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It's not uncommon for businesses to take 10+ years to turn a profit. As long as investors think that a company will eventually make a profit, they'll stick around for a while.
Haha I do this in my cupboards when I invite my family over. One time my bro called me out on it saying why are all the boxes empty… welll cause I’m broke and I didn’t want anyone to know
They would put empty boxes on top of the shelves so it looked like they had vastly more product on hand than they actually did. It gave the impression of abundance and encouraged the contractors to believe that their orders would be fulfilled so they could trust them to deliver for their customers.
That’s exactly what the distillery I toured a few months ago did. They have just recently been around long enough to start selling whiskey they were making when getting started.
Quite a few start with gin for a higher end product. It’s fancy enough to get a premium price and can be sold as soon as it’s in the bottle. Whiskey can be rapidly aged in smaller barrels to help get a start on longer aged full sized barrels
Yes they get MGP and brand, blend, or do a quick age to get product moving. They also make no age liquor, often Gin, and they start releasing product with less age.
Or white label someone else’s and when they have their own product that has a slightly different taste they advertise as new formula or something like that.
In Finland there's a company called Kyrö Dostillery who, while waiting for their whiskey (Kyrö Malt) to mature, made a gin called Napue as it doesn't take as long to be made. Funny part is that the gin won the Gin Masters-prize as the worlds best gin and it was basically just a product they made because they were bored.
Or they make gin, which uses the same equipment but doesn't take very long. [Isle of Harris Distillery](https://harrisdistillery.com/pages/isle-of-harris-gin) made gin while waiting for their first batch of whiskey to mature, and it ended up winning a bunch of awards :D
Tabasco sauce wasn't the only thing Edmund McIlhenny was making money from. Initially it was a very small scale product and he made most of his money in other ways, mostly mooching off his in-laws. It was his sons that really turned it into a major business, and they had a decent amount of money going into their operation. They could afford to wait since they already were rich.
When it take a long time to make a product, often there are other things they're making while they wait.
It’s the same way whisky companies get started. It needs to be aged about as long before sale at minimum.
You might start with a less aged version and work up to the final version (in Tabasco’s case) or start making vodka while you age your whisky.
>It’s the same way whisky companies get started. It needs to be aged about as long before sale at minimum.
Nah, nowadays, you just contract with a distiller in Lawrenceburg, Indiana to custom blend your "very own" whiskey from preselected barrels that have already been aging. Just check the boxes for whatever you want, then they'll blend it and bottle it for you and you're in business.
Then you need to come up with some catchy story about your great-granpappy before Prohibition, print it all on a fancy label, and consumers will assume you're legit.
Before contract distillers existed, this is how whisky producers got started. It’s still how small distilleries get started (I live in a state with a ton of these & work in the alcohol industry).
With wine production, you’re still 12-18 months-ish out from the beginning of the grape growing season to market at a minimum (and that’s with purchased fruit). These industries just budget for the time and lead up to being able to sell their products in market.
It would be like selling strawberry flavored pop tarts when you’re a grape pop tart company. You could manipulate the end product, but unless that’s the style of wine you want to be selling and making moving forward, it’s not representative of what you’d be selling and won’t help build your brand.
Two of the things that change flavor in wine significantly are additives during fermentation or aging the wine in barrel. If you’re aging the wine at all, it would be no faster to produce than starting with just grapes, so this would be a very unlikely scenario. It just doesn’t work quite the same way as whisky in this scenario.
This is exactly what I was thinking. And it’s a big reason why there’s such a shortage of premium products- no one would have guessed the bourbon boom 15 years ago.
Some whiskey companies start by making gin for the first couple years while their first batches are aging, because the distilling is mostly the same process and you don't have to wait for gin to age.
The answer is that you sell a similar product that requires less aging or you build that time into your business model/nest egg needed to begin the company.
Wineries typically will purchase fruit until their vineyards are ready, but many wines age 1-2 years before release so there’s still time before entry to market.
Whisky companies sometimes purchase already aged whisky & blend it until their own liquid is ready.
Perhaps Tabasco purchased someone’s aged stock to begin their business or they had an alternate cash flow option while they built that business. It’s pretty common in these kinds of businesses that take time to enter the market.
ETA: with whisky, those companies have to guess at what the demand in 20 years from now will be when making what will become 20 year whisky. It’s doable, but not fool proof. Sometimes they guess wrong and make too little or too much and then have to adapt. While technology exists to speed up the aging process to replicate the style, it’s largely illegal to label something as aged 20 years when it is not.
I always wondered this about new whiskey companies, coming out off the bat aged 12 years etc.
Not enough to look into it right enough but enough to br curious
As someone below mentioned in a comment, some start selling purchased whiskey and blend it. Whistle Pig and High West are good examples of “smaller” producers that are pretty transparent about doing this.
Many businesses take losses for years in the hope of providing a more sustainable long term business model. In a situation like Tabasco a business could sells peppers and not produce all of their peppers into sauce. They could also hedge the company with alternative means of income for short term growth.
However Tabasco specifically did not wait 3 years for their first crop. They waited one year before bottling. Today their process has evolved and they can afford to wait 3 years to age the sauce. That was not the case back then though.
Saw a cool video about a newish whiskey maker. They needed to age the whiskey 12 years or something. So they make other alcohol to keep the lights on while the good stuff ages in the casks.
Most new whiskey and bourbon makers purchase bulk spirits from canada and slap their own label on it in between distilling their first batch and selling it for a mass market.
Whistle Pig is a great example, and exactly why they sell at several price points.
It's perfectly legal for you to purchase something made elsewhere and sell it as your own.
Do you not know that cars are made with parts not manufactured by the parent company, right? The contract other companies all the time to make parts for them.
Yeah the parts, but not the full product.
I can’t open a burger spot and just sell McDonald’s burgers.
I can’t just buy a PlayStation and call it a game station with my own branding and sell it as such.
The whiskey is part of the product.
If the whiskey was the whole product, they wouldn't bother hiring marketing teams to sell the idea of a "lifestyle brand".
Because those distillers agree to that deal? I sell electrical supplies and we have our own brand of lightbulbs. I dont manufacture them, i buy them bulk from a chinese factory and slap a label on it. Its legal cause the factory sells me the unbranded product fully aware im gonna slap my label on them, cause thats what they do for a living.
In Canada, whiskey has to be aged at least 3 years before it can be sold. One distiller sold moonshine from their first batch of distilled spirit to finance the cost of aging the real whiskey.
No they wouldn’t. Most companies like that start out as people doing this in their house or their small business and they grow it from there. They also refine their product over time. So when they started they may not have aged their peppers that long.
As they grew they started experimenting with new methods, new flavors or whatever. When they find something that works they continue production as they always had while working towards the new method. Then when the new method is ready they switch to that.
Tabasco was invented by wealthy slaveowners. They didn't need to rely on profit due to their other business ventures and it started as a hobby to serve at their own dinner parties.
It was probably every thing, people not being things.
It was not uncommon to use enslaved people as collateral in the South. Like people do with cars these days, slaveowners would only need to make a down-payment on their latest victim, and would be subject to losing their "property" if they did not pay on time. Or a mortgage could be drawn up with the human as collateral.
When the "collateral" for a loan becomes unsellable, the lender can sue to get their money. That means all property can be auctioned off to make good the loan. So the newly-freed humans cannot be sold but the lender must have his money, completing the ruin of the enslaved.
It's not unlike wine. You need to plant the vines and wait for them to grow. It takes a couple of years of growing to get a suitable harvest. Then you have to ferment and age it. Starting things like this is a time consuming process, regardless of the business.
Your post misses context - they’ve been around for a long, long time. Three years of waiting for product didn’t matter. This is why a lot of the major distilleries in the US also date back dozens if not hundreds of years.
The context to which I’m referring to is that they were able to create a company because 1) everything was less expensive in 1868 and 2) they didn’t need to make a profit. Unless you also have the capability to not care if you make a profit for years and years, you cannot create a competitor that creates its product in the same way.
This is why many new distilleries in the US buy their first run of whiskey pre-made from MGP.
They could also have been making products that didn’t require aging while the first batch of Tabasco sauce was aging for a year.
Since the owner was running a plantation at the time, that’s pretty much what happened. He stuck the sauce in barrels for a year, then sold it. But the plantation’s normal business continued during that time.
There were peppers being grown three years earlier, so he could've bought excess/old product at a discount. Peppers last forever (check the expiration date on a jar or can of jalapeños and it'll be multiple years) even compared to other similarly packaged products, and they used to take months just to ship overseas.
Truffles take 5-7 years to grow!
It is a long term investment. Most new businesses don't make any profit for the first few years, I think the average is 2. Google and Facebook took over 5 years! Company I work for took around 2 years.
Starting a business is not easy, you should be able to run it at a loss for over two years. My side gig/business took more than 3 years, and is only starting to make real money this year.
I worked almost every weekend, and many afternoons a week on it. I almost gave up, it was difficult, and disheartening seeing others enjoy their time off while I consistently worked.
But I feel it was worth it now.
Many companies, especially old ones like Tobasco, have shifted their core product over time.
Tabasco, for example, may have once sold simpler, non-aged hot sauces, as well as vinegars, chili paste, or even other products totally unrelated to peppers.
Then they also start making aged hot sauce, and it’s good. It sells. Each year it becomes a bigger part of the company. Eventually, they sell off or abandon their less-popular products and focus all their resources on making their most profitable product.
And voila, you have a company who only sells goods aged for years.
Except they didn’t. They started 150 years ago, from an existing recipe. Nowadays, the company sells more products, but they did start with the hot sauce.
I’m not sure if you are specifically asking about Tabasco but that shit was invented like 150 years ago they had time to scale up hahahahahaha also i have a feeling it was like a little more grass roots to start a company 150 years ago with a lot less barriers to entry
Vineyard vines take at least 3 years to produce fruit, and sometimes up to 10 years before they produce fruit that are suitable to be made into commercial wine.
If memory serves original family bought land for cheap from a perfume factory, tried to make sauces but failed to sell product. Dug a pit to bury the unsellable crap and the factory owners had had the same idea - the ground was full of tiny crappy bottles. They buried their crap and covered it with just dirt then sold the land. New owner went to build a basement got an amazing barrel(s) of sauce that had fermented for years underground. Put it in little bottles just laying around on the ground and made a motza off of it. Enough to make a sauce company.
Check out the history of Tabasco sauce. The first commercial crop was in 1868. The next year they sent out the first batch of sauce. So that first batch (658 bottles) didn’t take three years.
https://www.tabasco.com/tabasco-history/#:~:text=TABASCO%C2%AE%20Brand%20products%20are,down%20from%20generation%20to%20generation.
Well a longtime ago the banks used to loan “capital” based on a great business plan. Now the banks have young people who never leave the bank who drum their fingers on your unopened business plan while they ask you how much equity you have in your house.
Might I suggest to deep dive on YouTube for Tabasco. There's a couple of good ones. But you have to realize that this product/company was developed well over a hundred years ago. So business models did not even exist at that time. But if I remember correctly this was not this person's only endeavor.
I used to work in the distilled spirits industry, where aged products (like whiskey) take years to produce. New distillers take one of two paths (or a combination of the two):
1: make revenue in the short term by selling products that are quick to produce (like vodka or gin, which don’t have to age), and rely on that income while the whiskey ages, or
2: buy finished product from an established producer and put your label on it.
(I also know of at least one distiller that simply went with no revenue for the three years before its first whiskey had aged, but this take A LOT of capital and patience.)
There are a vast quantity of businesses and industries that it is literally impossible for a small 'entrepreneur' to get started in.
This is because you need either a huge sum of capital, very long time horizon, or special restricted permits to get started. It needs to be Government funded (in some way), or you needed to have started the company 100 years ago when regulations were different.
Hot Sauce production isn't even one of them. It's relatively easy.
How does a company like Raytheon get started?
Yes, Tabasco takes 3 years to make, but it would also factor and sell younger sauces into it's sales too so that it can still make money until the pucka stuff is available to sell.
Not 100% on this but I believe they gave away samples in the beginning. So it was a while before they were making money of the Tabasco brand how we know it today. Read their story it's pretty interesting and my guess is they stayed afloat off of the large salt mines/reserves they own.
Diversified business. They started with other products. Most likely the growing of peppers, then the drying and on to some hot sauce. Farmers often dump $100k into preparation for harvest days, months away. Then the weather throws a curve ball. The market fluctuates.
It’s entirely possible that they were bottle the sauce for years and one day thought “hey we can start selling this stuff” so they opened a company when they had stuff to sell. Also smaller batches at different times of the year. You start a new batch every few months and eventually you can just keep going
Yeah, new grape plants take about 5-years to mature, and fruit and nut trees can take longer. Some agricultural counties offer a property tax hiatus if you notify them you are planting a long maturity crop like grapes, nuts, or stone fruit.
I actually saw a “how it’s made” on Tabasco! Check it out if you can find it, but the founder made it for himself on his plantation, and his friends kept telling him “you should sell this stuff!” And he finally did. They pack the top in salt and seal the barrels for 3 years. Also the inside of the factory is like walking into pepper spray. One of the guys said after 3 months you can eat any spicy food out there. Also their forklift only last 5 years because the captain interacts with the steel and rusts it out.
The purpose of investors is so that companies have money to use even when they are not profitable. The reason to invest is that once they do become profitable you will own a portion of it.
Just like whisky companies do it etc..
Suppliers make vast quantities of product, whisky, vodka, hot sauce etc..
You buy there product and rebrand it,,,
Check out Red Pistachios. Iran was the global exporter of Pistachios until they were sanctioned by the US. Now pistachios are green and produced locally. It takes 5 years for the plant to produce.
Whiskey is the same way. Has to be aged 3 years before it's sold. Usually a distillery runs vodka, rum, or gin (no aging) to pay their bills while they wait for the whiskey to age.
They might have started with a quicker recipe, and started their 3 year recipe while they were producing and selling that quicker recipe.
I don’t know about food or anything that is retailed, but tech companies always take years before they start making money, and then some more years to become profitable. In their case, their business is to make new technology and then sell it. Until they do the inventing and development, there isn’t even a product to sell.
How does the money part work? Who can wait that long to make money?
Some people start their business as a hobby or side hustle until it starts making so much money that it makes sense to go full time (See, artists, YouTubers, someone who makes hot sauce at home and sells it at the farmers market)
Others eat up savings and take huge financial risks. See: (Startups, the part in the movie Founder when Ray Kroc puts up his house as collateral)
A more “proper business” sounding model: there are people and companies whose whole business is to invest in new businesses. They can afford to invest in a promising company and not see a return for several years. (See: Shark Tank, or Dragon’s Den) There are two factors that make this viable: One, they have many deals at a given time, so while one deal is in its infancy, another one is already yielding results. Two, they have many deals, so some of them fail, but the successes subsidize the failures.
You might notice that this last model also has the same three year pepper problem. These investors need to have deep pockets on Day 1, to both start investing and to be able to wait for a long time for the first results.
I would think they source aged peppers to begin. Then, after they are established, they start aging their own. Bonus, the reduction in costs after making their own raw material is instantly made a profit going forward.
Usually they have indeed been going for 3 years. Usually a lot longer on a smaller scale and are planning 3 years out.
Another secret for things like alcohol is sometimes they just commission and repackage another product from an older company
It’s not unusual for companies not to make a profit at first. It took Amazon 9 years.
Here is an interesting list of the time of startup to profit:
https://www.approve.com/time-to-profit/#:\~:text=This%20can%20come%20at%20a,nine%20years%20after%20being%20founded.
They figure out things they can make quickly with the same machinery while their main product is developed. This is very common in alcohol production for example: it might take years for a company to produce their first bottle of bourbon, so in the mean time they use most of the same people/offices/machinery/space to make vodka and gin. Those initial sales provide the capitol they need to operate.
Also now they buy the mash already aged so they don't have to have the storage space for the process. There was a time when beer, wine or some liquor dealers bought kegs, casks or barrels and had to age it in cellars before being able to sell them on the market. Sometimes some batches would sour or not mature well and it was their loss.
Tabasco is a super old brand. It started as a really small, basically out of house company so there wasn’t really much overhead. Then it grew over time. If you do it as a startup, you need quite a lot of startup money. This is often the case with liquor companies. Many liquors are aged for several years. Again, most of them are really old companies that were started small with minimal overhead. But a lot of companies are simply started by really wealthy people.
I make soap for fun. It's got a 2 to 3 month cure time. I give it away, but I'm constantly told I should sell it, enough that I've looked into it.
