Trends 2013

The Biggest Trends in Business for 2013

Move over ketchup, hot sauce is now one of the 10 fastest-growing industries in the U.S.
By Jason Daley
Hot Sauce Goes Mainstream
Photo Courtesy of hotsauce.com

Hot sauce has caught fire. In April research firm IBISWorld declared manufacturing of the spicy condiment to be one of the 10 fastest-growing industries in the U.S., with average company revenue jumping 9.3 percent per year over the last decade.

Even though the segment is small--roughly 5,500 people employed by 218 sauce companies, an industry valued at $1 billion--it packs an entrepreneurial punch. Beyond established companies, thousands of kitchen and garage cooks have begun decocting their own spicy blends, with dozens of new sauces hitting local shelves and mail-order catalogs each year. A quick survey of recent entrepreneurial sauciers included a 13-year-old boy from North Carolina, a formerly homeless veteran who used sauce to rebuild his life and a Palo Alto, Calif., firefighter who grows his peppers behind the station. Even the industry's largest player--Avery Island, La.-based Tabasco, which has an estimated 34 percent of the market--has been privately held by the McIlhenny family since 1868.

Dave DeWitt, producer of the annual National Fiery Foods & Barbecue Show held in Albuquerque, N.M., and the authority on all things spicy, likens the hot-sauce explosion to that of craft beer. "It's similar because it's an industry in which people have a vision of a product that they want to create," he says. "So just like in microbrewing, people are using innovation as much as they can."

So what has transformed Americans from ketchup slaves to salsa-swilling heat addicts? IBISWorld and DeWitt both point to the increasing popularity of and exposure to international foods. With that comes demand for zippy condiments like Vietnamese sriracha, Korean chili paste and more complex versions of Mexican salsas. Research firm Mintel reports that sales of sauces and marinades--including hot sauces--jumped 20 percent between 2005 and 2010 and are expected to increase another 19 percent by 2015, mainly because people are increasingly cooking at home to save money and want to re-create those international flavors they have come to enjoy while eating out.

At the same time, DeWitt says, hot sauces are maturing. Instead of focusing on extreme heat or crude names like Slap Your Mama and Blow It Out Your Ass, companies are doubling down on flavor, experimenting with fruit-based sauces and toning down some of the heat to appeal to a wider consumer base. "The micro-hot-sauce industry and all the new brands are slowly eroding Tabasco's market position," DeWitt says. "These new chili-heads are trying to come up with a line of products that will appeal to people who like all kinds of cuisines."

Blair Lazar, who founded Highlands, N.J.-based Blair's Sauces and Snacks 23 years ago (and holds the Guinness World Record for the hottest product on Earth), believes technology is a major driver of the sauce boomlet. "When I started it was hard to even find bottles. Now people can order bottles and get labels off the internet," Lazar says. But the most important reason for the trend, he contends, is that Americans, like much of the rest of the world, have simply fallen in love with heat: "We're not a bland society, that's for sure, so why not turn it up a bit?"

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This article was originally published in the December 2012 print edition of Entrepreneur with the headline: The Biggest Trends in Business for 2013.

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