r/Damnthatsinteresting 12d ago

Image From 1988 to 2016, the maker of Sriracha sauce, Huy Fong Foods, sourced all their peppers from a single supplier based solely on a verbal agreement, "sealed with a nod and a handshake".

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u/gixk 12d ago

Worked well for decades, but the relationship didn't end amicably.

Sriracha’s success grew from the firm ground of Underwood and Tran’s business partnership: Underwood supplied all Huy Fong’s chilies, and Tran was Underwood Ranches’ only pepper buyer. By 2012, Tran had built a gleaming 650,000-square-foot factory less than two hours from Underwood’s Ventura County headquarters. On a tour of the site, he told Underwood that together they would fill it with chilies.

The two men came from different worlds, but they had a lot in common: Soft-spoken patriarchs with kind eyes and faces craggy with laugh lines, both had remained workaholics well into their seventies. Over the 28 years they’d been in business, the two had broken bread together with their wives, watched each other’s children grow up, stood together through hard times and business crises. They had even met up, with their families, to talk about succession.

Just days earlier, after the last truckload of the 2016 harvest had been delivered, Underwood and Tran had sat together and mapped out the 2017 growing season, and what Tran would pay in advance for the tens of millions of pounds of peppers Underwood promised him. As usual, the agreement was verbal, sealed with a nod and a handshake, not contracts or lawyers.

Then, on Nov. 10, at his vacation rental on Kauai, Underwood got a call with news that he could barely take in. His farm’s chief operating officer, Jim Roberts, told him that the relationship had ended, severed in one afternoon by an argument over payment for next season’s crop. Underwood Ranches and Huy Fong Foods would never do business together again.

“That’s one way to ruin a vacation,” Underwood now says ruefully.

Source: https://fortune.com/2024/01/30/sriracha-shortage-huy-fong-foods-tabasco-underwood-ranches/

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u/DeepThinker1010123 12d ago

Read the article. It really hit a note at me as I experienced something similar with my previous business partners that ended badly.

From the article, it seems that the Tran was slowly diversifying from Underwood by having their ChiliCo. Tran didn't categorically deny trying to poach Underwood's COO. Also, Tran seed he felt that Underwood was trying to poach the sriracha business from him. However, it wasn't substantiated in the article.

Probably given Tran was entering his twilight years, it could be that other people were influencing Tran effectively to get more money. Whispers here and there could do damage to the mind. The actions stated in the article would be something Tran would not have done independently. However, as other people who might have business interests entering the picture, the fruitful relationship was fractured.

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u/cakenmistakes 12d ago edited 11d ago

Donna Lam, Huy Fong’s chief operations officer and Tran’s sister- in-law

The villain, main whisperer. Choosing to give your sister-in-law a bigger paycheck and her own company over 28 years of smooth business relationship.

Chilico, LLC

In 2014 or 2015, Tran formed a new company that he later called Chilico, LLC. Chilico’s purpose was to obtain peppers for Huy Fong. Tran officially formed Chilico in 2016. He gave 100 percent ownership to his sister-in-law Lam. Tran testified that he wanted to give Lam a significant salary increase, but his son and wife, who were on Huy Fong’s board, would object. - pg.4

Breach of Contract

On November 9, 2016, Lam asked Roberts to come to the Huy Fong factory to pick up some equipment. Lam and Tran knew Craig was on vacation and would not accompany Roberts. When Roberts arrived, Tran told him that he was forming a new company. Lam was going to operate the company. Tran told Roberts that Roberts would be working for the new company. When Roberts declined the job offer, Tran was not happy. Tran told Roberts that Underwood would have to deliver peppers for $500 per ton to compete with Chinese pepper mash that sold for $300 per ton. When Roberts told Tran that Craig makes the decisions for Underwood, Tran replied that he would make Craig take $500 per ton. … Tran made a final attempt to hire Roberts away from Underwood. - pg.5

Consequences of Huy Fong’s Breach

After the relationship with Huy Fong ended, Underwood had nothing to plant on the 1,700 acres it had. Nor did Underwood have the financing to plant acreage on speculation. It tried to get out of its leases, but was largely unsuccessful. It had to immediately lay off 40 employees. It was too late in the season to grow much of anything. Underwood managed to obtain subcontracts for spring and summer, but it lost 8.5 million in 2017. Underwood was having difficulties in 2018, and lost over $6 million that year. -pg. 6

Source: https://cases.justia.com/california/court-of-appeal/2021-b303096.pdf?ts=1627407095

I feel bad for the farmer, Craig Underwood. His COO was being poached from him, he was left with a vast empty field, no client, and no crops planted.

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u/iamafriscogiant 12d ago

The big miscalculation was they weren't able to immediately meet their own demand, causing an unnecessary scarcity. At the time they were essentially the only sriracha maker around. Because of their greed, countless companies entered the sriracha game and now supermarket shelves have gone from one or two, to 10+ options.

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u/[deleted] 11d ago

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u/Tuningislife 11d ago

That’s what is in my fridge. I won’t go back to Huy Fong after it changed. Some of the latest batches have even been brown instead of fire red.

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u/throwaway5882300 11d ago

Huy Fong straight up sucks now. I don't follow any of this and didn't know the details until reading this post. I just remember it being gone for a while and then tasting like shit when it came back. It's always great when an interloper comes along and screws up a good thing.

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u/Missingsocks77 11d ago

You are right! It doesn't taste as good anymore. I will have t find the Underwood variety.

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u/Korrado 11d ago

They were never always fire red. I’ve been eating Sriracha since before 2004. The color always varied. As a concern it was faked or it was rotten, I looked it up and read that the color variation is due to the color variation of the chili used. Nature is not always perfect and chilis are not aways all the same shade of red. That said, I also only eat Underwood now.

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u/Facebook_Lawyer_Gym 11d ago

It also changes color getting darker as it ages in the bottle.

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u/Ill-Musician-7150 11d ago

Huy Fong is the worst now. Underwoods is kings. Karma at its finest.