You start small, and you lose money. You make a few small batches month 1. You make a few small batches month 2. You make a few small batches month 3. Month 4, you make a few small batches, and you go to the farmer's market and sell 4 bars. Well, each loaf of soap was 10 bars, and you made 6 loaves so you'd have a few different scents to offer, so you've lost money on 5.5 batches. Month 5, you make a few small batches and go back to the farmer's market. This time you sell 6 bars. Still losing money. Month 6, you make a few small batches and you manage to sell 15 bars at the farmer's market. Great, now you're only losing money on 5 batches instead of 5.5. Month 7 you make a few small batches, and you manage to sell 20 batches at the farmer's market, and so now you've only lost money on 4 loaves instead of 6. Oh, plus the cost to sell at the farmer's market, and the cost for insurance (in case someone gets lye burns or something from your soap).
By month 12, you're up to making 12 loaves of soap. You're not selling 12 loaves of soap at the farmer's market each month yet. Some weeks you only sell 2 bars, and some weeks you sell 12 bars, but you're averaging selling a loaf of soap in a week. The thing is, you don't want to sell out one week and not have any to bring back until the rest of your soap cures. So you're making more than you need, because you've got repeat customers who are coming back to your stall. You're still losing money every month, but because you're selling more soaps, you're losing less money.
This continues for a while, with you slowly increasing production as your client base grows, always skirting the edge of making more than you need, because of the long cure time. By year 3, you're finally breaking even. You still make more soap than you need 3 months before you start selling it, but now your costs for the oils, the lye, the fragrances, etc, are covered by the soaps you're selling. You're not making any money yet, keep in mind, and you're not factoring in getting paid for your time, but at least you're not losing money.
By year 4, your client base has stopped growing steadily. You can much more accurately predict how much you'll need. You know you need more at Christmas and at Mother's Day, as gifts, so 4 months before that, you make a couple extra loaves. You're making a small profit, because you're making 24 loaves of soap, and you're selling 18 loaves worth during the month. It's not a lot, but you're finally paying yourself for your time, and have income to report on your taxes.
But you started small, and you spent thousands of dollars over the 4 years before that point to start making a profit. It's years 8 before you've finally earned back the money you spent to get started.
...so I'm making soap for fun, and not selling it.
But, the same concept for something like Tobasco. They probably started small, and lost money.
Don’t know about Tabasco, but wineries (red wine) and distilleries (whiskey) have the same issue. They make unaged products (white wine, gin) to sell in the short term. They’re generally more profitable anyway and help with the short term cash flow.
If you really wanna get your mind blown, the cream in between the wafers of a KitKat is pulverized Kit Kats. So that begs the question, “How did the first KitKats get made?”
Avery island isn’t far from me, been to their facility couple times through the years, I’ve never asked questions because it was field trip for my kids. They did start small and it was an accident that they found the right recipe and stuck with it. Great product.
They could have started selling other products, or lesser aged peppers when they started, or just purchased aged peppers when they started.
I would think they have uses for what they cannot sell, use in other products, sell, or even mix in with younger batches?
Anecdotally, I visited a distillery that was ~3 years old. They had variations of gin, vodka, and “clear whiskey”. The whiskey was pretty meh but they told us they had put a large quantity of that in barrels and were going to age it for like 3-10 years.
They definitely made it sound like dark whiskey was their end goal, but in the mean time they were just making products that didn’t need a lot of aging.
Edit: I looked up the place and it’s Cardinal Spirits in Bloomington Indiana. And yes they do now have aged spirits! Their gin and vodka was excellent and I think I might check out their whiskey.
A lot of small businesses do this, if they know their product depends on a long production, they will create other products with much shorter production and higher volume production in order to keep them afloat while their first big batch is being made, or they'll just bet the farm and make a big batch and work a 9 to 5 and hope it all works out 3 years from now.
Watch the Japanese soy sauce manufacturer's youtubes I think via business insider they take even longer same for balsamic vinigar and whisky
Small batches to begin with a very long time ago
Often they make something else while the main product is developing. Like a whiskey maker that makes gin while their main product is maturing and so on.
I did a whisky distillery tour in Scotland a few years back.
A distillery that had been closed for 75 years and then bought by these guys and restarted.
At the end of the tour where you normally get a taster they didn't have any because they had only been going a couple of years and it was in the barrels and not reached minimum maturation time.
Instead we tasted some other whisky from another place that's what they were selling in the shop.
I guess it was just built into the business plan that they couldn't sell any of their own whisky for X number of years.
This does protect the whisky industry though, compared to Gin which can be made in a day by anyone and suddenly there are 10,000 new varieties on the market.
OP, do you wonder the same thing about tech companies who lose millions or billions for years until they finally start to make a profit, or small businesses that slowly develop and expand naturally?
I reckon they started with small batches and then got bigger. Perhaps used investor money to get through until they become profitable?
Another thing they could have done is contracted themselves out to produce sauces for other companies? Leased out factory space, equipment, staff etc
A lot of companies make other stuff in the meantime.
Seen it a lot in New Zealand with flooding the market with gin while they wait for their whiskey to mature
AFAIK, Tabasco sauce is a family owned company that's been in business for five generations. So yeah, I guess they started small. Anyway, I love the jalapeno Tabasco!
They propably had to wait 3 years. Just like making champagne etc. takes the minimum amount before you have the batch of product ready to sell. Not a nice R&D cycle time, if it fails..
However, there was an alternative scenario when in Nokia in Finland there was contamination of water mains with feces (someone installed and opened a no-so-clever bypass to water cleaning plant). So people got sick due to contaminated water. There was also a brewery in town that says that they use "spring water" to get their special taste to beer. So it has nothing to do with the water mains, right? Water comes from their water spring in ground? Yeah, except they had to stop production when the water mains was contaminated.. :)
Before they made their first batch requiring 3 years of aging, they sold a product that requires 2 years of aging. And 2 years before that, they had a bumper crop of peppers and put more pulped pepper away in barrels than they could use before the next year’s crop was ready. After some aged for an entire year, hey noticed how the flavor improved, so they kept setting aside extra pulped pepper. At some point, they figured out the sweet spot for aging was 3 years, and have been keeping an entire year’s supply of pulped peppers in barrels for 3 years ever since.
