Beyond Sriracha:
How Huy Fong Foods Can Stay Ahead of the Game with Innovation
Exploring Innovation Solutions to Strengthen Customer Relationships and Tap into New Markets
In the world of condiments, Huy Fong Foods’ iconic Sriracha sauce has carved a fiery path to success. But stagnation is not an option in the ever-evolving food industry landscape. In order to stay ahead, innovation must be sought. Through the exploration of various strategies and frameworks, Huy Fong Foods can discover new opportunities for growth and expansion. Join us on a journey to uncover the potential of this beloved sauce through the lens of innovation analysis.
A Brief History of Huy Fong
The story of Huy Fong Foods began with founder David Tran, a Vietnamese entrepreneur who arrived in the United States in 1978 to escape communist tensions. After an eight-month journey on a Hong Kong freighter, he settled in Los Angeles and started his company, Huy Fong Foods, with his last dime, named after the freighter. His first product was the iconic Sriracha sauce, now a staple in American households. This versatile sauce is made from a perfect mixture of chili peppers, distilled vinegar, garlic, sugar, and salt, and it adds a spicy flavor to any dish. Huy Fong’s product line currently has three sauces: Sriracha, Sambal Oelek, and Chilli Garlic, which are distinct in texture and usage with similar taste profiles. For example, Sriracha offers a smooth blended sauce, whereas Sambal Oelek has a chunky texture and a more specific taste. Surprisingly, according to market research firm NPD Group, Sriracha ranks third in U.S. hot sauce after Tabasco and Frank’s RedHot [1] with minimal marketing; It has commandeered 9 percent of all U.S. households. Despite Huy Fong Food’s decades of success, there are areas for improvement, such as the lack of control over intellectual property, a limited product range, and limited marketing efforts.
The current state of Huy Fong’s business
- Lacking intellectual property control —The genesis of Huy Fong’s Sriracha sauce can be traced back to Thanom Chakkapak, a home cook from Sri Racha, an eastern province in Thailand, who created Sriraja Panich, the original lighter version of the sauce. Founder David Tran was inspired by this recipe and made his version under a similar name, acknowledging Thanom’s formula and the province name. However, the name Sriracha itself cannot be trademarked due to its descriptive nature as a geographical feature, making it a common sauce name. This oversight has allowed competitors to use the name and make their version akin to ketchup and soy sauce.
- Disadvantages in licensing fee — As a result, the name has appeared to most condiment companies as a product expansion and took away its market share, for example, Tabasco’s sriracha sauce, Kikoman’s Sriracha mayo, Heiz’s Sriracha ketchup, etc. Although Huy Fong benefits from the indirect advertising for the name of Sriracha, the company doesn’t gain any licensing fee, commission, or direct incentive.
- Limited product offering — Even though Huy Fong’s product line has three iconic sauces, they have a similar taste and differ only in texture, which starkly contrasts other brands. For example, Tabasco has around ten different sauce offerings ranging from Tabasco with various spicy levels and types of spice blend combinations to BBQ sauce. In addition, Kewpie, a Japanese dressing company, has around ten different dressing sauces. Therefore, the limited product offering of Huy Fong puts it at a disadvantage compared to these other brands, which offer a more comprehensive range of products to cater to different tastes and preferences.
- Insufficient advertising approach — Despite its success, Huy Fong Food Company has yet to develop a trademark slogan or effective marketing strategy. According to Forbes, in an interview with founder David Tran, the company has achieved significant growth with minimal marketing expenses.[1] However, with increasing competition from other condiment companies entering the growing hot sauce market, it may be wise for Huy Fong to invest in advertising to stay ahead. In comparison, the well-known American condiment company McCormick spent approximately $182.6 million on advertising in 2021, a number that continues to rise.
Suppose Huy Fong company plans on market expansion and innovation; there is a potential for enhancing brand visibility and product improvement by offering a broader product line, new marketing strategies through an engaging brand experience, and collaborating with their network. Moreover, the company can use the innovation roadmap to apply those solutions in different phases as short-term or long-term planning.
- Product Improvement Strategies
According to the official website, Sriracha offers three different sauces.[2] Regarding product system and performance, Sriracha can do further market research on the emerging dripping sauce trend among its current users and create a sub-product line in several ways.
- The variable of Sriracha — The iconic Sriracha sauce could have a broader range of spice levels, from mild to extremely spicy, to serve a specific use according to the preference and recipe on the official website.
- Healthier Product Line — Low sodium or less sugar Sriracha could capture the trend in the health-conscious markets.
- New Sauce Combination — the company could make a product line of unique sauce combinations, such as Sriracha spicy soy sauce and Sriracha BBQ, to capture a niche market. Offering a more comprehensive product range and focusing on the minor competitor market would allow Sriracha to take the market share more efficiently under the Sriracha brand umbrella. Furthermore, Sriracha can collaborate with other condiments or beverage brands to develop a new product to expand its network and broaden its potential customer base. For example, Sriracha could collaborate with Stirring, a cocktail mixer brand, to produce a unique Sriracha cocktail blend.
- Dry Seasoning — Sriracha offers a new way of seasoning meals and product advancement by introducing different condiments, such as a dry seasoning of Sriracha mixed with a blend of spices or salt. The dry product has the advantage of lower weight and longer shelf-life without refrigeration because it does not contain moisture, which can stimulate contamination and inconsistent quality through the storage time. One example is togarashi or furikake, a Japanese rice seasoning widely used in Asia as a dry nutritious flavoring over fish, vegetables, and cooked rice. Sriracha could bring this inspiration condiment and make its version of dry, healthy seasoning.
2. Sriracha Ready-Meal
This solution is from the “Job to be Done” model, which uncovered the motivations and desires of their users, foreign college students, and the new food products can be innovated by offering ready-made dishes that save time in preparation and cooking.
[Situation]: When I miss my hometown(Vietnam), and I cannot cook [Motivation]: I desire cultural comfort food [Expected Outcome]: So that I can experience a sense of warmth and familiarity. With this insight, the company could launch pre-made, comforting dishes from various cultures, with Sriracha as the primary seasoning ingredient, like Vietnamese noodles or honey Sriracha chicken wings. This solution offers budget-friendly and long shelf-life meals targeting early college who are just away from their home country. It also builds consistency in brand recognition and product quality which leads to future purchases and becoming a brand royalty.
3. Patented Products and Collaboration
Monopolizing the condiment industry is not feasible due to the vast array of flavor options and diverse culinary tastes of consumers. Instead, Huy Fong should aim to be a perfect competitor by targeting a growing market or establishing a new trend. To keep up with the ever-changing preferences of Gen Z and Millennials, the company may consider venturing into the realm of lesser-known exotic condiments and creating a unique, trademarked product, such as introducing a Sriracha version of Phillipino spicy and sour sauce, Indonesian spice sauce, or Mexican spicy fruit sauce. Even though this solution might have a higher marketing investment than other strategies, this method would enable Huy Fong to avoid similar intellectual property issues that “Sriracha” is facing. Unlike Sriracha, the new product gives the brand complete control of legal protection to license the product recipe or trademark and product collaboration with other companies. In addition, starting on the niche and small segment of the condiment market creates a unique product offering and a more potent brand identity to differentiate itself from competitors.
Another way for Sriracha to grow its product portfolio is by acquiring another condiment company. This approach would give Huy Fong access to an existing customer base for the acquired brand and offer a quicker path to growth than starting a new product from the ground up.
4. Virtual Experience Strategies — Engaging brand experience
Traditional advertising is challenging and ineffective nowadays as people avoid the obvious and the hard-sell approach and personal preferences are getting more diverse. Therefore, this is the right time for the brand to offer more seamless recognition by creating an engaging experience with a unique combination of social interaction. Social gaming is one example of a virtual experience that could subtly increase brand exposure, allowing users to connect and engage in platform activities. It also creates a meaningful connection to the brand compared to one-way communication like social media or print advertising.
- Virtual Social Gaming Experience — Sriracha could launch virtual land on popular gaming platforms such as Roblox, Fortnite, or Sandbox. Fortnite presents a valuable opportunity for Sriracha, given its large player base, with 63% aged 18–24. This target group of Gen Z can be exposed to Sriracha at an early stage, establishing brand recognition and potentially leading to future purchases. According to IBISWorld market research, this target group also links to Sriracha’s core target demographic of 23 to 38. An example of a branded game in Fortnite is Wendy’s, where they designed a custom game for players to eliminate all freezers at burger restaurants. This goal also ties back to the brand philosophy of not serving frozen burgers. The result was successful, with 1.5 Million minutes watched on Twitch, 119%, and an increase in mentions of Wendy’s on social during that time.
5. Experiential Marketing as a Festival
Regarding physical experience enhancement, Huy Fong could launch the Sriracha food festival to build a stronger community and marketing strategy. The festival’s benefits are creating a holistic brand experience and marketing through all senses of interaction; tasting, seeing, hearing, and touching. For example, visitors can taste various dishes from curated food creators worldwide that use Sriracha as the core ingredient or complement meals that go well with the taste. In addition, they incorporate live performance or branded space where the user visit, watch, and share those experience on their social network, indirectly leading to increased brand visibility and community building. Collaborating with local businesses to form a workshop or interactive events can also enhance attendees’ engagement, for example, a cooking workshop run by Vietnamese chefs or a beer pairing with spicy meals workshop by local breweries. Eventually, by offering a more comprehensive range of experiences in a single space, the festival can become a food platform where they curate and connect the network for food creators and a destination for those interested in spicy and exotic food.
In the quest for innovation, Huy Fong Foods can employ various strategies to enhance its current state. The Jobs-to-be-Done method can identify new product development, while the ten types of innovation framework can create product or marketing strategies. Prioritizing strategy allocation can be achieved with the three-horizons approach. Additionally, an organizational model can evaluate the feasibility of product development strategies. These strategies can lead to broadening the product range, leveraging experiential marketing to tap into new markets, and designing festivals to improve customer retention and strengthen relationships. By adopting these methods, Huy Fong Foods can pave the way for innovation and growth.
Citation
[1]G. Tognini, “How Vietnamese Refugee David Tran Became America’s First Hot Sauce Billionaire,” Forbes. https://www.forbes.com/sites/giacomotognini/2023/02/05/how-vietnamese-refugee-david-tran-became-americas-first-hot-sauce-billionaire/ (accessed Feb. 10, 2023).
[2]“Huy Fong Foods, Inc. — Known Worldwide for Our HOT Chili Sauces,” Huy Fong Food Company. https://www.huyfong.com/
