Hot sauce is a fast growing industry in the US.

A Sriracha Crisis?

by Elaine Schwartz    •    Nov 29, 2013    •    597 Views

Next year, we might have a hot sauce crisis.

Sriracha’s creator, David Tran is known to be very particular about his peppers. The “heat, color and taste” were specifically bred for Tran at the Kern County Farm near Irwindale California where he has a processing plant. “If the peppers are not spicy, then that’s the real problem.” Timing is crucial. In just one day, the peppers are harvested, delivered and ground.

Irwindale residents say that those peppers have created a “public nuisance” and worse. With their eyes tearing and throats burning and some attributing their heartburn, asthma and nosebleeds to the pungent jalapeno odor, they have gone to court. On Wednesday, the court agreed. An LA Municipal court judge declared that the odors were, “reasonably inferred to be emanating from the facility.” As a result, he said that the facility will have to partially close. Huy Fong had said that they installed extra filtration but that does not appear to have been sufficient. They have not commented about the impact on production of the decision.

The good news is that the last part of the crop, the 7,000 to 8,000 tons of peppers that still had to be picked on October 30th appear to have been delivered and ground. But sauce needs to be made.

From an LA news report, firsthand, here is a Sriracha factory:

As economists, we just need a demand and supply graph to see what will happen if  they cannot make that Sriracha. Less supply and soaring demand add up to higher prices. And, fewer people will get their hot sauce.

Impact of LA Court on Sriracha

With the court decision creating a shift in the supply curve, price rises and quantity falls.

Sources and resources: The LA Times had the best articles on Sriracha here and here while econlife had some history in a previous post.

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