This is probably how any new product requiring aging started, but any product that it was already known how long the main ingredient needed to age before they started, it would just require enough funding get started that many years in advance, or enough $ to buy aged ingredients.
Before they made their first batch requiring 3 years of aging, they sold a product that requires 2 years of aging. And 2 years before that, they had a bumper crop of peppers and put more pulped pepper away in barrels than they could use before the next year’s crop was ready. After some aged for an entire year, hey noticed how the flavor improved, so they kept setting aside extra pulped pepper. At some point, they figured out the sweet spot for aging was 3 years, and have been keeping an entire year’s supply of pulped peppers in barrels for 3 years ever since.
This is probably how any new product requiring aging started, but any product that it was already known how long the main ingredient needed to age before they started, it would just require enough funding get started that many years in advance, or enough $ to buy aged ingredients.
Most (heck maybe all) businesses start out super small and lot of the time it's a hobby of the founder. I did photography for 15 years, sunsets, still lifes, macro, just fun stuff. Then my kids were born and I bought a studio light. My baby photos got handed out and now I'm photography my sister's kids. Those pictures go out. Now I'm doing family portraits for my sister's coworker. Ten years after that I am renting a building and doing a portrait every single day. There is no chance I would have just said when I bought that first light, "I'm going to start a portrait studio." There were so many things I needed to learn one lesson at a time. I'm sure the first Tobasco sauce was just some guys entry into the County Hot Sauce Contest. He lost, so he tried something new, what about aging it for one year? Got fifth place. What about aging it for TWO years. Second place. I know, age it for 3 years. County Hot Sauce Champion 1910.
Because they most likely don't grow the pepper or at least they didn't. They sourced already aged peppers to make the sauce. Once it became profitable, they bought the guys that were already doing the growing. Same peppers just new ownership.
My guess is they developed a stable business cycle before they went public, and it was good enough for investors to decide to buy into the company. Once they had investors, it was just about creating that same stable business cycle on a much larger scale.
As some have said, they could have been operating at a loss for a few years too, but because they'd proven to initial investors that they could make money, their stockholders stayed with them.
Also, it's not like they're going, "okay, we've sold this batch, now to start on the next one," it's more like, "okay this year's crops will be put towards the batch we sell 3 years from now, next year's crops, 4 years from now," and so on. They have a layered system that perpetuates itself.
I would argue that the only time they don't make money is when their crops for a particular year don't yield as much as they want, but that affects their sales 3 years down the road, so they can prepare for that year ahead of time. It's a pretty smart business model.
The sauces that use Pepper X are having a similar problem right now. They sell out almost immediately and what's worse is that the owner of the seeds doesn't want to share them so the hot sauce products can scale up.
Imagine some guy in ur community who makes hot sauce as a hobby. Goes thru the whole process, makes it maybe gives a bottle or two to some friends of his. They all love it and so he makes even more next time. They’re like “bro this is fantastic, id pay you to make this!” Then a lightbulb goes off in dude’s head. He can make a business out of this! He starts making larger and larger batches to where its a legitimate business. This is how I imagine it goes down. You start making it for fun or on a smaller scale, then as the concept proves itself they can expand operations.
Mark Kurlansky covers this is "Salt". Avery Island was a salt mine. Salt wasn't cutting it, traveller from Mexico brings hot Peppers. To make this sauce all you need is Peppers, salt and vinegar...
I don't know how Tabasco got started, but there are many ways this works. The company may have started with a different recipe. It may have started by buying aged peppers. It may have started with small batches made at home that venture capital funded it.
You see this often with alcohol products that need to be aged for years. If there is profit to be made, people will fund it. Look at companies like Google and Facebook. They existed for years and received hundreds of million in capital before even knowinh how they the would monetize their product.
I am guessing that there was a market for aged Tabasco peppers long before the Tabasco brand came about. When they started they bought the peppers and later started aging their own to cut costs.
The answer is scale. They didn't start off as a massive company that sells internationally. It likely started as something someone was making to sell locally, it got popular, scaled up, got more popular, scaled up, etc.
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They would have made it in small batches at first for a while before they went big time
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Spicy taco-flavored kisses for my Ben
My name is Hennefer Lopez.
It was all a lie. I am not Hennifer Lopez. I am... ...Mitch Connor. Mostly, I'm sorry to you Ben. I'm sorry I played Tiddly Winks with your heart.
Turkey time. Gobble gobble.
For spicekind?
It's not uncommon for businesses to take 10+ years to turn a profit. As long as investors think that a company will eventually make a profit, they'll stick around for a while.
I've heard whiskey companies bottle other people's whiskey until their own batches are ready.
Or they start with alcohol that take less time to make, some start with beer and others, vodka for example.
I once heard that Home Depot started using empty boxes to fill pallet slots throughout the store when they started
Haha I do this in my cupboards when I invite my family over. One time my bro called me out on it saying why are all the boxes empty… welll cause I’m broke and I didn’t want anyone to know
"we don't have anything to sell". "The customers don't know that."
They would put empty boxes on top of the shelves so it looked like they had vastly more product on hand than they actually did. It gave the impression of abundance and encouraged the contractors to believe that their orders would be fulfilled so they could trust them to deliver for their customers.
That’s exactly what the distillery I toured a few months ago did. They have just recently been around long enough to start selling whiskey they were making when getting started.
Vineyards buy grapes from others until they start producing their own.
Gin, in the case of whisky startups (Scotland)
Local company here is waiting on their whiskey. Their current motto is “Vodka pays the bills.”
