McIlhenny's Gold cover

TEXT OF INTERVIEW

KAI RYSSDAL: If you love hot sauce, Light My Fire's the place for you. It's a shop here in Los Angeles that sells nothing but -- more than 500 different varieties. One thing you won't find? Perhaps the most famous hot sauce of all...

Percia Tong: Tabasco? Actually, no. Because it's a common sauce, and we prefer to carry things that people don't normally get.

RYSSDAL: Percia Tong runs the store -- her remark about Tabasco being a "common" sauce is exactly the problem facing the company, and the McIlhenny family that founded it. Jeffrey Rothfeder explains in his new book, McIlhenny's Gold.

Rothfeder: Well, that's a bit of a struggle that they're going through right now. I mean, they're kind of caught in the middle. On the one hand, they've got the radical fringe, which are the chili heads... Chili heads are coming out with products that are really, really powerful, like one called "Da Bomb," which is the hottest sauce you can imagine. You take one little taste and your mouth virtually explodes. And then on the low end, they've got commodity companies that are just pumping out this stuff -- not with any quality or any care for the product, and they're charging about half the price of Tabasco sauce. So now they're facing a time when they're going to have to address these issues a little bit more.

RYSSDAL: Before we get to the business and to the company that makes Tabasco, let's talk a little bit about the product. This company and this family has come a long way on salt, vinegar and some peppers, huh?

Rothfeder: Well, absolutely. They've been around for 140 years, which is remarkable for a family business. And so they're now in 120 nations, and their profit margins are stupendous -- 30, 40, 50 percent, depending on the year.

RYSSDAL: Let's go back to the history, and in some ways the mythology of the McIlhenny family and this company and Tabasco sauce.

Rothfeder: Yeah, well the McIlhennys were on Avery Island up to the Civil War. They had a sugar plantation there. And when the Civil War came, the Union threw the McIlhennys and the Averys off the island. And when they came back at the end of the war, the island had been completely burned down. So McIlhenny was sort of looking for a second act in his life and how to make money again, and he grew some peppers. Eventually they produced Tabasco sauce out of it. But what McIlhenny did then to that product to make it succeed so well is that he created a great brand around it and created myths around how that product came to be. One myth, for instance, was that he actually was the first to use Tabasco -- well, it's a state in Mexico, is Tabasco... So, McIlhenny used all of these kinds of myths around the product to get a trademark on the word "Tabasco," which is incredible, because there's no other company today that has a trademark on the name of a place. You just can't get that.

RYSSDAL: They tried, didn't they, back in the 1990s, to get a food professional in there to run the company. How did that go?

Rothfeder: They hired this guy Vince Pierce, who had been a professional food marketer for many, many years, because they realized that their growth was slowing. So Vince Pierce put all this money into promotion, and sales were actually picking up. But the family couldn't stomach all the money it cost to promote the product -- they've just never done that before. And so after a year, they fired him.

RYSSDAL: Is the family just cheap?

Rothfeder: Well, part of the problem -- and this is the one part of the business model that I think hurts them -- every heir of Edmund McIlhenny, who created the business, gets a piece of it at birth. Nobody wants to share that money with a promotional campaign. And so it's the growth of all these heirs that's really shut down the ability of the company to spend their money in the way that they need to do to continue to grow.

RYSSDAL: Before I let you go, what about you? How do you use it? Scrambled eggs, maybe?

Rothfeder: Scrambled eggs is the best for them, I think. But I've learned to put it on pizza, and it really gives it that zest that pizza doesn't have.

RYSSDAL: The book by Jeffrey Rothfeder is called McIlhenny's Gold -- it's about the family that started the Tabasco company. Mr. Rothfeder, thanks a lot for your time.

Rothfeder: Thank you.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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