Lawsuit Against Sriracha: Affliction or Blessing in Disguise?

It was 9:40 on Saturday morning, visiting cars had filled up the parking lot of Huy Fong Foods, Inc. in Irwindale, California. Several golf cars worked continuously to pick up people from their parking spot and drop them at the entrance of the magnificent factory.

“Good morning, please register here and wear the cap,” a staff handed a red disposable bouffant cap to every visitor in line, wrapped in which are a Tour Guide, a ticket for Sriracha flavor ice cream and a ticket for a 9-once bottle of Sriracha Hot Chili Sauce and a free T-shirt.

Every Saturday since August 22nd, Huy Fong Foods, Inc. expects over 1000 visitors to the Open House event. On September 27th, there were over 1,500 people flooded to the factory. “We didn’t have so many visitors even at the first Open House,” said David Tran, the CEO and Founder of Huy Fong. From 10 a.m. till afternoon, the 70-year-old millionaire would wait outside the entrance to greet every visitor with smile and make pose for photos.

David used to be very cautious about the secrecy of his processing lines, but now visitors can see the whole procedure of making the iconic Sriracha hot chili sauce. From chili grinding, ingredients mixing, to bottle making, filling and the eventual packaging, visitors can not only stand by the processing line to take selfies, but also talk to the workers and get to know more about the procedure.

The tour is free, but it brings extra revenue to the company. When all the visitors had left, David got reported that for September 27th they earned over 6,000 dollars for selling souvenirs in their gift shop, the Rooster Room.  Neither for branding nor for higher sales, David confessed opening the door to public is his “last resort to run the business” at current location.

Started in 1980, Huy Fong Foods, Inc. has been making hot sauce for 33 years. Their signature product, Sriracha hot chili sauce, was named as the “ingredient of the year” by Bon Appetit magazine in 2010 and has a huge foodie fan base nationally and internationally. But the company was not known by many people. In February, 2013, Huy Fong moved to a 650,000 square-foot brand new factory in Irwindale, hoping to begin a new page of business. But later that year, the Irwindale city filed a lawsuit against Huy Fong Foods, Inc. claiming strong odors emit from the factory have affecting residents’ lives and threatening to close the factory.

In an email from Irwindale Council Member H Manuel Ortiz sent to other council members on Oct 10,2013, Ortiz writes: “I just received notice that the ordr at this place is very strong. We must proceed with SHUT DOWN immediately. Remember they have another 10 to 12 weeks of full operation, how can the affected residents put up with this health problem.”

David recalled that among the 60 to 70 complaints, several indicate residents can smell the spicy order on Sunday morning, when his factory is not working at all. A little bird told David that someone was shooting pepper guns in front of some residents’ home and try to put the blame on Huy Fong.

The Irwindale city used to greet Huy Fong with warm welcome event, being considered as an example of business-friendly government by California Community Redevelopment Association and the Los Angeles Business Journal. But several months later, the government tried hard to shut down his factory without any sound proof that the odor comes from Huy Fong. What’s worse, David said the city also delayed the license for his new factory with no reasonable explanations.

In April 2014, Irwindale City Council voted unanimously to declare the spicy smell of Sriracha hot sauce production a public nuisance. At the public hearing, David was so furious that he shot at the city council members with his poor English that ” You have no brains. Your noses have problems,” he recalled. But eventually David cooperatively worked with South Coast Air Quality Management District to improve the placement and effectiveness of odor control filters.

The city holding its right to install the improved equipment itself if the order issue didn’t get better within 90 days, for David, is a dormant volcano, which can erupt at any time especially during the chili grinding season during June to November. “If they wait to install the equipment until the harvest season, I have to stop all my operations and the pepper will be wasted. I will go bankrupt,” David said.

David is highly suspicious that some scheme may be behind the whole dispute. Concluding from the sudden turn of city government’s attitude and all the troubles he has faced in the recent two years, he said maybe Sriracha’s growing demand has threatened other big companies’ market share, so they want to take me down and take away my business.

“(Huy Fong) is my second wife, my lover. I can’t love it enough. How can I share it to others?” said David. To save his business, David finally decided to open the door to public, and prove that “no tear gas” is produced in his factory.

David sent 30 VIP invitation to Irwindale city to invite all the complaints to his factory and check the odor themselves. But none of them had showed up so far. Oppositely, until September 27th, there has been over 10,000 people outside Irwindale, the city with around 1,400 residents, attended the Open House and their feedback were all positive.

“My business runs smoothly for 33 years, but last year it had a lot of problems. I got great pressure,” the usually calm and smiling businessman sighed while confessing his true feelings.

During the past 33 years, David worked hard to improve the quality of his products while keeping the price low. When he started the business, a 28-ounce bottle of Sriracha was sold at $2, but now it’s $1.75.

But the dispute ironically brought Huy Fong Foods, Inc. into the spotlight. The demand for Sriracha increased drastically. David said last year the sales of his products increased for 20% and it continues to grow.

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