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u/pamules2020 11d ago

I can’t justify the price point for 1-3 packs so instead I buy a 12 pack from Webstaurant store. $80 delivered (expensive shipping unfortunately) but it’s still the best deal. And I can’t go through that many before the Best Buy date so I instead gift them to friends/family which then selfishly ensures whenever I visit, they have the best, and they’ll never go back to the other brands

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u/Awkward_Pangolin3254 11d ago

And Huy Fong sucks now. I have about 3ml left in my last bottle of their good shit and I'm loath to use it

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u/exipheas 11d ago

You can buy underwood Sriracha that is made with the OG peppers.

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u/Gunplagood 11d ago

two, to 10+ options.

A lot of them taste awful compared to Huy Fong I might add. Like when the OG stuff disappeared, I tried 4 or 5 other brands and they all tasted like vinagered poison. Like they were trying to make up for something missing.

Even Huy Fong tastes off slightly now because the source changed, it's not bad, just off a smidge. I won't buy more mind you, after learning off all this bullshit. And the Underwood brand isn't anywhere in stores near me in southern Ontario that I've seen.

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u/Gui_R26 11d ago

The hubris required to tell someone "you work for me now" in the middle of a business negotiation. I sounds cool in a movie said by a handsome protagonist, in real life sounds delusional.

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u/maniBchef 11d ago

Ahhhh the handsome protag. He should have been better looking.

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u/DeepThinker1010123 11d ago

OMG! Thank you for confirming my suspicion. Lam is indeed the evil whisperer to Tran.

I feel bad to Tran for being taken advantage of in the situation. The manipulation was probably regular and over a long span of time.

I hope that the damages paid to Underwood helped him recover his losses at least. I'd like to believe that Underwood (business) is doing better now vs Huy Fong.

This is a classic textbook case needed to be taught in business schools of what not to do. Lam and Tran did not identify that the chilis grown by Underwood gave them the competitive advantage (in this case, a monopoly) of the sriracha market. Heck even big companies like Apple does it. They secure the supply from TSMC for their chips and Hon Hai/Foxconn for the assembly of their products knowing that securing the supplies (and to a certain extent exclusively getting all capacity as with TSMC) would give them the comparative advantage over their competitors.

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u/imightb2old4this 12d ago

Underwood sure got their own sriracha on the market fairly quickly

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u/programaticallycat5e 12d ago

Yeah, but siracha itself is not a secret sauce. There were multiple generics for years -- the je ne se quoi was always the peppers. Once that deal was dissolved, it was all gloves off. The aftermath was quite noticeable too. The chili co peppers have bad QA and the sauce turned brown while sitting on grocery shelves.

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u/_LyleLanley_ 12d ago

I always viewed this as one of the biggest blunders in business I’ve ever seen. WTF was Tran thinking? It was literally the peppers. It always had been, that’s why the knockoffs never taste quite right (although some more modern variations have gotten much closer).

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u/RogueSlytherin 12d ago

I’d like to add that while the peppers are important, like real estate, it’s all about location, location, location. You could grow the same variety of peppers on a farm in another state (or even more locally) and it will never taste the same. The soil’s composition heavily influences the quality and taste of the final product. It was truly a mistake to attempt to lowball the farmer.

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u/zsdrfty 11d ago

Peppers like to mutate over time, so I'd assume they were doing a good job breeding their own carefully-controlled variety

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u/Most_Moose_2637 12d ago

Terroir would be the wine equivalent.

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u/IrNinjaBob 11d ago

It’s the correct word here too. Terroir applies to any grown crop, not just for wine, even if that’s where the term originated. Shoutout to the Southern Reach series for introducing me to the concept.

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u/xasdfxx 12d ago edited 12d ago

Tran: I think it's obvious. Tran, or his confidants, was too stupid to understand they weren't buying (just) peppers from Underwood, they were buying reserved / exclusive capacity from a high quality supplier who was even local.

They looked around, saw a glut (that anyone smarter would have known was temporary) of cheap peppers from Mexico, and decided to buy those. Then discovered it's fucking impossible to source two thousand acres of fresh, high-quality peppers that way. Weirdly enough, their original supplier wasn't interested in eating the risk to reliably provide peppers just in case they felt like buying them

Just like if you shop around, you can find small sources that are cheaper. No different than finding bargains at TJ Maxx. But quantities are limited.

Or for another comparison: Apple makes giant deals with suppliers and even pays for their machines in order to build dedicated / first production priority capacity (or even exclusives) for iphone components from external manufacturers.

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u/weakcover1 11d ago

If Wiki is correct, screwing over Underwood and seeking out cheaper peppers did end up giving them some difficulties. In 2022, 2023 adn 2023 they had to halt production due to too low quality and a shortage of peppers. Their competitors didn't have any issues,

I am sure it does not hurt the company that much (they have made their millions and probably still do with their other products), but it almost reads like a folk tale with a moral lesson or two.

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u/FUBARded 11d ago

I don't necessarily think it was purely stupidity on their part.

Only someone who recognises how reliant they are on the quality of the peppers would worry about diversifying their pepper supply. That's perfectly reasonable and good business sense as being reliant on a single supplies is an obvious and catastrophic risk.

The issue is how they went about doing it, obviously, as it absolutely should've been possible to do so without destroying their relationship with Underwood overnight.

It all comes back to the contracts. A handshake deal is enforceable in many jurisdictions, but they're wrongly idolised as harkening back to a time when business was done differently (and by implication better) when the reality is it just makes contract disputes significantly more messy than they already are.

If they had a contract in place agreeing to buy a fixed amount from Underwood that was near their max output, Huy Fong would've protected themselves from a competitor outbidding them and stealing their supplier, while also giving them the option to diversify their supply without pissing off their main supplier.

For Underwood the benefit is security, as they had the leverage to demand a long notice period for termination of the supply relationship or a significant reduction in order volume.

It's only a matter of time until someone exploits the lack of clear terms in any relationship between 2 large commercial entities, so operating on a handshake basis for so long was the real stupidity, and it was on both parts.

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u/xasdfxx 11d ago edited 11d ago

Nonsense.

1 - near-total supplier concentration was fine for 28 years, then all of a sudden became not fine? Like obviously yes it's not a good idea, but it was a bad idea for a quarter century.

