to know the difference. Previously, we Fong never paid a dime to advertise its sauce. The company relied entirely on word of mouth. Over and over, David Tran relayed his belief that the company's first priority was to make a great product. Profit would follow, and for decades that was true. As a result, Sriracha Sauce developed a devoted following. People even got tattoos of the rooster logo that adorned the bottle. But now, with the shortage and the bad press as a result of the Underwood lawsuit, the sentiment toward Huy Fong has turned. A cadre of customers feels that Huy Fong has turned its back on its commitment to make a great product. And instead, they think the company is prioritizing profit. In November 2023, Hanley Su eagerly cuts open a cardboard box of Sriracha bottles. She's been waiting for this. Sue owns the restaurant Forever in Alhambra, California, an eastern suburb of Los Angeles. Sriracha sauce is a staple in pho restaurants, and customers expect to find it on the table. So when the Huifang Sriracha shortage began, Su faced a bunch of disappointed patrons. Su couldn't afford to buy Huifong's Sriracha from any of the price gougers online. So for the past few years, she's been using an alternative brand, a sauce called Cholimex. That's the go to fossas in Vietnam. But she still regularly checked the wholesale price on Huifong's Sriracha. And when it finally came back down to pre shortage prices a few weeks ago, sue quickly ordered a case. She grabs an armful of bottles and places one on each table, taking away the Chollimex. She can't wait for customers to walk in and see that their beloved Huy Fong Sriracha is back. A little later, the restaurant opens and the lunch rush begins. Sue flits between tables, greeting regulars, filling water glasses, wiping up spills. A customer across the room raises his hand calling her over, sue strides to his table.

[B]

Hi. How can I help you?

[A]

The customer holds up the Sriracha bottle. Sue smiles.

[B]

Isn't it great? It's finally back. Our long national nightmare is over.

[A]

Actually, I was wondering if you had any of the old stuff left. Sue's eyebrows shoot up in surprise.

[B]

Oh, you don't want Sriracha?

[A]

No, I want the other stuff. I don't remember the name. Started with a C. Choleemax. Yeah, that's it. Can I get that instead?

[D]

Sure.

[B]

I'll be right back with it.

[A]

Sue heads to the storeroom to grab a bottle of the Choli Max for the customer. But she can't believe it. For over a year, her customers clamored for Huifong Sriracha. Sue thought they only begrudgingly made do with the Choli Max. But over the course of the day, other customers also ask for Choli Mex instead of sriracha. Turns out the shortage made customers realize that Huifong Sriracha might not be the best on the market. Other alternatives to Huifong Sriracha are also benefiting. Underwood Ranch's Sriracha sauce sees a boost in sales while Sriracha is off the market. And in 2023, Underwood Ranches secures a distribution deal with Costco for 24 locations around the United States. They also make a deal to be carried by Walmart. As a privately held company, Huefong does not have to declare its revenue or make its finances public. So it's hard to know exactly how much the shortage and increased competition are hurting its bottom line. But in the second half of 2023, McIlhenny's Sriracha surpasses Huy Fong's as the best selling Sriracha in the United States. Huy Fong is still working to figure out its chili supplier problem and how their name is hurting them. Around 2023, farmers in southern California are approached by an intermediary about growing hundreds of acres of jalapenos for an unknown buyer. The the price offered is described as handsome. Speculation runs rampant throughout the farming community that the secret buyer is Hui Fong looking to diversify their pepper suppliers. But the legal dispute with Underwood casts a long shadow and some farmers turn the offer down out of loyalty to Craig Underwood. Years after the lawsuit, Huy Fong's name still triggered hesitation among the farmers, not because of pricing and but because of trust. When you burn bridges in a close knit industry, word travels fast and lingers longer. One bad split can follow you for a generation might Think of it as the long tail of reputation. So despite its attempt to add more suppliers, Hue Fong still struggles to procure peppers that are up to the company's high standards. In May 2024, Huifong is forced to stop production again. This time, they tell customers that the peppers they received were too green. They promise to resume production around Labor Day. The announcement of another shortage generates a lot more negative press for the company. Major publications like the New York Times report on Huy Fong struggles, and Tiktoks complaining about the recurring shortages garner millions of combined views. But while some customers feel that Hue Fong has lost its luster as a result of the problems over the years, others are newly drawn in. A research poll shows that Gen Z's knowledge of Hui Fong Sriracha has increased, likely due to all the social media chatter the shortages have generated. And instead of causing frustration, the scarcity has piqued the younger generation's curiosity. In early 2025, there are signs that the latest shortage is behind Hui Fong. If they can maintain a steady supply of peppers, their future still looks bright. But they've shown they can be vulnerable. The economic moat that protected them for so long is a little shallower than it once was. And the big players like McElhenny aren't going to back down now that they've gotten a taste of victory. Huy Fong's days as the only Sriracha sauce maker of note in the United States are over. Consider this for a moment. Huy Fong built a cult brand without spending a dime on advertising. That is a rare feat. But when their product disappeared and the replacements were better or cheaper, a lot of that goodwill evaporated. Rebuilding trust is going to take more than restocking shelves. It'll require consistency, communication, and. Okay, here we go. Actual marketing. A great product can certainly build a brand, that's for sure. But maintaining it requires more than just sauce in a bottle and rebuilding a brand. That'll cost you for sure. But, you know, for those of us who consider ourselves hot sauce aficionados, sure was fun. Feeling like you had the inside line on the best stuff around. Deep down, I still like to think no one can kill the rooster. Come to think of it, we may be overdue for a taste test right about now. Anyone else up for it? From Wondery, this is episode two of the Great Sriracha Feud for business work. A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. And if you'd like to read more, we recommend what really Caused the Sriracha Shortage by Indrani Sen, published in Fortune. I'm your host, David Brown. Austin Rachlis wrote this story. Sound design by Ryan Potesta. Kyle Randall is our lead sound designer. Voice acting by Chloe Elmore. Fact checking by Gabrielle Jolais. Our producers are Tristan Donovan of Yellowant and Kate Young. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer Emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie. For Wondering.

[D]

Hi, I'm Denise Chan, host of Scam Factory. You might remember hearing about our investigative series that exposed what's really happening behind those suspicious texts you get inside heavily guarded compounds across Asia, thousands are trapped and forced to scam others or risk torture. One of our most powerful stories was Jela's a young woman who thought she'd found her dream job only to end up imprisoned in a scam compound. Her escape story caught the attention of Criminal's Phoebe Judge and am honored to share more details of Jella's journey with their audience. But Jella's story is just one piece of this investigation. In Scam Factory, we reveal how a billion dollar criminal empire turns job seekers into prisoners and how the only way out is to scam your way out. Ready to uncover the full story? Binge all episodes of Scam Factory now. Listen to Scam Factory on the Wondery app or wherever you get your podcasts.