The Genius of Hot Sauce

The reason we are told to make lemonade from the lemons that life gives us is obvious: Lemons rot because no one but unsuspecting babies in YouTube videos eats them raw. But as a commodity, lemonade is problematic too. Sugar is not local to our lemon grove and is costly, and anyway in lemonade we still have a product that likely requires refrigeration. And since it is mostly water, it is bulky, heavy, expensive to ship, and takes up room in grocers’ pricey coolers.

No, what we need is a product we can make with something local and preferably cheap. It should be small, sturdy, shelf-stable, and able to be marked up as value-added. Louisiana has done well with products like this, including rum from sugar cane, and everything including your shampoo from crude oil.

Surely one of the most brilliant marketing successes in the history of business is Tabasco hot sauce, bottled since 1868—now in its 150th year—on Avery Island, Louisiana, near the southwest coast. The peppers were introduced from Mexico and now are farmed in other locations such as Central and South America and Africa. When they are mature they are picked, ground, and mixed with salt. The slurry or mash is put in oak barrels and warehoused for several years, then seeds and skins are filtered, the mash is mixed with vinegar, and after another month the finished sauce is bottled.

Avery Island is a salt dome, so the salt was as cheap as it ever could be. Agricultural labor was cheap. (There had been a slave plantation on the island, and even now there is a sort of company town for Tabasco workers.) Peppers are aged in used barrels (now from the Jack Daniel’s distillery). The original product was sold in old cologne bottles that still determine the shape and size of today’s product. Even the spent pepper slurry is sold to companies to make pepper spray.

The great-great grandson of Tabasco founder Edmund McIlhenny (and current CEO of Tabasco), says, “There was no commercially sold hot sauce before Tabasco. Edmund invented the category.” (“Commercially-sold” is sometimes disputed, as is the claim for who first brought these particular peppers to the region.)

“Every harvest is a labor of love,” the company tweets. Perhaps, but in any case Tabasco sells a quarter-billion dollars in product each year, with sustained margins of 25 percent. It is on the list of America’s oldest companies. Even more unusually, Tabasco has stayed in the family—five generations now. Its CEO says, “Only 30 percent of companies outlive the founder or move to a second generation and only 12 percent actually make it to a third generation.”

It was a genius idea to take a thing that grows locally, not many would eat by itself, could rot on its way to market, to add some local salt, let time do much of the work, and sell it in tiny bottles for a healthy profit. The lemonade stand can go suck it.