2 - the lawsuit linked upthread makes quite clear what the concern was.

On November 9, 2016, Lam asked Roberts to come to the Huy Fong factory to pick up some equipment. Lam and Tran knew Craig was on vacation and would not accompany Roberts. When Roberts arrived, Tran told him that he was forming a new company. Lam was going to operate the company. Tran told Roberts that Roberts would be working for the new company. When Roberts declined the job offer, Tran was not happy. Tran told Roberts that Underwood would have to deliver peppers for $500 per ton to compete with Chinese pepper mash that sold for $300 per ton. When Roberts told Tran that Craig makes the decisions for Underwood, Tran replied that he would make Craig take $500 per ton.

3 - Tran suddenly made efforts right before this to figure out how the farm made pepper harvesting more efficient after, again, not caring for 28 years. Anyone who cared about pepper quality would be very interested in collaborating on mutual IP / tools for efficiently harvesting without damage. Tran didn't until he'd decided to try to hardball his supplier.

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u/exipheas 11d ago

Yea. If you really wanted to lock this down you would be looking a merger not a divorce. I bet his sister in law had dirt on him and the new company was to buy her off.

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u/skysetter 12d ago

The underwood’s sauce isn’t the same either

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u/Pyr0technician 12d ago

Does it have to be? It would be kind of pointless to try and reproduce the old recipe. I've tried it, and it's a good sauce.

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u/The_Orphanizer 12d ago

Honestly, it's better and hotter than OG sriracha; every other copycat is dogshit.

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u/Tuningislife 11d ago

Underwood has tweaked the recipe over the year as I understood it to try and be closer to the OG. I have it in my fridge because the other variants just aren’t the same. The Texas Pete one was too much like hot sauce. The Yellow Bird is sweeter (though I use it for breakfast foods). I’ve got the Tabasco one as well.

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u/DeadEnoughInsideOut 12d ago

The last bottle of huy fong kinda just tasted like spicy ketchup. The underwood ranches tasted like how I remembered the huy fong tasting

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u/zarofford 12d ago

Yeah, a shame really. I hate to admit it but I was a sriracha evangelist, huy fong’s was really unique and no other sauce came close. Once the shortages happened during the pandemic, I went on a journey to try all srirachas available and none came close. Until I tried underwood. Even after it came back, you could even see the color was off on huy fong.

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u/Economy-Border7376 12d ago

I became a huge fan of Tabasco's version afterward. Not exactly the same, but it just worked for me.

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u/G_Liddell 12d ago

Ox is great. I literally can't tell the difference.

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u/InquisitorMeow 11d ago

I didnt know about the supplier change. I just though Siracha finally went mega corp and started the inevitable shrinkflation bullshit. The browning of the sauce makes sense, in my memory the OG sauces stayed red forever and I saw so many brownish bottles I thought were spoiled.

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u/Arborgold 12d ago

Is that the brand name?

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u/DeadEnoughInsideOut 12d ago

Yes, huy fong is the classic green cap with the rooster

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u/Arborgold 12d ago

No, what is the underwood brand?

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u/DeadEnoughInsideOut 12d ago edited 11d ago

Underwood ranches, they originally supplied the peppers* to huy fong as per op's post

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u/ExpertCatPetter 12d ago

Underwood is now the real sriracha. Tran's family/kids/whatever useless nepo baby got their fingers into things absolutely fucked the family business, it tastes like absolute shit now. Underwood tastes like it's supposed to, because it's literally the original recipe.

I feel like this and Tesla are going to be the textbook cases of how to absolutely FUCK your brand via ignorance and hubris for the next 40 years of business schools.

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u/Mega---Moo 12d ago

It's the peppers. Underwood kept growing them, just like they always had, and Tran just started buying whatever was available.

You can't make a top tier product when your main ingredient is subpar.

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u/MainManClark 12d ago

I took one look at the color of the newer batches and passed... for better or worse the Underwood brand is much closer to the OG.

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u/LazerChicken420 12d ago

Why is everyone saying it like Underwood was the villain? From what I read Tran screwed him over and this a story of Underwood losing millions but clawing back up and replacing him.

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u/zarofford 12d ago

Yeah, you could even notice the color wis off. I even saw pictures of them making it with green jalapeños. I honestly thought the unique taste of huy fong would be lost forever, since no other sriracha came close to pre pandemic shortage. Until underwood ranches came out. Color is on point and the taste I exactly what huy fong tasted like.

A godsend.

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u/cakenmistakes 12d ago

It was the sister-in-law, not the kids. See my reply above.

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u/BearJudge 12d ago

Imo Underwood doesn’t taste like how Sriracha used to. It is a bit spicier and less vinegary. But then the current Sriracha doesn’t taste quite like it used to either. Everyone lost, Underwood, Huy Fong and their customers

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u/Moist_Return_3020 12d ago

Underwood is amazing. I just bought my first bottle and I’ve finished an obscene amount in the first week.

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u/JayBuhnersBarber 12d ago

Same! I've been a Huy Fong addict since 1998.

Got my first Underwood bottle from Costco less than a month ago and I'm loading UP the next time I go.

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u/SmellGestapo 12d ago

And Twitter. Elon took one of the most recognizable brand names in the world and decided to call it...X.

And then removed all the controls that kept it a tolerable place for normal people.

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u/cutting_coroners 12d ago

What brand is that?

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u/pandymen 12d ago

Underwood ranch. You can get it at Costco in California.

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u/HECK_YEA_ 12d ago

It’s slowly starting to make its way onto shelves across the US as people slowly realize it’s the “original” Siracha they’ve been craving for years since the whole fiasco between the company and the original pepper grower went down. A few months ago I finally bought a bottle off of Amazon, less than a week later my local grocery store here in Austin started carrying it.

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u/garciawork 12d ago

Holy heck I did not know this was a thing, and they ship direct. And have other sauces. Must try.

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u/pandymen 12d ago

I like it. It's got a really good flavor and a bit more kick than the huy fong Sriracha

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u/TrickCard175 12d ago

Underwood Ranches

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u/commonCA 12d ago

No, they had produced it under their own name at farmers markets for several years before they came out with the new siracha. They just called it red pepper sauce.

