4 Reasons to Chill About Sriracha's Public Nuisance Ruling

Huy Fong Foods' "rooster sauce" is still the condiment to beat, despite a game of regulatory chicken and ruffled foodie feathers.

Apr 14, 2014 at 11:57AM

Fans of Huy Fong Foods' spicy Sriracha sauce—possibly the hippest condiment in human history—got hot under the collar last week when the city where Sriracha is made declared the smell from the plant a public nuisance. But the ongoing chili-odor dispute between Irwindale and the rooster sauce maker shouldn't affect prices or supply. And competitors looking to take advantage of the company's latest regulatory troubles aren't going to find any new openings as a result of last week's ruling. Here's why everyone can chill out:

Images

Image: Calgary Reviews

No one's saying the plant will be shut down.

OK, there have been some Chicken Little-style reports to that effect. But that's not what was said at the city council meeting where the chili fumes were declared a public nuisance. Huy Fong says the problem can be fixed by June 1, well before the annual chili grinding season. If not, the city has the option to send its own contractors in to install odor-filtration equipment and send Huy Fong the bill—not an ideal solution, but one designed to keep the plant operating and nearby residents breathing freely.

There are strategic Sriracha reserves in place.

Huy Fong and its distributors have had shortages in the past, including one last year after regulators ordered a 30-day hold of Sriracha before distribution to comply with state health laws. Now, though, Frank Shyong of the Los Angeles Times reports that Huy Fong has enough of Sriracha's chili-pepper base in storage to last a year and a half. Distributors who were caught empty-handed during last year's stoppage have been building up their own reserves, too.

Any resulting price hike shouldn't sting too much.

It looks inevitable at this point that Huy Fong will install the required filtration equipment, at an estimated cost of $600,000. That's not chicken feed, but any expenses passed along to customers shouldn't be much more than a blip. Sriracha is already so inexpensive ($1.75/28 ounces wholesale, about $3 retail) and sold in such high volume (20 million bottles sold in 2012) that rolling in the cost of air filters won't amount to a big price hike.

The latest squabble won't give the competition an edge.

A 3-pack of 28-ounce bottles of Sriracha sells for $14.80 on Amazon. For comparison, an 18-ounce bottle of Texas Pete Cha sauce, introduced last year by TW Garner Foods of North Carolina, sells on Amazon for $13.78. Mexican hot sauce Cholula has a similar cost per ounce, retailing on Amazon for $18 for two 12-ounce bottles. Even if Huy Fong Foods were to quadruple Sriracha's price (and no one's saying Huy Fong will), it would still be less expensive per ounce than Cholula and Texas Pete. The spicy rooster still rules the hot-sauce value barnyard.

It's all cool.

Bottom line: It looks like the pepper fume problem is on its way to being solved. There are enough ingredients stockpiled to stave off a shortage, and the price shouldn't go through the roof. Foodies, grocery chains, restaurants, and distributors can chill out about their favorite hot sauce—at least until the next feather-ruffling news comes along.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers