Inside Crystal Hot Sauce: The $50M Southern Staple Defying The Odds

Hot sauce has been one of the hottest sectors of the food industry and third-generation owner Pepper Baumer has built Crystal, his family’s century-old business, into a $50 million Southern staple. Baumer Foods was founded by his namesake grandfather in 1923, and 37-year-old Pepper Baumer has been at the helm of his family’s company since 2019. He has grown the 103-year-old maker of Crystal—as well as a Worcestershire sauce, soy sauce, liquid smoke, wing sauce, teriyaki, steak sauce and more condiments—into a $50 million (annual sales) business, up 5% since last year. Today, Crystal is sold at thousands of retailers nationwide including at Kroger, Publix, Safeway-Albertsons, Walmart, Wegmans. And there’s ample room to grow outwards to the East and West coasts. Crystal’s loyal customer base in the South helps the business compete with brands that are multiples of its size. Across New Orleans’ finest restaurants and local po’boy joints, Crystal is a staple ingredient in many iconic creole recipes. These days, hot sauce is a white-hot market. McCormick set off an acquisition frenzy back in 2017 when the spice conglomerate and owner of Old Bay acquired Frank’s for $4.2 billion. Then McCormick ignited the deal market further when in 2020 it forked over $800 million for Cholula, the third largest brand, in a deal valued at 10 times revenue. More recently, in January, the fifth-largest hot sauce brand in America, Tapatio, sold to Dallas-based private equity firm Highlander Partners for an estimated $355 million. Tapatio was making an estimated 45% EBTIDA profit margin and the deal was at a multiple of roughly 20 times EBITDA profit. Then in May, Japanese barbecue sauce brand Bachan’s, known for its “Sweet & Spicy,” “Hot Honey” and “Hella Hot” flavors, sold for $400 million at a similarly estimated profit multiple. This isn’t just another passing food fad. The profits in the hot sauce business are some of the best in the entire food industry—with gross margins over 70% and EBTIDA margins above 40% are the norm. Forbes estimates that Crystal has about $20 million of profit annually, and if it were to get acquired, it would be worth at least $450 million. Read the full story on Forbes: https://www.forbes.com/sites/chloesor... Subscribe to FORBES: https://www.youtube.com/user/Forbes?s... 0:00 Flavor Forward, Heat Second 0:52 The $50 Million Southern Staple 1:15 1923 Roots: From Snowball Syrup to Secret Recipe 2:30 Nationwide Retail & Earning Their Stripes 3:15 The Brennan Dynasty & Commander's Palace 4:35 Popcorn, Tequila, & Crescent City Culture 5:40 Ruin & Resilience: Surviving Katrina and COVID-19 7:39 Why a $450 Million Valuation Won't Buy This Legacy 8:50 The Next Big Bet: Going Industrial Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more: https://account.forbes.com/membership... Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter:   / forbes   Forbes Video on Instagram:   / forbes   More From Forbes: http://forbes.com Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.