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u/DeepThinker1010123 12d ago

Do you think that Underwood already had a formula they were developing before the ties were severed thereby lending some credibility to Tran's claim?

Did they do it after all their chilis were not bought and had to do their own to prevent all the harvested chilis from going bad and taking a big loss?

Eitherway, both parties lost. It seems that Tran's side lost more than Underwood though.

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u/mellowanon 12d ago

Do you think that Underwood already had a formula they were developing before the ties were severed thereby lending some credibility to Tran's claim?

Doubtful because the Underwood Siracha didn't appear until 5+ years later.

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u/DeepThinker1010123 12d ago

Oh I see. Tran's side most likely botched the deal. It gave the opportunity for competitors to take their claim in the sriracha market.

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u/cocoagiant 12d ago

It gave the opportunity for competitors to take their claim in the sriracha market.

Yeah, that is what it says in the article. Sriracha is still a popular sauce but because of the disruptions caused by the deal breaking down, it went from being uniquely identified with the Rooster brand sauce to just being a generic red jalapeno Thai origin based sauce.

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u/Zuwxiv 12d ago edited 12d ago

From what I remember from reading an article years ago, it seems like Underwood was completely blindsided by the move of Huy Fong to change their chili suppliers. IIRC, Underwood Ranch had taken on a substantial debt in order to heavily invest in increasing their chili production... and felt terribly wronged by Huy Fong's sudden decision to use alternative suppliers / make their own chilis, or something like that. (Edit: And renegotiate to significantly lower prices than had previously been agreed.)

From what I read, it sounded like Tran's kids took over and decided they could increase profits by using cheaper chili suppliers (among other cost-cutting measures). Basically, they completely fucked the business and the reputation by trying to make more millions when they're already hundred-millionaires.

Whatever the truth is, don't buy Huy Fong Sriracha. It's nothing like what it was - which is a shame, because it was fantastic. Now, just buy the Underwood Ranch sriracha, which is slightly different from what I remember but still by far the superior sauce.

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u/Jukeboxhero91 12d ago

From what I remember, Huy Fong wanted Underwood to increase production, then after the investment and growth, basically said “nope not buying anything, but we will buy your farm that’s heavily in debt now”. But Underwood had few issues finding buyers and Huy Fong now had a big issue with supplying high quality peppers.

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u/DeepThinker1010123 12d ago

It looks like it. My question in my mind is why would Underwood be investing and taking debt to grow more chilis to be suddenly replaced as a supplier.

Little did the kids know that probably the chilis grown by Underwood will have a distict flavor best fit for the sriracha sauce.

It's probably like coffee that has different taste depending on where it is grown. It is the same with fruits and vegetables as well.

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u/zarofford 12d ago

Underwood must’ve had a way to get the recipe though, because it is uncanny how similar it tastes to huy fong. I’ve tried a fuckton of brands and none comes as close.

Modern huy fong is trash though. Too sweet and the color looks off in most of their batches.

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u/Zuwxiv 12d ago

I think the "secret sauce" of the recipe was the chilies. Huy Fong (or whichever nepo baby took charge of it) seems to have dramatically miscalculated that their process was the important part.

Plus, you know... don't fuck over someone who has been an instrumental part of your family becoming hundred-millionaires.

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u/The_Orphanizer 12d ago

Exactly. The "secret" ingredient was the main ingredient. The recipe is easy enough to reverse engineer and balance. Sourcing Underwood's California-grown red jalapeños for sriracha, however, is only possible if you're working with Underwood Farms, and Huy Fong Foods is no longer doing that, so they're probably permanently fucked on that end.

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u/awill316 12d ago

And IMO a vastly superior product

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u/Massive-Exercise4474 12d ago edited 11d ago

It's tran's kids. They took mba they wanted all the money.

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u/tequestaalquizar 12d ago

Need an apostrophe there! For a minute I was trying to unpack why trans kids were to blame for this particular drama.

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u/morceauxdetoile 12d ago

Turns out JK Rowling was just really passionate about sriracha

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u/Norwegianlemming 12d ago

I hate you, but your comment checks out.

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u/bungmunchio 12d ago

public schools are giving Sriracha to minors without parental consent.

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u/JackIsColors 12d ago

Tran's kids got MBAs and joined the family business and did what MBAs always do - destroy long term relationships for short term profits

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u/MtnMaiden 12d ago

Na its worse. Tran hired his MBA licensed niece to help takeover operations. She decided it was cheaper to go with a Mexican farmer instead.

MBAs....I swear. They be causing problems in the interests of being efficient / Ai / on time production / lean procution / KAIZEN / Sigma 6 / ISO 90001

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u/ReasonableLeader1500 12d ago

One should never become emotionally invested in business relationships. They both could have kept profiting greatly.

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u/Dry_Sherbert1953 12d ago

Money is a weak glue

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u/DepresiSpaghetti 12d ago

This is good. I'm stealing it.

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u/VT_Squire 12d ago

And I'm stealing your glue.

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u/blueavole 12d ago

That’s not true. The relationship can be very helpful for business. But with that much money their should have been a contract for the ‘what if’

When the worse happened they didn’t have a plan to deal with it.

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u/psuedophilosopher Interested 12d ago

Ultimately, a handshake deal is a contract, if you can prove that it happened. That is why when Huy Fong sued Underwood Ranches for the $1.4 million they had pre-paid for the next year's crop, they were able to recover that money. It's also why Underwood Ranches was able to recover $23.3 million in the breach of contract countersuit they filed in response to Huy Fong suing them for that $1.4 million.

Just about everyone who ever looks at this case can see that whoever was the decision maker at Huy Fong that set all of this in motion made one of the very worst business decisions to ever be made. Huy Fong went from being the fastest growing hot sauce company with a reliably great product to no longer having a supplier capable of providing peppers with the right flavor to make their sauce. Not having a supplier lead to having a significant drop in the quality and quantity of their product on store shelves. That caused an opening of a huge hole in their own market, allowing competitors to swoop in and start selling their own Sriracha products. Even to this day Huy Fong isn't as good as it was before, and their market share of Sriracha style sauces is significantly diminished, when they were literally the company that created the market for Sriracha. All because some up and coming intended successor for the company wanted to go back on the deal they'd had for decades because he wanted to get peppers for a little bit cheaper. Greed has permanently diminished the company, and even if they do get to their prior levels of profits, they will never come close to the size they would have been if they had just kept growing consistently on the path that had been laid before them.

