Huy Fong Foods, the most popular maker of Sriracha hot sauce in America, controls a 6.3% share of the entire hot sauce market, with annual revenue reaching $131 million in 2020. However, the relationship between Huy Fong and primary pepper supplier, Underwood Ranches, ended in 2017, leading to a shortage of Sriracha sauce and skyrocketing prices. Supply chain and weather-related issues made it hard to find Sriracha hot sauce in the summer of 2022, and it is uncertain when the supply will bounce back. The relationship between Huy Fong and Underwood Ranches was damaged after a legal battle. Although Underwood Ranches has diversified crop production and is producing its own hot sauce, it still purchases peppers from external sources to keep up with supply needs. Agricultural shocks in the food industry are becoming more frequent, and the effects of climate change require society to invest in science, research, and technology to mitigate them.
1. Underwood Ranches supplied the primary ingredient for Huy Fong Foods' Sriracha hot sauce for 28 years.
2. In 2015, Underwood Ranches delivered 100 million pounds of jalapeños to Huy Fong Foods.
3. Huy Fong Foods controls a 6.3% share of the entire hot sauce market, generating nearly $131 million in revenue in 2020.
4. The relationship between Underwood Ranches and Huy Fong Foods ended in 2017, leading to a Sriracha shortage in the market.
5. Huy Fong Foods blamed the shortage on weather conditions affecting the quality of its peppers.
6. Huy Fong Foods sources its peppers from farms in California, New Mexico, and Mexico.
7. Underwood Ranches won a $23 million judgment from Huy Fong Foods in a legal battle over breached financial agreements.
8. Underwood Ranches now produces its own Sriracha sauce and has diversified its crop production.
9. Demand for Sriracha is expected to continue growing, but agricultural shocks caused by climate change may create supply-related issues in the food industry.