Homework

1 Biplab Deka The Story of David Tran and Sriracha Hot Sauce 1. David Tran was a refugee from Vietnam who moved to the US in the 1960s and settled in Los Angeles. He could not find any hot chilli sauce like he was used to back home and so decided to make his own. He made it at home and started to bottle it and drive it to customers in a van himself. He called his sauce Sriracha after a village in Thailand. Today his sauce in a clear bottle and distinctive green cap can be seen all over the United States and his company Huy Fong Foods has $60 million in sales and is still privately owned. 2. Tran says he never started the business to make a lot of money. He just wanted to make a really good hot sauce. Although a lot of people advised him to sweeten the sauce for the American consumers, he decided not to change it. Hot sauce must be hot. If you dont like it hot, use less, he said. We dont make mayonnaise here. This set his product apart and made it distinct and helped create a brand for it. The other strategy that he used was to price it right. In his words he wanted to Make a rich mans sauce at a poor mans price. His dedication to right pricing can be seen from the fact that the wholesale price of his sauce has been constant for the last two decades. 3. Trans company has never spent a dollar on advertising. His marketing strategy was to make a sauce that was unique and offer it at a low price. He never tried to increase capacity by taking outside financing offers to rapidly grow his business. He has consistently grown his revenue by around 20% every year. In his words, If our product is still welcomed by the customer, then we will keep growing. The company is also focused on the Asian consumers, uses Asian channels for distribution and sells 80 percent of its products to Asian companies. 4. One challenge that Tran faced was that he could not Trademark the name Sriracha as it is named after a city. That has led to a lot of copycat products that are trying to eat away his market share. For example, another company makes its own variety of Sriracha Chilli Sauce that is

sold in a similarly shaped bottle with a yellow cap and the picture of two dragons instead of a rooster. 5. The venture succeeded mainly because it created a quality product and Tran never compromised on what he set out to create. His dedication to quality can be seen from the fact his company maintains a close relationship with its suppliers and closely monitors the entire process of growing chillis from seed to harvest. Also, all chillis are processed within one day of harvesting in order to preserve their spiciness. This uncompromised quality made Sriracha sauce popular and directly led to the success of his venture.
References:

1. Article in LA Times 2. Article in NY Times