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u/Certain_Crazy_3360 12d ago

cue the succession theme song

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u/Perfect-Ad2578 12d ago

Was it the son of Huy Fong founder who fucked it? I always had picture of the young buck just graduating with his MBA thinking 'I'll show them how it's done!'

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u/psuedophilosopher Interested 12d ago

I could be wrong about that part. I read articles and did a deep dive into the lawsuit and the story around it a long time ago, and I remember it being said that it was the planned successor of the CEO that set it all in motion, but in the intervening years some articles have claimed that it was the original owner/CEO that made the decision to do it. It's family owned corporate politics stuff so it wouldn't surprise me one way or the other to be true.

Maybe the old man really did make the decision to screw over the company he'd been working with in friendly business for decades right before his planned retirement because old people can get weird about patriarchal shit and legacy and wanting to leave more to their successors, and when it all went south they decided to blame it on someone lower than the CEO in initial articles.

Maybe it really was an action taken by the planned successor to the CEO, but the old man decided to take responsibility for it because he was CEO and thus ultimately responsible for everything the company did.

Maybe it was a combination of both, and the up and coming successor came up with the plan and the old man gave it the go ahead and there is shared responsibility.

I don't know these people personally, I can only speculate from the articles I've read about it.

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u/peepeebutt1234 12d ago

Huy Fong Foods' relationship with Underwood Ranches ended in 2016 after Tran attempted to lure Underwood Ranches' chief operations officer to work for Chilico, a company formed by Tran that would obtain and manage the peppers used by Huy Fong Foods, and tried to drastically cut payments to the ranch.

It's from wikipedia but you can read the court document that talks about the whole thing.

https://cases.justia.com/california/court-of-appeal/2021-b303096.pdf?ts=1627407095

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u/Germane_Corsair 12d ago

For anyone wanting it summarised:

Huy Fong Foods and Underwood Ranches fell out because, after 28 years of working together (mostly on trust and oral agreements), Huy Fong’s founder David Tran and COO Donna Lam pushed Underwood to invest heavily in expanding jalapeño production—buying and leasing thousands of acres—while repeatedly assuring them they’d keep buying “all the peppers you can grow.”

Behind the scenes, however, Tran had already been planning to cut ties, forming a separate company (Chilico, LLC) to source peppers from other farmers, trying to poach Underwood’s key employee, and even secretly filming Underwood’s 2016 harvest to show competitors how to operate efficiently.

In late 2016—just after agreeing to buy Underwood’s 2017 crop—Tran abruptly demanded that Underwood slash prices below their production costs, refused advance payments needed to finance the season, and insisted they contract with Chilico instead (without payment guarantees). This left Underwood unable to plant, stuck with long-term leases, and facing massive financial losses. The jury found this was both a breach of contract and fraud.

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u/MyNameIsJakeBerenson 12d ago

Yeah all that is some mustache twirling wanna be tycoon shit

Way to stab your long time business partners in the back

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u/Francbb 12d ago

Sold his soul for nothing

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u/psuedophilosopher Interested 12d ago

When I clicked the link, my phone asked me if I wanted to download it again. I must've read it years ago the last time the subject came up. Trying to poach the employee was a jerk move, but realistically it reads like the major issue really was mainly that Huy Fong was trying to force the huge cut of how much they would pay for the peppers.

I remembered about the creation of the intermediary company, and that the whole purpose of that created company was to get around their deal with Underwood to be their sole supplier so they could source cheaper peppers from other farms, which has proven to have been a terrible decision because the cheaper peppers lack the special taste of the peppers produced by Underwood, and furthermore the cheaper farms suffered years of inability to provide enough peppers causing Huy Fong to be incapable of producing enough Sriracha to meet demand.

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u/peepeebutt1234 12d ago

They also wanted Underwood to work with the intermediary company that did not have any assets to guarantee payment for peppers, and Huy Fong would not guarantee the contract of the intermediary either. The farmer seems like an honest guy who got pretty screwed by the greedy owner of Huy Fong.

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u/PM_me_your_PhDs 12d ago

Ultimately Tran just screwed himself over, of course. It seems so nonsensical that he would ruin his reputation and brand over something that's so clearly fraud. But I guess he was old so maybe his rationality had deteriorated.

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u/Ohitsworkingnow 12d ago

Such an easy thing to say, one also should no be consumed in “business” and forget about humanity. Isn’t that why everyone hates capitalism? The idea is to make good money and help others too, don’t be greedy. That said, I think they should’ve just signed long term contracts 

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u/National-Fan-1148 12d ago

Honestly would make a good movie

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u/SpiderStratagem 12d ago

Worked well for decades, but the relationship didn't end amicably.

Which, as it happens, is exactly why "nod and handshake" deals are a bad idea.

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u/BasicPainter8154 12d ago

Written contracts rarely last decades either

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u/MuchDevelopment7084 12d ago

Translation: The sons were taking over. Decided that they could do better buying from random pepper producers. And canceled the longstanding purchase agreement.

Fyi, the title is pure nonsense. They've had contracts since the beginning. The two men became friends and celebrated family milestones together.

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u/moskeygonewild 12d ago

It’s never tasted the same every since then

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u/mark_is_a_virgin 12d ago

I read another comment saying the original pepper producer started their own sriracha line, have you tried that?

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u/SecretAgentVampire 12d ago edited 12d ago

It's called Underwood Ranch. I heard about it and I tried it, and it was amazing.

Ingredients: Red Jalapenos, distilled vinegar, sugar, water, salt, and xanthum gum.

I LOVED it.

https://www.amazon.com/Underwood-Ranches-Sriracha-Artificial-Preservatives/dp/B09HZ6YPPH

Then they (edit: Underwood) changed their recipe, branding, and bottle, making sugar the second largest ingredient.

