For decades, the iconic Huy Fong Foods sriracha—the one with the rooster on it—was made with red jalapeños sourced from the same farm.
Sriracha is technically a type of Southeast Asian hot sauce, but when Americans think of it, they tend to think of Huy Fong Foods’s sriracha, the rooster-emblazoned Californian sauce. The most important ingredient in any hot sauce is its chile peppers, and Huy Fong Foods sourced its peppers from the same Ventura County, California farmer for decades. Note the past tense on that one.
A lawsuit between the grower—Underwood Ranches—and Huy Fong Foods was recently settled in the favor of the former, but the relationship between the two enterprises has been strained for years. The basics: Underwood has grown the red jalapeños for Huy Fong since the early 1980s. The relationship between the two companies was close; Craig Underwood, the proprietor of the farm, attended the weddings of the children of Huy Fong’s CEO, David Tran.
But in 2016, Huy Fong overpaid Underwood, to the tune of $1.46 million. According to Underwood’s lawyer, Tran attempted just before this to hire away Underwood’s COO in order to form a new chile-growing concern, breaking the trust between Tran and Underwood. Huy Fong sued Underwood for not paying back this overpayment; Underwood countersued for an illegal breach of contract.
The case was decided generally in favor of Underwood, with a California jury awarding Underwood $10 million in punitive damages and $14.8 million to make up for the years of lost contracts between 2016 and now. The jury also, however, decided that Huy Fong’s claim of the failure to repay was also valid, so $1.46 million was deducted from those damages.
Underwood Ranches is the country’s largest supplier of fresh jalapeños, and also happens to be conveniently located close to Huy Fong Foods’s production facilities. The hot sauce maker will presumably have to find new suppliers to make up for the loss.