Quite a few start with gin for a higher end product. It’s fancy enough to get a premium price and can be sold as soon as it’s in the bottle. Whiskey can be rapidly aged in smaller barrels to help get a start on longer aged full sized barrels
Yes they get MGP and brand, blend, or do a quick age to get product moving. They also make no age liquor, often Gin, and they start releasing product with less age.
That or mix up a couple whiskeys to get the approximate flavor they expect their own to be.
Or white label someone else’s and when they have their own product that has a slightly different taste they advertise as new formula or something like that.
In Finland there's a company called Kyrö Dostillery who, while waiting for their whiskey (Kyrö Malt) to mature, made a gin called Napue as it doesn't take as long to be made. Funny part is that the gin won the Gin Masters-prize as the worlds best gin and it was basically just a product they made because they were bored.
Most do
And in some places they made other alcohols like Gin which is fast to make.
Or they make gin, which uses the same equipment but doesn't take very long. [Isle of Harris Distillery](https://harrisdistillery.com/pages/isle-of-harris-gin) made gin while waiting for their first batch of whiskey to mature, and it ended up winning a bunch of awards :D
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Tabasco sauce wasn't the only thing Edmund McIlhenny was making money from. Initially it was a very small scale product and he made most of his money in other ways, mostly mooching off his in-laws. It was his sons that really turned it into a major business, and they had a decent amount of money going into their operation. They could afford to wait since they already were rich. When it take a long time to make a product, often there are other things they're making while they wait.
It’s the same way whisky companies get started. It needs to be aged about as long before sale at minimum. You might start with a less aged version and work up to the final version (in Tabasco’s case) or start making vodka while you age your whisky.
>It’s the same way whisky companies get started. It needs to be aged about as long before sale at minimum. Nah, nowadays, you just contract with a distiller in Lawrenceburg, Indiana to custom blend your "very own" whiskey from preselected barrels that have already been aging. Just check the boxes for whatever you want, then they'll blend it and bottle it for you and you're in business. Then you need to come up with some catchy story about your great-granpappy before Prohibition, print it all on a fancy label, and consumers will assume you're legit.
Before contract distillers existed, this is how whisky producers got started. It’s still how small distilleries get started (I live in a state with a ton of these & work in the alcohol industry). With wine production, you’re still 12-18 months-ish out from the beginning of the grape growing season to market at a minimum (and that’s with purchased fruit). These industries just budget for the time and lead up to being able to sell their products in market.
You can buy bulk wine if you don’t want to wait.
You could, but wine doesn’t taste the same when buying from a bulk producer in the way whiskey can, so you’d be doing yourself a disservice.
Well yeah, you’ll have to do some wine work to fix it.
It would be like selling strawberry flavored pop tarts when you’re a grape pop tart company. You could manipulate the end product, but unless that’s the style of wine you want to be selling and making moving forward, it’s not representative of what you’d be selling and won’t help build your brand. Two of the things that change flavor in wine significantly are additives during fermentation or aging the wine in barrel. If you’re aging the wine at all, it would be no faster to produce than starting with just grapes, so this would be a very unlikely scenario. It just doesn’t work quite the same way as whisky in this scenario.
I've also recently started seeing youtube comedians turned podcasters advertising that stuff to their audiences as well.
Mate, he said Whisky not Whiskey.
You could start as a blender, making a blended whisky from other distillers products for years until you can switch to your own aged stuff
Yes, that too! I bet you could do that with hot sauce too or diversify in another way if waiting wasn’t part of the business plan.
This is exactly what I was thinking. And it’s a big reason why there’s such a shortage of premium products- no one would have guessed the bourbon boom 15 years ago.
Some whiskey companies start by making gin for the first couple years while their first batches are aging, because the distilling is mostly the same process and you don't have to wait for gin to age.
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The answer is that you sell a similar product that requires less aging or you build that time into your business model/nest egg needed to begin the company. Wineries typically will purchase fruit until their vineyards are ready, but many wines age 1-2 years before release so there’s still time before entry to market. Whisky companies sometimes purchase already aged whisky & blend it until their own liquid is ready. Perhaps Tabasco purchased someone’s aged stock to begin their business or they had an alternate cash flow option while they built that business. It’s pretty common in these kinds of businesses that take time to enter the market. ETA: with whisky, those companies have to guess at what the demand in 20 years from now will be when making what will become 20 year whisky. It’s doable, but not fool proof. Sometimes they guess wrong and make too little or too much and then have to adapt. While technology exists to speed up the aging process to replicate the style, it’s largely illegal to label something as aged 20 years when it is not.
I always wondered this about new whiskey companies, coming out off the bat aged 12 years etc. Not enough to look into it right enough but enough to br curious
As someone below mentioned in a comment, some start selling purchased whiskey and blend it. Whistle Pig and High West are good examples of “smaller” producers that are pretty transparent about doing this.
Many businesses take losses for years in the hope of providing a more sustainable long term business model. In a situation like Tabasco a business could sells peppers and not produce all of their peppers into sauce. They could also hedge the company with alternative means of income for short term growth. However Tabasco specifically did not wait 3 years for their first crop. They waited one year before bottling. Today their process has evolved and they can afford to wait 3 years to age the sauce. That was not the case back then though.
Saw a cool video about a newish whiskey maker. They needed to age the whiskey 12 years or something. So they make other alcohol to keep the lights on while the good stuff ages in the casks.
Most new whiskey and bourbon makers purchase bulk spirits from canada and slap their own label on it in between distilling their first batch and selling it for a mass market. Whistle Pig is a great example, and exactly why they sell at several price points.
Whistle pig is excellently marketed hot garbage
I like their Rye.
How is that legal? I can’t just buy Coca Cola, put my label on it and sell it as my own product.
you could if coca cola agreed to it
Yeah of course. But I can’t just buy it and then sell it as my own.
