why category design and not trademarking your name is best: siracha

Hot sauces are so popular, they often have their own section at the supermarket. But one hot sauce has grown to be a category all its own in the last decade, making its way onto menu boards at fast-food restaurants and into recipes in the New York Times

Sriracha is a phenomenon in the food world, and it is inescapably tied to its clear bottle with the rooster and green plastic cap.

The bottle and sauce are a product of Huy Fong Foods, founded and based in Los Angeles. The company did not invent sriracha sauce – sriracha could describe any number of chili-garlic hot sauces that originated in Southeast Asia. But Huy Fong Foods brought the sauce to the United States and made it into its own category. Ask anyone to name an Asian hot sauce, and they’ll likely say the generic sriracha – and specifically mean Huy Fong’s sriracha.

Like Kleenex or Xerox, the brand has become the category. 

And it happened largely by accident. Huy Fong Foods was founded in 1980 by David Tran, a Chinese-Vietnamese businessman who had served in the South Vietnamese Army during the Vietnam War. Following the fall of Saigon, Tran fled the country to escape persecution by the new communist regime for his military service and his Chinese ethnic origins. 

He eventually made his way to Los Angeles. Tran had been making chili sauces in Vietnam before he left, and he started up again in his new home. He named his company after the vessel that ferried him out of Vietnam and began selling his sauce at first only to Asian restaurants in Los Angeles. As it caught on with customers of these restaurants, Tran started selling directly to consumers and eventually to a wider network of food establishments. It became embedded in the Los Angeles food scene and began to spread around the country.

Huy Fong Foods has never spent a cent on advertising, instead of relying on word-of-mouth for awareness. Over the past decade, the internet rapidly accelerated awareness of sriracha.

Callout-Oct Blog-2021-2Huy Fong also benefited from something that might seem counterintuitive to most marketers but will be familiar to category designers: the company has never owned the name sriracha

While the rooster bottle with the green cap is the intellectual property of Huy Fong Foods, the name sriracha is a generic term, derived from the Thai village where the sauce supposedly originated. In Southeast Asia, the sauce had been around in different recipes and variations for almost a century before Huy Fong’s founding.

Once Huy Fong established its version in the U.S., the sriracha category grew every time a new Asian chili-garlic sauce hit the market using that name. This grew the category as a whole because it raised the awareness of the product. And since the Huy Fong sauce in the rooster bottle was the category creator and the leader in the category, it benefitted from all of these other entries into the category. Huy Fong’s sriracha is the first one people think of when thinking of sriracha, And as happens with category winners, Huy Fong reaped the majority of the economics of the category.

Huy Fong essentially can let other companies do advertising for the category. Wendy’s, Pizza Hut, Starbucks, Subway, Applebee’s and others have all promoted sriracha products on their menus without having to pay licensing fees or use the Huy Fong recipe. In 2016, Lexus partnered with Huy Fong Foods to build a single promotional Sriracha IS sport sedan. Huy Fong has profited massively from these campaigns without having to do any additional work.

All of this has contributed to Huy Fong’s sriracha becoming ubiquitous in America, earning the company $80 million in revenue in 2018 – a huge portion of the total market for all hot sauces, which was estimated to be worth $700 million the same year.

In a remarkable turn, the Huy Fong sauce is now being sold in Asia, where it originated. And while it might be written off as “American Sriracha” by some in Thailand and other Southeast Asian countries where the sauce originated, Huy Fong’s rooster bottle is appearing in more and more countries, and flying off the shelves.