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A year ago at a Vietnamese restaurant, Polly Mitchell-Guthrie reached for a bottle of Sriracha on the table and was surprised to see the usual slow pour coming out quickly.
Mitchell-Guthrie, a supply chain expert, asked the waiter what happened to the regular bottle with the rooster attached, and soon the complicated backstory of why there was copycat sauce on the table became clear.
in linkedin postMitchell-Guthrie, vice president of industry advocacy and thought leadership at Kinaxis, emphasized the urgency of climate change as the sauce disappears from store shelves and restaurant tables.
“In a vicious cycle, supply chains are the largest contributor to a company’s emissions (80 to 95 percent in most cases) and will suffer from the disruption caused by climate change,” she wrote. “#Sustainable Supply Chain “Like sriracha in pho, it’s no longer a nice-to-have, it’s a must-have.”
On April 30, Huy Fong notified wholesalers that it would again suspend sauce production until after Labor Day due to supply issues. April 2020, Huy Fong also presented. First production halted due to inventory issues. In April 2022, the company announced another suspension that would not resume until after Labor Day. And now the company is in the same position again.
Here's the letter recently obtained by Food Dive: Jungle Jim's International Grocery Store, noting that the supply of peppers was “too environmentally friendly to proceed with production.” Some of the content is as follows: “After reassessing our pepper supply, we decided it was too green to proceed with production as it would affect the color of the product.”
that much The New York Times reported. “California farmer Craig Underwood, who grew red jalapeños for Huy Fong Foods for nearly 30 years and is now a competing manufacturer, said the peppers were likely harvested too late in the season.”
He explained it this way: “Jalapeños are green at first, then ripen to chocolate color and then harvested when they turn red.”
“Nobody wants earthy hot sauce, and other chili experts I’m reading are saying it will affect the flavor… Flavor is important,” Mitchell-Guthrie said.
But this isn't the first experience with the popular hot sauce, and some experts say it's more complicated than a simple supply issue.
“Chili peppers are quite a labor-intensive crop. With labor shortages and rising labor costs, it’s really important for growers to compete,” Walker said. “We really need to invest in research and development to have new varieties and new techniques for growing peppers so we can continue to fill our pantries with hot sauce.”
Huy Fong Foods is the most well-known and major manufacturer in the U.S. sriracha market, selling only three products: sriracha, sambal, and chili garlic sauce.
But despite its size, the shortage shows how Huy Fong failed to adequately diversify its sourcing partners, said David Ortega, an associate professor of food, agricultural and resource economics at Michigan State University. manufacturing dive Again in 2023.
“These are seasonal products. You can’t change suppliers overnight,” Ortega said. The key culprit may have been climate change, but the fact that other hot sauce suppliers haven't experienced the same shortages means there's more to the story, he said.
Struggling to supply jalapeños starting in 2020
Although production has increased in recent months, another shortage could emerge as farmers in Mexico, where Huy Fong supplies red winter pepper jalapeños, endure a severe drought with a smile.
USA Today reported that the company has since purchased peppers from other growers in New Mexico, Mexico and California, but has struggled with shortages. also, open lawsuit It caused some farmers to avoid the company. Currently, the company uses a pepper supplier in Mexico; some reports say.
Huy Fong did not respond to Food Dive's request for comment.
“You have to have the right number of suppliers to Goldilocks. You can't have too little. You can never have too much.” Mitchell-Guthrie Added.
This is an example of the importance of the supply chain, Mitchell-Guthrie added. “Coming up with a great product and building an amazing brand is the beginning. “But this overlooks how important the supply chain is.”
Industry Impact
Is it really a big problem if one source is lacking?
“Yes, actually, that’s a big problem,” he says. Stephen Dombroski, Director, Consumer Markets keyWe are an international supply chain company.
Dombroski added that the real victims are consumers who may have to change their food plans and experience sticker shock due to price increases.
“The ripple effect could be huge as chilli impacts the fresh food, frozen food and additive manufacturing markets. This could change demand and the ability of manufacturers to produce other products,” Dombroski said. “Not only will it impact consumer buying habits in the short term, but it could also change the market for peppers as well as other agricultural alternatives in the long term.”
While Huy Fong struggles, other Sriracha brands are competing to fill the void. But loyal Huy-Fong fans and food producers who rely on its products are doomed to wait out tumultuous times.
“People really like it. They love the taste and (the company) found the right formula,” said Dr. Stephanie Walker. co-director chili pepper lab In ~ New Mexico State University He added that the price is reasonable. “But there are a lot of other hot sauces out there.”
It's Spicy in Los Angeles
In 1979, David Tran, founder of the Huy Fong company, a Vietnamese refugee, moved to Los Angeles and started his world-famous brand. In the back of his blue Chevy van. Less than a decade later, the company began a partnership with Underwood Ranches, a California-based farm. It was the only supplier of jalapeños.
Business was booming until 2016-2017, when Huy Fong and Underwood Ranch had a heated financial disagreement. that much The Los Angeles Times reported. that “Historically, Huy Fong paid Underwood Ranches upfront for the estimated costs associated with growing and harvesting peppers. According to court records, the agreement was ‘established partly orally, partly in writing, and partly by the practices of the parties.’”
In 2019, a jury found that Sauce Brands had breached its contract with Underwood Ranches, committed fraud, and was ordered to pay costs. $23.3 millionThe LA Times reported.
“It was basically a huge loss of character and a loss of a long-term relationship with that vendor,” Walker said.
Now Huy Fong is paying the price of fierce competition for its products. Ironically, it also includes a line of competing hot sauces developed by Underwood Ranches itself.