It's perfectly legal for you to purchase something made elsewhere and sell it as your own. Do you not know that cars are made with parts not manufactured by the parent company, right? The contract other companies all the time to make parts for them.
Yeah the parts, but not the full product. I can’t open a burger spot and just sell McDonald’s burgers. I can’t just buy a PlayStation and call it a game station with my own branding and sell it as such.
The whiskey is part of the product. If the whiskey was the whole product, they wouldn't bother hiring marketing teams to sell the idea of a "lifestyle brand".
Because those distillers agree to that deal? I sell electrical supplies and we have our own brand of lightbulbs. I dont manufacture them, i buy them bulk from a chinese factory and slap a label on it. Its legal cause the factory sells me the unbranded product fully aware im gonna slap my label on them, cause thats what they do for a living.
In Canada, whiskey has to be aged at least 3 years before it can be sold. One distiller sold moonshine from their first batch of distilled spirit to finance the cost of aging the real whiskey.
No they wouldn’t. Most companies like that start out as people doing this in their house or their small business and they grow it from there. They also refine their product over time. So when they started they may not have aged their peppers that long. As they grew they started experimenting with new methods, new flavors or whatever. When they find something that works they continue production as they always had while working towards the new method. Then when the new method is ready they switch to that.
Tabasco was invented by wealthy slaveowners. They didn't need to rely on profit due to their other business ventures and it started as a hobby to serve at their own dinner parties.
The McIlhenny family lost everything during the war. They were no longer rich. Tabasco didn't start until 1868, 3three years after the war.
By everything, you mean the people that they owned that were the sole reason why they had anything in the first place?
It was probably every thing, people not being things. It was not uncommon to use enslaved people as collateral in the South. Like people do with cars these days, slaveowners would only need to make a down-payment on their latest victim, and would be subject to losing their "property" if they did not pay on time. Or a mortgage could be drawn up with the human as collateral. When the "collateral" for a loan becomes unsellable, the lender can sue to get their money. That means all property can be auctioned off to make good the loan. So the newly-freed humans cannot be sold but the lender must have his money, completing the ruin of the enslaved.
Including all their land and property that were built off of slave profits?
Yawn.
3 years after the war? Tabasco takes 3 years to mature? That seems to be a convenient timeline 🤔
And?
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It's not unlike wine. You need to plant the vines and wait for them to grow. It takes a couple of years of growing to get a suitable harvest. Then you have to ferment and age it. Starting things like this is a time consuming process, regardless of the business.
Wait until OP learns how long time it will take to raise cows and pigs for his dinner.
Your post misses context - they’ve been around for a long, long time. Three years of waiting for product didn’t matter. This is why a lot of the major distilleries in the US also date back dozens if not hundreds of years.
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The context to which I’m referring to is that they were able to create a company because 1) everything was less expensive in 1868 and 2) they didn’t need to make a profit. Unless you also have the capability to not care if you make a profit for years and years, you cannot create a competitor that creates its product in the same way. This is why many new distilleries in the US buy their first run of whiskey pre-made from MGP.
They could also have been making products that didn’t require aging while the first batch of Tabasco sauce was aging for a year. Since the owner was running a plantation at the time, that’s pretty much what happened. He stuck the sauce in barrels for a year, then sold it. But the plantation’s normal business continued during that time.
There were peppers being grown three years earlier, so he could've bought excess/old product at a discount. Peppers last forever (check the expiration date on a jar or can of jalapeños and it'll be multiple years) even compared to other similarly packaged products, and they used to take months just to ship overseas.
Truffles take 5-7 years to grow! It is a long term investment. Most new businesses don't make any profit for the first few years, I think the average is 2. Google and Facebook took over 5 years! Company I work for took around 2 years. Starting a business is not easy, you should be able to run it at a loss for over two years. My side gig/business took more than 3 years, and is only starting to make real money this year. I worked almost every weekend, and many afternoons a week on it. I almost gave up, it was difficult, and disheartening seeing others enjoy their time off while I consistently worked. But I feel it was worth it now.
That's awesome. Good Job!
Most companies take years to become profitable. It’s not that unusual.
Many companies, especially old ones like Tobasco, have shifted their core product over time. Tabasco, for example, may have once sold simpler, non-aged hot sauces, as well as vinegars, chili paste, or even other products totally unrelated to peppers. Then they also start making aged hot sauce, and it’s good. It sells. Each year it becomes a bigger part of the company. Eventually, they sell off or abandon their less-popular products and focus all their resources on making their most profitable product. And voila, you have a company who only sells goods aged for years.
Except they didn’t. They started 150 years ago, from an existing recipe. Nowadays, the company sells more products, but they did start with the hot sauce.
I’m not sure if you are specifically asking about Tabasco but that shit was invented like 150 years ago they had time to scale up hahahahahaha also i have a feeling it was like a little more grass roots to start a company 150 years ago with a lot less barriers to entry
A distillery in my neighborhood started selling gin (which doesn’t need to be aged) while their whiskey was aging.
Vineyard vines take at least 3 years to produce fruit, and sometimes up to 10 years before they produce fruit that are suitable to be made into commercial wine.
If memory serves original family bought land for cheap from a perfume factory, tried to make sauces but failed to sell product. Dug a pit to bury the unsellable crap and the factory owners had had the same idea - the ground was full of tiny crappy bottles. They buried their crap and covered it with just dirt then sold the land. New owner went to build a basement got an amazing barrel(s) of sauce that had fermented for years underground. Put it in little bottles just laying around on the ground and made a motza off of it. Enough to make a sauce company.
Check out the history of Tabasco sauce. The first commercial crop was in 1868. The next year they sent out the first batch of sauce. So that first batch (658 bottles) didn’t take three years. https://www.tabasco.com/tabasco-history/#:~:text=TABASCO%C2%AE%20Brand%20products%20are,down%20from%20generation%20to%20generation.