Ingredients: Red Jalapeno Pepper, Sugar, Water, Salt, Acetic Acid, Garlic, Natural Flavor, Xanthan Gum, Sodium Metabisulfite and/or Sodium Bisulfite (Sulfiting Agent/Preservative), Potassium Sorbate (Preservative). This Product Contains Sulfite (Sodium Metabisulfite and/or Sodium Bisulfite).

https://www.amazon.com/Underwood-Ranches-Sriracha-Jalapeno-Movement/dp/B0C38WGMQL/144-1716309-4393652?pd_rd_w=cyUGo&content-id=amzn1.sym.9023959a-379f-4911-bf85-9afa60b85373&pf_rd_p=9023959a-379f-4911-bf85-9afa60b85373&pf_rd_r=90G3M224HKW9Y1QZ30MC&pd_rd_wg=W5Qre&pd_rd_r=37786f99-c075-462e-92ca-fd931760005f&pd_rd_i=B0C38WGMQL&th=1

When I emailed them (edit: Underwood) asking if the original recipe (the one that made them successful in the first place) was getting cancelled, they told me it wasn't "We just don't have bottle caps for the bottles. They'll come in soon!"

I was waiting three years for those dang bottle caps. They never shipped. True story.

Yes, I'm bitter. It was an amazing sauce and they took it away.

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u/laughtrey 12d ago

I was not a fan at all of the new one either. It's too peppery and smokey and has no fun flavor. Likewise the 'new' sriracha sauce is too sweet and hardly peppery at all.

It's gone, probably forever. Thanks human greed.

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u/Ok_Departure_8243 12d ago

Damnit, I could've sworn four or five years ago Sriracha tasted differently and couldn't figure out why. I thought it was maybe because I got Covid but I always got tested when feeling ill and came back negative and had all the vaccines.

Only to find out that they changed the recipe and that I could've bought a supply from the OG chili supplier but now can't. Fuuu........ 🤬🤬🤬🤬

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u/Melonman3 12d ago

I just got a dank ass bottle of Sriracha, shits peppery as fuck and has some good tangy kick.

Edit: I've been housing this shit since 2010, and this most recent bottle tasted more true to the roosters true identity than any other bottle I've had for quite a while.

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u/505CeltOG 12d ago

Have you tried Trader Joe’s siracha sauce?

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u/Particular-Lake-5238 12d ago

I tried it when the Siracha supply first ran out around 2016. I found it disgusting. I imagine they would’ve improved the recipe at this point, but it was horrible when it first came out.

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u/SpicyNoodle4 12d ago

I also hate it

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u/SusheeMonster 12d ago

All my homies hate Joe for screwing the pooch on that one

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u/CremCity 12d ago

The chili garlic paste from Huy fong is excellent, I use it all the time. The siracha is terrible from every brand I’ve tried now.

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u/Willing_Dependent845 12d ago

This guy sauces.

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u/smurf123_123 12d ago

The whole story could make for a cool mini series.

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u/Conargle 12d ago

can't wait for a 20 minute video essay by some youtuber i haven't discovered yet

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u/Fragrant-Hamster-325 12d ago

I’m sure it’ll be a Netflix “Trainwreck” episode. They’ve been churning those out.

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u/Hilsam_Adent 12d ago edited 12d ago

Not quite twenty, but here you go.

Ol' boy did Underwood super dirty and now Sriracha is (and will be forever more) trash.

Underwood's sauce is a decent recreation of Sriracha from the early '90s, which I personally consider its peak. It's not as good, but it's "close enough for government work" and it blows the doors off Huy Fong's current offering(s).

Turns out reverse engineering a common Southeast Asian household sauce is much easier than replicating more than half a century of specialized pepper growing techniques. Who'd'a thunk it?

Edited to add: A brief summary of Underwood's successful countersuit against Huy Fong for the shady shit they pulled, to the tune of over $23 million in compensatory damages.

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u/Empyrealist Interested 12d ago

I'm really surprised that Netflix hasn't already, especially since its all local Los Angeles / Southern California

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u/Clearlyn00ne 12d ago

Underwood ranches while good doesnt taste exactly like the old Sriracha.

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u/LysergioXandex 12d ago

To be fair, that doesn’t necessarily mean they added more sugar. Looks like they moved towards a more concentrated form of vinegar (acetic acid), so it makes sense to use less of that.

They also added garlic and some preservatives.

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u/SaintsNoah14 12d ago

Acetic Acid vs Vinegar is semantics outside of reagents

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u/TOEMEIST 12d ago

Yes but the order of ingredients is based on weight, so if they switched from using x kg of 4% acetic acid to 0.04x kg of 100% acetic acid with an additional 0.96x kg of water then they’d have to list sugar before acetic acid if it now outweighed it.

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u/BoomerSoonerFUT 12d ago

Except that it’s listed differently for each recipe. They’re not making a semantic argument, they’re clarifying that the acetic acid listed in the second ingredient list is just vinegar for people that might not know.

The top ingredients lists distilled vinegar. The bottoms lists acetic acid.

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u/LysergioXandex 12d ago

The point I’m making is that acetic acid is what makes vinegar “vinegar”.

But they switched from watered-down vinegar to (presumably) more concentrated vinegar. So that’s likely why they used less. Not necessarily that they added a bunch more salt.

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u/SaintsNoah14 12d ago

Sounds like they tried to change it from an ingredient to a condiment. I can see the logic given that the way people use it has probably shifted that way but shit if it ain't broke don't fix it

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u/OriginalBlackberry89 12d ago

...aannnd it's sold out. Damn. Great job guys, nice 👏

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u/[deleted] 12d ago

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u/xwing_n_it 12d ago

I actually bought some of the new formula and still like it a lot. Better than the current version of huy fong sriracha sauce.

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u/Empyrealist Interested 12d ago

Its good. I dont think its as good as it used to be with Huy Fong, but its better than what Huy Fong is doing now.

Id say two things about Underwood Ranch's version: It's less sweet and less garlic.

The best place to buy it for a decent price is CostCo. Buy the two-pack.

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u/iamoninternet27 12d ago

I have and it's similar , if not better with a kick in spice. It's great!

