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How Vietnamese Refugee David Tran Became America's First Hot Sauce Billionaire
WESLEY BEDROSIAN FOR FORBES
Giacomo Tognini
Forbes Staff
Staff Writer, Wealth Team.
Feb 5, 2023,06:30am EST
Forty-five years after arriving in Los Angeles, David Tran has built Sriracha into a billion-dollar business.
In December 1978, David Tran, then 33, left his home in Vietnam with 100 ounces of gold. Worth $20,000 at the time, or about $90,000 in today’s terms, the precious metal was stashed in cans of condensed milk to evade the attention of Vietnam’s Communist authorities. Tran traveled by freighter to Hong Kong, where he spent eight months at a refugee camp, then moved to Boston for six months before settling in Los Angeles.
Once in L.A., he sold a chunk of the gold and bought a 2,500-square-foot building in the city’s Chinatown. He set up his business, Huy Fong—named after the freighter he took—to make a hot sauce he called Sriracha, after a recipe originally from Thailand.
More than four decades later, Sriracha has been on
Survivor, the International Space Station and dining tables worldwide. Its bottles, with their rooster logo and green squeeze cap, are in nearly one in ten U.S. kitchens, according to market research firm NPD Group. It ranks third in the $1.5 billion (revenue) American hot sauce market behind Tabasco, owned by the McIlhenny family since 1868, and Frank’s RedHot, part of publicly traded spice giant McCormick & Co.
Today Huy Fong is worth $1 billion, based on estimated sales of $131 million in 2020, according to research firm IBISWorld. That makes Tran, 77, who owns the entire company, the nation’s only hot sauce billionaire. And while some of Sriracha’s competitors have been snapped up in recent years—McCormick
purchased Mexican hot sauce brand Cholula for $800 million in November 2020—Tran has no plans to sell. He intends to pass the business on to his two children—William, 47 and Yassie, 41—both of whom work there.
Sriracha has become a behemoth without spending a dime on advertising and without raising its wholesale price since the early 1980s. It’s also survived a lawsuit over its factory’s smell and, most recently, a climate-related shortage of chilis last spring that forced Huy Fong to temporarily halt production, causing retail sales to spike as devotees and restaurants stocked up.
Still, Tran remains unfazed by his success. “I want to continue to make a good quality product, like making the hot sauce spicier…and not think about making more profits,” he tells
Forbes.
David Tran at Huy Fong's factory in Irwindale, California in 2014.
DAVID MCNEW/GETTY IMAGES
Tran has traveled far to get to this point. He was born in Soc Trang, Vietnam, in 1945, when the country was still under French colonial rule. His father was a merchant and his mother was a housewife, raising David and his eight siblings,
according to an oral history of Tran’s life by Dr. Thuy Vo Dang for UC Irvine's Vietnamese American Oral History Project.
At age 16, with only an elementary school education, Tran moved to Saigon—now known as Ho Chi Minh City—to follow his older brother and work at a store selling chemicals. He returned to Soc Trang for high school, but by the time he finished he was drafted into the South Vietnamese army.
"I had no choice,” Tran said in the oral history. “At nighttime, the policeman came and knocked on [my] door.”
Tran never actually fought —he largely worked as a cook instead—and finished his conscription in 1975, the year that North Vietnamese forces captured Saigon and won the war. He had gotten married to his wife, Ada, a few months earlier. Having completed his military service, Tran worked with his older brother growing chilis on his land northeast of Saigon. It was then that he turned to hot sauce: Tran had made a chili sauce as an army cook, and he found that the other sauces on the market weren't spicy enough or lacked flavor. So he decided to buy fresh chilis and preserve them, applying his background in chemicals to make a hot sauce that stayed fresh and spicy.
“I thought of making it because the pricing of the fresh chili…jumps up and down a lot,” Tran said in the oral history. “If I can make it and keep it fresh and keep the pricing low...when the [price of chilis] goes up, we still keep the [price the] same, so we would have [a] market.”
