Sriracha, a famous hot sauce brand produced by Huy Fong, has become a household name since its inception. Known for its rich flavor and distinct packaging, the brand has had its fair share of success. However, a series of unfortunate events have recently led to its downfall. This case study will examine Sriracha’s failure in applying a human-centered strategy, subsequently demonstrating the significance of considering the human element in any business.
In a Nutshell
Let’s spill the tea on Sriracha, that famous hot sauce everywhere – from your favorite noodle bowl to that snazzy cocktail you had last week. It was all sunshine and rainbows until they got on the wrong side of the pepper supplier, and boy did things go downhill from there. In this case study, we’re taking a deep dive into how Sriracha fell flat on its face by ditching the human touch in their business in favor of making a quick buck.
Here’s What Went Down
With their head in the clouds, Sriracha thought it was a bright idea to screw over Underwood Ranches – their main squeeze for peppers. In an attempt to increase profits, they broke a long-standing contract with Underwood Ranches, treating what should have been a cherished partner as just a resource to leverage to get ahead. They promised to buy the 2017 pepper harvest in its entirety, causing Underwood to rent more land to meet Sriracha’s demands. But then, Sriracha just…didn’t.
Furthermore, Sriracha began sharing confidential harvest information with competitors, an action that not only betrayed the trust of Underwood but also jeopardized their business. These decisions damaged the relationship between Sriracha and Underwood, leading to a legal battle that Sriracha lost, resulting in a hefty penalty of $23 million.
You can see right away how this was problematic; you might even be rooting for Underwood. This breach of contract and blatant disregard for their key partner’s business interests not only cost them financially but also severed a vital supply chain link, causing a pepper shortage that halted their production in 2022.
Sriracha’s misadventures didn’t stop there. Their blunder was a red flag for other potential pepper suppliers. The suppliers weren’t eager to gamble their cash on a company that was famous for backing out of contracts.
With this stunt, they had painted themselves into a corner. They even had to halt their production in 2022 due to a lack of peppers.
Consumers, who were aware of the situation, started boycotting Sriracha’s products, further decreasing the brand’s sales and market share. Sriracha attempted to blame the weather and economic factors for their issues, but many saw through this, identifying the brand’s poor choices and lack of integrity as the root cause.
As Griffin Hammond, the filmmaker behind a Sriracha documentary, rightly said in a Thrillist article, “There was no big warning sign that Sriracha was going to disappear off shelves. But when you’re a one-sauce company, there are dangers.”
So, What’s The Big Takeaway?
The moral of the Sriracha story? It’s pretty simple – don’t be a jerk in business. Sriracha lost a lot more than a few bucks – they lost the trust of their partners, suppliers, and customers.
By disregarding the value and interests of their key partners, Sriracha faced severe financial, operational, and reputational consequences. Their fall from grace reiterates the importance of treating all partners with integrity and honor, maintaining transparent relationships, and valuing the human element in all aspects of business. In a world increasingly focused on sustainability and ethical business practices, taking a human-centered approach is not just right—it’s crucial to long-term business survival and success.
Business isn’t just about dollar signs and bottom lines; it’s about people. That’s why a human-centered strategy is crucial. Treat your partners, suppliers, and customers right, keep your promises, and be honest. Or else, you might end up like Sriracha – a hot mess.
Hold Up, What’s a Human-Centered Strategy?
Before we go on, let’s break down this whole human-centered strategy thing. It’s about treating your business relationships—whether it’s with your customers, employees, or suppliers—like, well, humans. It’s about understanding their needs, respecting them, and keeping your promises.
Now where did Sriracha trip up? They lost sight of the fact that their pepper supplier was a partner, not a commodity. They ditched their promise to Underwood Ranches, threw their confidential info to the wolves (AKA their competitors), and acted like it was all hunky-dory. Spoiler alert: it wasn’t.
As stated in this Thrillist article, “You can’t just cut corners when you’re making a product loved by so many.” In trying to save a buck, Sriracha forgot the human element, and it ended up costing them a whole lot more.
Okay, So How Can You Nail a Human-Centered Strategy?
“Great, I get it. But how do I do this human-centered thing right?” I hear you loud and clear. Here’s the 411:
- Understand: Spend time understanding your partners, customers, and suppliers. What are their needs, what’s important to them, and what makes them tick?
- Empathize: Put yourself in their shoes. How would you like to be treated if you were them?
- Respect: Treat every relationship with respect. Don’t backstab, don’t go back on your word, and definitely don’t sell out their secrets.
- Communicate: Keep the lines of communication open. If there’s a problem, talk about it. Transparency is key.
- Appreciate: Show your appreciation. Say thank you, give credit where it’s due, and acknowledge the value they bring to your business.
- Evolve: People change, needs change, and your strategy should too. Regularly revisit and tweak your approach to keep it relevant and effective.
You might also be thinking, “I’m not Siracha. My business is small. Why does this matter to me?” Here’s why.
It’s not about the size of your operations but about fostering ethical, trustworthy relationships. Big or small, businesses need solid relationships to thrive.
You may depend more heavily on a handful of relationships with suppliers and customers – these connections are the backbone of your business. If you start with good habits like honoring agreements, communicating transparently, and genuinely caring for your stakeholders, it’ll set you on a path of sustainable growth.
You have a unique opportunity to set the tone for your industry. You can demonstrate that success and integrity can go hand-in-hand, and that’s something people will admire.
In a nutshell, a human-centered strategy is all about people. Take care of them, and they’ll take care of your business. And if you’re ever unsure, think, “What would Sriracha do?” Then do the opposite.
You’ve seen what can happen when businesses lose sight of their human-centered strategies – don’t let that be your story. Get a head start on making your business relationships stronger, more productive, and more human.
We’ve got just the thing: a totally free, no-strings-attached chat about your strategy and an audit of your marketing. Yep, you heard right. We’ll snoop around your current game plan, point out where you’re acing it and where you’re… well, not so much.
Why? Because we’re all about helping you create killer relationships with your customers, your team, and your suppliers. Click here to book your free call.