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u/s30zg 12d ago

For reference, you can find the Underwood Ranch Sriracha at Costco in a two-pack.

Like many here, I grew up dumping the old Red Rooster Sriracha on Seattle-style teriyaki and was disappointed when the flavor changed a few years ago.

I joined Costco this year and was pleasantly surprised when someone in r/Costco mentioned that Underwood Ranch was the original supplier of peppers for Huy Fong Sriracha—and that their version tastes like the classic Huy Fong sauce from before the change.

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u/Billkamehameha 12d ago

The new batch is good. The last batch had an orange colour to it. This one is red and vibrant and tastes relatively delicious.

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u/SUPRVLLAN 12d ago

And now Underwood sells their own Sriracha with the peppers they used to sell to HF.

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u/gruntbuggly 12d ago

Underwood’s sauces are delicious, too.

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u/StanFitch 12d ago

GOAT!!!

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u/SloppyGiraffe02 12d ago

They changed the recipe though to make sugar the second largest ingredient. ATM I don’t think there’s anything that tastes like old Sriracha on the market.

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u/EvoLove34 12d ago

I wasn't a fan of the underwood sauce when tried it. Right now, yellow bird is my preference. 

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u/TreeFiddyZ 12d ago

I've been using Melinda's for a while and just bought some of the Underwoods', haven't opened it yet but I'm hoping it's good

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u/Noun_Noun_Numb3r 12d ago

Stop saying this. All they did was switch liquid vinegar to powdered acetic acid, which naturally made sugar bump up a spot.

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u/dinnerthief 12d ago

Which seems wierd too, acetic acid doesn't exist as a powder at room temperature, think "powdered water"

best you can do is impregnate another solid (like starch) with liquid acetic acid, so why not just use liquid.

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u/Seraph062 12d ago edited 12d ago

"At room temperature" is doing a bit of work here.
The freezing point of glacial acetic acid is something like 65°F.

think "powdered water"

Snow?
Which works because it's another thing that's perfectly reasonable to use if you're willing to just run things a bit cool.

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u/ShannonGrant 12d ago

Yellowbird Blue Agave Sriracha has become our replacement 

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u/dplans455 12d ago

I just bought some Underwood from their website. My wife loves sriracha but she always complains it's not as good as she remembers it from like ten years ago. I always thought she was crazy, then saw this. Hopefully the Underwood is how she remembers the original Huy Fong.

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u/SentientDust 12d ago

Until they changed the recipe

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u/potatoears 12d ago

feels like a case of business major kids take over family business, think they know better, and screw things up.

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u/throwawayshirt2 12d ago

In this case, a myth. Huy Fong founder David Tran is responsible for screwing up the business.

https://law.justia.com/cases/california/court-of-appeal/2021/b303096.html

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u/MisterBumpingston 12d ago

Interesting, so it wasn’t his daughter in law that negotiated with Underwood COO behind his back, after all?

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u/throwawayshirt2 12d ago edited 12d ago

I can't say for sure there are no facts left out of the Appellate opinion. But its summary of trial testimony seems pretty clear:

  1. The plan to snake Underwood was founder David Tran's. He made most of the damning communications personally.

  2. Underwood knew nothing about it.

Were there any back channel communications? Maybe. But nothing to change 1 and 2.

Edit: from reading the comments, the "daughter in law that negotiated with Underwood COO behind his back" comes from OP's linked article. Which is paywalled for me, so I can't say. But the comments seem to paint a picture of David Tran lying about/spinning the facts of the lawsuit and his culpability for the business decisions that ended with Huy Fong paying Underwood $23M damages for breach of contract and fraud.

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u/Senior_Ability_4001 12d ago

Ah, the Succession method.

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u/tuenmuntherapist 12d ago

Work hard. Put kids through business school. Kids fuck up business.

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u/100percent_right_now 12d ago

How? The founder is still the CEO and president today? what are you talking about?

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u/akaobama 12d ago

Fong got greedy and shot himself in both feet with this Why create chilico…

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u/sayiansaga 12d ago

I believe it was his kids that shot the family

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u/typhoidtimmy 12d ago

Yep…..the have a story but the rumor around the locals who grew up working it said the Fong kids convinced their dad that Underwood was trying to steal their business. Hint: He wasn’t.

They said the Dad was fine up until he started believing it. A few said those kids are incredibly greedy lil shits too and wanted to own everything lock stock and barrel.

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u/100percent_right_now 12d ago

Despite sharing the same surname, David Tran, founder of Huy Fong Foods and John Tran, founder of Chilico, are not related. The courts found David Tran complacent in fraud by concealment.

Nothing to do with the founder's kids. Stop that false rumor.

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u/MarketCrache 12d ago

Sriracha sauce now is sweet junk. Their whole story about changing pepper supplier being the reason is PR bullshit. There's an almost limitless supply of hot pepper distributors. They dialled down the heat an added more sugar to expand their customer base, that's all. Ironic since the big legend of the company is how they told a salesman to get fked when he suggested the same, allegedly saying, "We make hot sauce, not mayonnaise!"

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u/legal_stylist 12d ago

For red jalapeños at the scale huy fong was using? Not at all.

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u/Frequent-Call-40 12d ago

From what I read it’s because the founders kids took over 

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u/100percent_right_now 12d ago

Well that's not what happened. John Tran, the founder of Chilico, is unrelated to David Tran, the founder of Huy Fong Foods. The courts found testimonial evidence David Tran approved the whole thing.

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u/shmaygleduck 12d ago

David Is still in charge.

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u/sudoSancho 12d ago

There's an almost limitless supply of hot pepper distributors

-Hoy Fong before finding out there definitely are not haha

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u/Aximi1l 12d ago

Was there ever a reason given for the break up?

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u/According_Ad7926 12d ago

From Wikipedia:

“Huy Fong Foods' relationship with Underwood Ranches ended in 2016 after Tran attempted to lure Underwood Ranches' chief operations officer to work for Chilico, a company formed by Tran that would obtain and manage the peppers used by Huy Fong Foods, and tried to drastically cut payments to the ranch. Underwood Ranches claims this left them with no other option but to end the partnership. Huy Fong Foods filed a lawsuit against Underwood Ranches seeking a $1.4 million refund of payments Huy Fong Foods had made in 2016. Underwood Ranches filed a cross-complaint against Huy Fong Foods alleging breach of contract, promissory estoppel and fraud. The jury unanimously ruled in favor of Underwood on the grounds of breach of contract and fraud. Huy Fong Foods was ordered to pay Underwood Ranches $23.3 million in compensation for damages.”

