Warrant-holding sauce boss: Consumers will pay more for quality
Key points
The manicured lawns of Buckingham Palace are a world away from the liana-strewn, sub-tropical wilderness of rural southern Louisiana, but Tony Simmons is equally at home in both settings.
He looked cool, collected and relaxed after his transatlantic flight when we met in the palace grounds at the Queen's Coronation Festival. Simmons had jetted into London from Avery Island, Louisiana – home of Tabasco sauce maker the McIlhenny Company – to attend the festival.
Recently appointed the firm’s president and chief operating officer, Simmons leads the only US food business to hold a royal warrant. His firm joined 83 other warrant holders to exhibit at the Queen's 60th anniversary celebration.
After Buckingham Palace, the next stop on his whistle-stop tour was to be the Leicestershire cheese maker Long Clawson Dairy. His mission: to review final plans for a Tabasco Cheddar Cheese range launching this month.
The visit reveals the importance the firm places on developing export markets around the world. Two months earlier – speaking in his Avery Island office below a picture of a huge, hooked black marlin game fish – Simmons told me why.
“We have good domestic opportunities but the international market has much greater potential,” he said. “The international world is beginning to embrace flavour. The rise in ethnic food has created an interest in hot and spicy foods around the world. And the growth potential of food manufacturing, relative to foodservice, is good.
“We’ve paid a good bit of attention to food technology by using our product as an ingredient – either as a co-branded product, where manufacturers want to put their name on it – or just working with manufacturers to put our product into their product, even if they are not going to put our name on it.”
Still in the new product development pipeline are more cheese products and popcorn – all flavoured with Tabasco.
Another key co-brand is Tabasco-flavoured Spam, beloved by the US territory of Guam in the western Pacific. The islanders share the twin distinctions of being the globe's highest per capita consumers of Spam and Tabasco. So, putting the two together was a tasty proposition.
The islanders consume the equivalent of almost 113g of Tabasco per person, with consumption on the US mainland rated at just 21g per person.
Tabasco’s top export market is Japan, where sales total about 100,000 bottles a year.
“It is very common for Asian cultures to use Tabasco on pasta and pizza,” said Simmons. “We made an association between those foods and Tabasco. Experimenting with hot pepper sauce came naturally. And we did not have to overcome traditional barriers about how these types of food are perceived. So, by introducing our product with a non-traditional food, it helped our sales enormously.”
In Europe, Norwegian consumers have shown a predilection for spicy pizza that has significantly boosted Tabasco sales in the country. Norway has the highest per capita consumption of pizza – exceeding even Italy.
Tabasco pepper sauces are packaged in 19 different languages and distributed in more than 160 countries.
Back in the US, the family-owned McIlhenny Company faces intensifying competition in a market sector it pioneered.
Simmons is the great-great-grandson of Edmund McIlhenny, the New Orleans banker who created Tabasco sauce at his Avery Island home in the aftermath of the American Civil War.
“We invented the hot sauce category,” says Simmonds, with obvious pride. “Our competitors have always been less expensive. To some extent they do it with less expensive ingredients – such as cayenne pepper, which is much more of a bulk commodity.”
But food professionals value the quality and flexibility of Tabasco, he insists. “People who know food – chefs and food influentials – understand how our product is produced and its special qualities. They understand they can do things with our product they can’t do with a lower-cost cayenne-based sauce.”
Making Tabasco sauce has changed little in the 145 years since Edmund McIlhenny returned to Avery Island from war-torn New Orleans. But the process is neither cheap nor quick.
It takes just three ingredients to make the company’s flagship brand, Original Red Pepper Sauce – salt mined from the island, pepper mash and grain vinegar – but three years to mature the mixture in white oak barrels before bottling.
Every bottle of Tabasco is still made on Avery island – a salt dome surrounded by bayous.
About 16ha (40 acres) of red pepper seed are planted each year on the island before their seed is sent to South America for cultivation. The mature peppers are returned, mashed, and mixed with salt and vinegar before storage.
The barrels of mash – up to 60,000 at a time – are stocked in a warehouse of jetliner proportions. After maturation, the mash is moved to the bottling plant to produce up to 700,000 bottles a day, supplied in quantities from 30ml sachets to 50-gallon drums. Deliveries to food manufacturers account for about 5% of the total.
Over the years new flavours have been added – including Green jalapeño and Chipotle – and the production process has been attuned to world-class methods. But little else has changed.
It’s a winning recipe Tabasco fans love and, over the years, has tempted competitors into an increasingly crowded domestic market.
Mintel research indicates its other ethnic food category – dominated by cajun and creole cuisine with its fondness for hot flavours such as Tabasco sauce – had seen sales soar by 26% between 200712. The category – which also includes Hawaiian, Carribbean and eastern European foods – is predicted to achieve growth of 31% between 201217.
Mexican cuisine leads Mintel's list of ethnic foods with US sales of £3,888M ($5,907M). The category was followed by Asian food at £1,070M ($1,625M) and Mediterranean food at £507M ($769M).
Moreover, as the US population continues to become more ethnically diverse, the ethnic food category will continue to be successful – provided firms find the right balance of price, authenticity and familiarity, according to Mintel.
Simmons acknowledges the competition. “The number of offerings is increasing. The pepper sauce category is one the few CPG [consumer packaged goods] categories that has seen good growth over the past few years. Most CPG categories are struggling. It's difficult to maintain market share in the US against so many competitors and to try to stand out.”
But he remains undaunted. “No matter how cheaply somebody can make something, there are significant numbers of people who appreciate quality and understand that it’s worth paying a little extra for that quality.”
His confidence is born of trust in teamwork – learned both in business (working for US crane distributor Manitowoc) and in the fighting chair of his co-owned big game fishing boat.
“We set a game plan before we go out of the mouth of the Mississippi to fish for marlin. We'll be offshore in the Gulf of Mexico for up to 48 hours, so it's important to set a plan.
“Whether I brought it from fishing or from business, I don’t know. But formulating a plan, having everybody agree on the plan and then implementing it, is the way we go to market. It’s a true team effort.”
My interview complete, I waited for my lift back to the hotel. Turning to take my last view of the red brick building – once the main Tabasco factory – I noticed an emblem, fixed proudly to the wall next to the main entrance. It was McIlhenny Company's royal warrant – with lion and unicorn beneath a British crown.
For all its sub-tropical heat, Avery Island was closer to the Palace than I had thought.
Meanwhile, view our infographic to see how Tabasco’s influence has swept across the globe.
