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Past Contest Winners Ponder Commercial Production
What's in Store?
by Virginia B. WoodWhat passionate cook hasn't fantasized about seeing their name in lights above a restaurant or envisioned row after row of grocery store shelves stocked floor to ceiling with glistening jars or shiny packages of their specialty foodstuff? Just about every year, an award in the annual Austin Chronicle Hot Sauce Festival inspires someone to at least consider commercial production of their winning recipe. For most, it's just a passing fancy easily dismissed once they do a little research and find out how difficult and expensive small-time wholesale food production actually is. We interviewed three former winners (all repeat contestants this year) to find out where their companies stand in the hot sauce market.
Austinite J.P. Hayes can honestly say that a hot sauce contest changed his life. The UT marketing grad was unemployed in 1991 when he made up a gigantic batch of his special blend of fiery salsa, entered a quart in the contest, and sold $450 worth to the assembled multitudes who were waiting for the judges ruling. Hayes enjoyed himself so much that day and was so encouraged by his win in the Special Variety category that within 10 days, he had set up shop. He rented a small, empty barbecue restaurant at the Travis County Farmers Market and Sgt. Pepper's was officially born.
J.P. Hayes of Sgt. Pepper's
photograph by John Anderson
Hayes admits in retrospect that he had no real interest in the barbecue business. What he really wanted was an affordable, legitimate commercial kitchen in which to produce his signature creation, Tejas Tears, a blend of habaneros, onions, carrots and spices. Commercial food products must be produced in a kitchen licensed and inspected by both the Austin/Travis County Health Department and the Texas Department of Health. In less than a year, he closed the restaurant and re-located his operation to another kitchen. "There was no way I could afford to put in a kitchen of my own because my business was so small," Hayes explains. Fortunately, O'Shucks Tamales had available space in their new, downtown kitchen and Hayes was able to rent it on an as-needed basis. "We come in at night and do our production runs when they aren't there," he says, "it works great for both companies."
For future competitors who view the Health Departments as the boogyman, Hayes advises that they can be very helpful and informative if you work with them. Brochures and guidelines about setting up commercial kitchens, canning and labeling regulations, and health codes are available for the asking. The other source of assistance is the Better Process Control Short Course taught by Dr. Al Wagner at Texas A&M every October. In addition to the Health Department's Food Managers Certification, completion of the processing course is a requirement for commercial manufacturers. The short course is college-level course material, Hayes stresses, "and they expect you to learn it all."
Another potential stumbling block for start-up food businesses is liability insurance. Many small stores don't require it before they'll stock your product, according to Hayes, but large corporations (Whole Foods, HEB, Randall's, etc.) with deep pockets will expect the company to have plenty of coverage. Also, every business will expect labels with nutritional information and scannable UPC codes.
For the first few years he was in business, J.P. Hayes kept some day jobs. Working as an assistant in the cooking school at Central Market gave him the opportunity to assist some of the best chefs and cookbook authors in the country (see sidebar) and he put that learning to good use. Now he teaches monthly classes at the Cooking School and operates his own retail business, Sgt. Pepper's Hot Sauce Microbrewery at 601 E. North Loop. Hayes sells his own potent line of salsas and flavored vinegars as well as other brands that he's picked up at the annual Fiery Foods Show in Albuquerque every March. He still rents kitchen space and is just now beginning to consider contracting out some of his production to a contract or co-packer (see sidebar). Sgt. Pepper's salsas are entered in the red, green, and special variety categories -- now in the commercial division.
Longtime Austin chef John Randall was already a successful food service professional when he won the Grand Prize in the first annual Austin Chronicle Hot Sauce Contest in 1991. By 1992, he had found a contract packer to manufacture his prize-winning brew and now his Austin Grand Prize Hot Sauce is sold in 80 markets in Central and South Texas and Louisiana. He chose to work with a co-packer to avoid the trouble and expense of setting up a kitchen. He maintains the ownership of his recipe, protected by a confidentiality agreement. The manufacturing, packaging, labeling and shipping are all handled by contractors for a negotiated fee. "Now Stewart Neblett of Neblett Foods makes my sauce," says Randall, "and I'm very happy with them." Randall owns his company and retailers order directly from him. He relays orders to a San Antonio company called Albert Distributing that handles what is called DSD or direct store delivery. A co-packer who manufacturers several products can purchase bottles, lids, labels, boxes, and pallets in bulk at much cheaper prices than an individual company, while a distributor with trucks on set routes takes some of the cost out of delivery. Because his business has so little overhead, Randall says, "I actually make some money."Even with the income from his hot sauce business, Randall continues to work as a chef. He's on his third stint at local landmark Green Pastures, working as chef de cuisine with executive chef Chris Buslett. He enters the same recipe in the contest every year and always manages to place among the winners.
Malcolm Milburn is a passionate home cook who shares his love of the kitchen with his family and friends. They rave about his green sauce and he knows it's a winner because it garners first place prizes almost every year. After several years as an amateur, he's given serious thought to going pro, going so far as to register his company an assumed name with the county and design a label. This year he's entered the commercial division under his company name, Uno Mas Salsa Company, but you won't find his brand name on store shelves just yet. "Mine is a refrigerated fresh sauce," explains Milburn, "and that creates all kinds of problems with distribution. I'm working now trying to get it shelf-stable." Distribution for fragile refrigerated products is difficult to come by and it would be almost impossible to promote a refrigerated sauce outside the immediate Austin area, severely limiting sales. Milburn doesn't seem interested in the idea of hiring a contract packer. "The enjoyment for me is in the cooking, so I think I'd want to make the product myself," he says.While Milburn tests recipes and works on a business plan, he ponders the hot sauce market and his chances for commercial success. At one point, he considered buying a small Wimberley company that bottles flavored vinegars and oils but the numbers just didn't work out right. He hasn't taken the A&M short course or made the commitment to give up his day job to pursue salsa fame and fortune. "It's always been such a wonderful hobby," muses Milburn, "I'm afraid if I turn it into work, I might just lose my enthusiasm." He'll continue to enter the annual contest, saying "there's lots of ego in it, it's fun being competitive." His goal this year is to place in the red sauce category. If there is a commercial venture in your future the following information may be helpful: Austin/Travis County Health Department, Environmental Health Division, 469-2015; Texas Department of Health, 458-7111; Texas Department of Agriculture, Taste of Texas, 463-7476 (contract packers list); Texas A&M University, Better Process Control Short Course, 409/845-7341 (Oct. 7-10); From Kitchen to Market by Stephen F. Hall (Upstart Publishing)
