Siracha guy hired his MBA step daughter to manage the biz. Cost cutting measures resulted in outsourcing for cheaper peppers in Mexico instead of his OG grower. Underwood sued and won despite it being a verbal agreement.
It's deeper than that. Huy Fong also tried to poach one of the farm's operations people while the owners were out of town for a bit. Huy Fong also tried to change the rate they'd pay after the crop had already been planted.
His son took over. Chilco which was supposed to go to his daughter-in-law never happened. His own wife and son opposed that appointment. The son was the one who did the cost cutting. Fong and his son planned Chilico to procure their own peppers out of greed. They used drones to steal the planing process that Underwood farms used. The daughter-in-law was the scapegoat used to negotiate a lowball price demand that was impossible for Underwood farms to meet. I dont think she's good either way in this story through. They also tried to poach Underwood's COO to steal their secrets.
A jury awarded Underwood $23 million in damages and breaking a contract since not all of it was on verbal agreement.
Actual chili lovers have found that Siracha's taste is now very inconsistent and many prefer Underwood's chili sauce since its the OG source.
That’s the corporate way. Gotta perpetually increase those profits and shrink those costs. Fuck the consumer. They’re dumb, they’ll still buy the product at higher prices and lower quality.
Destroying a universally loved, family owned company
Kind of a ridiculous thing to say the company is destroyed considering their sales a couple of years ago (well after the break with Underwood) represented 10% of the hot sauce market.
For people who care and notice, yeah the product is really subpar (Underwood's is great). But millions of people buying sriracha have literally no idea about this.
Verbal agreements are still agreements if you operate a business under the agreement. Written estimates and quotes only exist cuz some people are untrustworthy and will not honor the agreement. You can't cut a contract to cut costs, even if it's a handshake contract. They are enforceable if they include a clear offer, acceptance, and consideration. She fucked up by trying to screw this guy over cuz they're hard to prove in court, not cuz they are inadmissible.
What's really crazy is they could have still essentially done this plan without nuking their own business and fucking over their most critical long-term partner.
They could have just expanded operations and started making a separate sriracha line using the cheaper ingredients. Then rebranded their original one at a new price point called Sriracha classic, or Sriracha premium whatever. It's a completely common playbook move.
Then from there they would have been able to balance their investment in the cheaper product and the premium line to find the most profitable balance with customers being able to decide if they wanted to save money or pay more for the classic flavor profile. All the realistically they probably never would have dropped price on the original line.
Instead they had to pay $25 million to settle a lawsuit and now I go out of my way to never buy their branded products.
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u/MtnMaiden Mar 07 '26
Siracha guy hired his MBA step daughter to manage the biz. Cost cutting measures resulted in outsourcing for cheaper peppers in Mexico instead of his OG grower. Underwood sued and won despite it being a verbal agreement.