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Product and Topic Expert
Product and Topic Expert

My son loves Sriracha hot sauce. To borrow a quote from a popular brand of hot sauce in the USA, he “puts that S#!& on everything”. Or more to the point, he did “put that S#!&  on everything” until the prices started going through the roof.

The online market for sriracha sauce is so hot (pun intended, and it won’t be the last) that bottles of top brands are going for more than $50. Resellers on Amazon, eBay and Craigslist are pricing bottles of hot sauce for as high as $120.

And why?  If you don’t like the heat…

Because particularly dry conditions on Mexico, has caused the red jalapeno pepper crop, a key ingredient for siracha source, to fail! Mexico is by far the largest producer, but you also find red jalapenos in New Mexico, Texas and California, all areas that have experiencing a megadrought over the past few years.

Large sections of the growing area in Mexico relies on water from the Colorado river, which has itself been depleted in recent times. As US farms on the banks of the river have 1st rights at the water, Mexican farmers now must adapt their growing processes to leverage less water. A situation that many farmers around the world will face over the coming years.

The shortage is now stretching over multiple years, and there is no specific end in sight, which has increased the supply and demand imbalance and jacked up the price!

What can take the heat out of the situation?

There is no quick fix:

  • Climate change is the main issues. Even though jalapenos are more tolerant to an arid climate than other peppers, the extreme weather over an extended period has led to a lack of water, and ultimately crop failure.

  • Identifying alternate sources and locations of supply. Sounds simple, but the majority of growers are located in the same small area of the globe, so all face the same problem. And growing the crop in an area less affected by extreme weather or breeding new variants of the peppers that are more tolerant to heat and require less water, if possible, at all, would take years.

  • Creating a new recipe for Sriracha sauce is equally as challenging. When the main ingredient needs to be replaced, it often takes months, if not years, of R&D to replicate the taste and spiciness of the original product. They would have to explore alternative pepper varieties, that can provide similar flavor and heat, and be readily available. Alternatively, they could look for alternate combinations of ingredient such as spices, condiments, or even frozen peppers that could add a similar level of heat and spiciness.

The heat is on to reduce water consumption

The jalapeno crop failure due to water shortage is just the tip of the (sustainable) iceberg.

The average person in the United States uses between 80 and 100 gallons of water a day on simple activities such as flushing a toilet, taking a shower, washing clothes, using the dishwasher and watering outdoor lawns (banned all summer in my town). So it should come as no surprise that nearly two-thirds of the world’s population is predicted to face water shortages by 2025.

With record-low water levels, it is up to us as individuals and businesses to optimize our use of water and other natural resources to both preserve what we have and ensure that more becomes available. We need to think about the raw materials that are involved in the things we wear and consume, and design products that leverage more ecologically friendly and recycled materials.

As our planets population continues to grow, and the words natural resources at best stay constant, and in many cases decline, we must rethink how we consume natural resources, and produce products in a sustainable way.

The Sriracha sauce shortage, is just a very small example of a much larger problem.

To learn more about how to enable a more resilient and sustainable business and supply chain, download the resent Oxford Economics white paper.