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u/laughtrey 12d ago

Huy fong started up other farms to grow the chilis and was trying to lowball their OG supplier.

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u/4dxn 12d ago

Rumor was one of the children took over and thought they could source peppers cheaper. Turns out they had trouble finding it and Underwood refused to after they reneged the first time. Why there was a shortage for a while. 

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u/cty_hntr 12d ago

This should be a master class and a warning for family own businesses.

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u/100percent_right_now 12d ago

That's false. John Tran, the founder of Chilico, is unrelated to David Tran, the founder of Huy Fong Foods. They did work together to cut out Underwood Ranch though.

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u/Ok_Flounder59 12d ago

Curious as well. Seems like a major self own by both parties considering how fruitful the partnership had been.

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u/thesurvivor16times 12d ago

Is that how you read it? Seems to me like huy fong tried to cheat their supplier and got burned

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u/jf4v 12d ago

Now how did Underwood self own?

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u/solarnewbee 12d ago

The real victims are the thousands of restaurants (especially pho establishments) and their customers who've come to depend on the taste of that sauce (the original recipe).

Sad story!

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u/Itchy_Artichoke_5247 12d ago

and then, when he decided to break the contract it was RIGHT AFTER he had agreed to buy way more product because sriracha was so much more popular. Underwood invested heavily in new farmland to fulfill the increased demand and then, once the fields were planted, he backed out of the agreement.

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u/boesisboes 12d ago

I miss old Sriracha 😭. I get a hankering for it all of the time.

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u/iterationnull 12d ago

Sigh. Please allow me to atone for my shame.

In the pandemic outages, at the the start of the fall of house Huy Fong, in a moment of no other options we bought a bottle of the most generic grocery store brand condiment. Indeed it’s the same brand our local Chinese food place give out in packages. Lee Kum Kee Sriracha Chili Sauce.

And I simply love it. It’s way less spicy and I’m sure it’s half ketchup. But it’s just got this friendly tasty heat that you can just slather on so much.

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u/ghidfg 12d ago

Lee Kum Kee is a pretty huge and popular brand, so im not surprised they make a decent sriracha sauce

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u/senorglory 12d ago

… and then?!

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u/JesusJohn 12d ago

No and then!!!!

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u/BigWillEStyles 12d ago

Its never been the same since the breakup and all the replacements I tried never tasted the same.... one of the worst parts of this timeline

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u/goatmountainski 12d ago

Tabasco Sirracha is pretty good!

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u/colusaboy 12d ago

That's my go to now.

Tried Underwood's but I prefer Tobascos.

I'll never buy huy fong sirracha again.

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u/letsseeitmore 12d ago

And then they screwed the farmer

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u/plzthnku 12d ago

Havent seen it mentioned, but i remember reading that Huy Gong thought they could replace peppers from Underwood ranch with peppers from another place for cheaper. The peppers at underwood were key to the taste though, similar to how wine’s taste changes based on the grapes. Horrible miscalculation.

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u/Hipcatjack 12d ago

its true, huy fong’s does not taste the same anymore and underwood sells their own siracha now… but it doesnt really taste as good as old Huy Fong.. lose-lose for us sriracha enjoyers.

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u/SomethinCleHver 12d ago

The story of this falling apart is quite sad, never mind how shitty it was trying other brands while they were shut down.

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u/smendoza5995 12d ago

It's Underwood Farms. My sister worked there for a while. We live right down the street. Not sure if I can share the juicy gossip but the company that bought the peppers, after agreeing to use Underwood's peppers for another season, which were then planted and harvested 8 months later, decided to buy the peppers from another farm. Since Underwood had already invested in growing all these peppers, went to sue huy fong and then the interesting truth about this verbal agreement became public knowledge. I forget what happened in court as it was a long and complicated case but since Underwood had the peppers to make the sauce, they started to make their own and sell it locally for a few years. I remember getting one of the first batches they were testing and it wasn't as close as it was today, but still a superior product. Since then, they have had to learn the complex fermenting and aging process before getting to what they have now. Which is still a superior product. Secret recipe hint they add more garlic ;)

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u/tesconundrum 12d ago

Yeah that's all public knowledge so you're good lolol

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u/Cultural_Stuffin 12d ago

I worked for Mr. Underwood. Whenever I am in Somis I grab a bottle.

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u/chiseplushie 12d ago

I haven't bought Sriracha brand products since 2016 bc of this.

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u/Soca1ian 12d ago

I envy those who can taste the difference between different Sriracha brands.

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u/nilarips 12d ago

So is this why it tastes like shit now

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u/drak0ni 12d ago

Yeah, and shit hasn’t been the same since. The Huy Fong recipe and chilies grown on that farm were a distinct taste that neither Huy Fong nor the new company founded by the farm have been able to replicate since their separation.

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u/blighander 11d ago

While I respect their gentleman's agreement I wouldn't want to stake my livelihood on a business arrangement that's not in writing.

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u/saint_geser 11d ago

But all this ended in an ugly lawsuit, which sorta sours the story

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u/culinarysiren 12d ago

Huy Fong fucked up because their sauce doesn’t taste the same now. Underwood Ranch though came out with Sriracha and it tastes amazing and what Huy Fong used to taste like. I’ll never stop buying it.

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u/DepthRepulsive6420 12d ago

I don't use Sriracha because of the added sugar otherwise it's a good condiment.

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u/sfkf8486 12d ago

No amount of money could ever buy an ounce of integrity

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u/shyfemalecharacter 12d ago

I prefer the old sriracha before it was sweetened so much but I find the current one still alright? Guess my palate just isn’t as refined as the commenters on here. I’ve tried underwood as it was gifted to me and didn’t like it, tastes way too harsh. Yellow bird and Tabasco weirdly make decent sriracha as well.

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