Tran, his older brother and his father-in-law made the hot sauce at home,
bottling it in reused Gerber baby food jars left behind by American soldiers. But by 1978, the communist government was pressuring Vietnamese of Chinese descent to leave the country. So Tran and his family, who were of Cantonese origin, left everything behind and boarded a freighter to Hong Kong. Tran, his wife and son moved to Los Angeles in January 1980, in part because Tran’s brother-in-law had told him he could find fresh chilis in California. Tran sourced peppers from local markets and incorporated Huy Fong in February 1980, choosing a rooster as the logo (Tran was born in the Chinese year of the rooster.)
Tran started selling Sriracha out of a blue Chevy van. By 1987, demand had grown so much that he moved Huy Fong to a 240,000-square-foot building in Rosemead, in eastern Los Angeles County. Less than a decade later he purchased a former Wham-O factory next door that
once manufactured hula hoops.
“I want to continue to make a good quality product, like making the hot sauce spicier…and not think about making more profits.”
David Tran
In 2010 Huy Fong moved again to its current, 650,000-square-foot facility in Irwindale, not far from Rosemead. But with the company’s rapid growth came new challenges: In 2013, the city of Irwindale
sued Huy Fong over the chili odors emanating from the company's factory, claiming it was a "public nuisance." It sparked a firestorm of controversy, with out-of-state politicians
including Senator Ted Cruz of Texas urging Tran and Huy Fong to flee the Golden State.
Usually press shy, Tran fought back by opening up the factory to public tours and letting the outside world in. "One of the things that makes [Tran] so fascinating is his reluctance to tell his story," says Griffin Hammond, a documentary filmmaker who created a 2013
documentary on Sriracha. "All he cares about is running his business very well." By May 2014, the city had
dropped its lawsuit.
Sriracha’s runaway success also led to counterfeiters, who sold knockoff Sriracha in bottles designed to mimic the iconic rooster logo.“We sent out a number of cease and desist letters and filed lawsuits," says Rod Berman, a partner at Jeffer Mangels Butler & Mitchell in Los Angeles who represents Huy Fong in intellectual property matters. "What David and Huy Fong realized is that...they have a unique sauce. There's no replacement for Huy Fong and that's the best protection they have."
Another challenge came in 2017, when Huy Fong’s relationship with Underwood Ranches, its exclusive supplier of chilis since 1988, collapsed and led to a legal battle. Huy Fong initially sued Underwood in August that year, claiming that Underwood hadn't repaid an overpayment of $1.4 million from the previous growing season. Underwood counter-sued, alleging that Huy Fong had breached its contract and that Huy Fong had set up a new entity in 2016 to source chilis from other growers. The court fight went on until 2021, when a California appellate court
ordered Huy Fong to pay Underwood $23 million in damages.
Even now with multiple growers in California, New Mexico and Mexico, the company—which reportedly goes through 50,000 tons of chilis a year—is reliant on a strong harvest in the spring chili growing season to ensure it has enough peppers to produce its hot sauces. Disaster struck in the spring of 2022 when weather conditions led to a poor harvest and a
“severe shortage” of chilis, forcing Huy Fong to temporarily stop production.
That shortage appears to have passed, and Huy Fong can return to its usual pace of churning out 18,000 bottles of Sriracha an hour. (The company also makes two other hot sauces: sambal oelek, based on an Indonesian recipe that uses only chili, salt and vinegar; and chili garlic, which is similar but adds garlic.)
Tran has always used the same ingredients in Sriracha since he first started selling it in 1980: chili, sugar, salt, garlic and vinegar. Over more than four decades, that’s been a recipe for success, turning Huy Fong from a tiny start-up to a billion-dollar business.
“I could use less expensive ingredients or promote my products to make more money,” says Tran. “But no—my goal is always to try to make a rich man’s hot sauce at a poor man’s price.”
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