Tensions now run hot between Sriracha producer Huy Fong Foods and Underwood Ranches, the largest domestic source of the fresh jalapenos that are the main ingredient in the Southeast Asian sauce.
In the past, Underwood produced 100 million pounds of peppers per year on California farmland for Huy Fong.
The model worked this way: Underwood estimated the cost of the upcoming year’s harvest, Huy Fong Foods fronted the money and assumed the risk, and at the end of each year the two companies settled up.
After 28 years of business and friendship, issues arose and the relationship deteriorated. Fong sued Underwood for not repaying a $1.5 million overpayment for the 2016 harvest season. While the jury awarded to Fong, it concurrently gave Underwood Ranches $10 million in punitive damages and $14.8 million for contracts lost over the next two years when Huy Fong sourced its peppers elsewhere.
This post is based on the Modern Farmer article, Sriracha and Its Pepper Farmer Are Mad at Each Other, by Dan Nosowitz, July 23, 2019; the San Gabriel Valley Tribune article, Continue reading