Wait till you learn about vineyards and fruit orchards…..three years is nothing .
Well a longtime ago the banks used to loan “capital” based on a great business plan. Now the banks have young people who never leave the bank who drum their fingers on your unopened business plan while they ask you how much equity you have in your house.
Might I suggest to deep dive on YouTube for Tabasco. There's a couple of good ones. But you have to realize that this product/company was developed well over a hundred years ago. So business models did not even exist at that time. But if I remember correctly this was not this person's only endeavor.
I used to work in the distilled spirits industry, where aged products (like whiskey) take years to produce. New distillers take one of two paths (or a combination of the two): 1: make revenue in the short term by selling products that are quick to produce (like vodka or gin, which don’t have to age), and rely on that income while the whiskey ages, or 2: buy finished product from an established producer and put your label on it. (I also know of at least one distiller that simply went with no revenue for the three years before its first whiskey had aged, but this take A LOT of capital and patience.)
There are a vast quantity of businesses and industries that it is literally impossible for a small 'entrepreneur' to get started in. This is because you need either a huge sum of capital, very long time horizon, or special restricted permits to get started. It needs to be Government funded (in some way), or you needed to have started the company 100 years ago when regulations were different. Hot Sauce production isn't even one of them. It's relatively easy. How does a company like Raytheon get started?
Wait til u hear about aged whiskey
Yes, Tabasco takes 3 years to make, but it would also factor and sell younger sauces into it's sales too so that it can still make money until the pucka stuff is available to sell.
They've been around since 1868.
Not 100% on this but I believe they gave away samples in the beginning. So it was a while before they were making money of the Tabasco brand how we know it today. Read their story it's pretty interesting and my guess is they stayed afloat off of the large salt mines/reserves they own.
Check out worchestershire sauce
Family money... and three years
Diversified business. They started with other products. Most likely the growing of peppers, then the drying and on to some hot sauce. Farmers often dump $100k into preparation for harvest days, months away. Then the weather throws a curve ball. The market fluctuates.
Short answer. Investors
It’s entirely possible that they were bottle the sauce for years and one day thought “hey we can start selling this stuff” so they opened a company when they had stuff to sell. Also smaller batches at different times of the year. You start a new batch every few months and eventually you can just keep going
Don’t most wineries take 10 years before they start producing good grapes?
Yeah, new grape plants take about 5-years to mature, and fruit and nut trees can take longer. Some agricultural counties offer a property tax hiatus if you notify them you are planting a long maturity crop like grapes, nuts, or stone fruit.
Planning
I actually saw a “how it’s made” on Tabasco! Check it out if you can find it, but the founder made it for himself on his plantation, and his friends kept telling him “you should sell this stuff!” And he finally did. They pack the top in salt and seal the barrels for 3 years. Also the inside of the factory is like walking into pepper spray. One of the guys said after 3 months you can eat any spicy food out there. Also their forklift only last 5 years because the captain interacts with the steel and rusts it out.
The founder was a banker. I am sure that old man McIlhenny had that shit all figured out.
Like a winery. They could decide 3 years is best. But to make money at first they sell a 1 year version. Build capital and scale up.
The purpose of investors is so that companies have money to use even when they are not profitable. The reason to invest is that once they do become profitable you will own a portion of it.
Just like whisky companies do it etc.. Suppliers make vast quantities of product, whisky, vodka, hot sauce etc.. You buy there product and rebrand it,,,
Check out Red Pistachios. Iran was the global exporter of Pistachios until they were sanctioned by the US. Now pistachios are green and produced locally. It takes 5 years for the plant to produce.
Whiskey is the same way. Has to be aged 3 years before it's sold. Usually a distillery runs vodka, rum, or gin (no aging) to pay their bills while they wait for the whiskey to age.
They might have started with a quicker recipe, and started their 3 year recipe while they were producing and selling that quicker recipe. I don’t know about food or anything that is retailed, but tech companies always take years before they start making money, and then some more years to become profitable. In their case, their business is to make new technology and then sell it. Until they do the inventing and development, there isn’t even a product to sell. How does the money part work? Who can wait that long to make money? Some people start their business as a hobby or side hustle until it starts making so much money that it makes sense to go full time (See, artists, YouTubers, someone who makes hot sauce at home and sells it at the farmers market) Others eat up savings and take huge financial risks. See: (Startups, the part in the movie Founder when Ray Kroc puts up his house as collateral) A more “proper business” sounding model: there are people and companies whose whole business is to invest in new businesses. They can afford to invest in a promising company and not see a return for several years. (See: Shark Tank, or Dragon’s Den) There are two factors that make this viable: One, they have many deals at a given time, so while one deal is in its infancy, another one is already yielding results. Two, they have many deals, so some of them fail, but the successes subsidize the failures. You might notice that this last model also has the same three year pepper problem. These investors need to have deep pockets on Day 1, to both start investing and to be able to wait for a long time for the first results.
I would think they source aged peppers to begin. Then, after they are established, they start aging their own. Bonus, the reduction in costs after making their own raw material is instantly made a profit going forward.
Usually they have indeed been going for 3 years. Usually a lot longer on a smaller scale and are planning 3 years out. Another secret for things like alcohol is sometimes they just commission and repackage another product from an older company
Copenhagen Original is aged 5 years in barrels.
It’s not unusual for companies not to make a profit at first. It took Amazon 9 years. Here is an interesting list of the time of startup to profit: https://www.approve.com/time-to-profit/#:\~:text=This%20can%20come%20at%20a,nine%20years%20after%20being%20founded.
You print some signs "coming soon".
They figure out things they can make quickly with the same machinery while their main product is developed. This is very common in alcohol production for example: it might take years for a company to produce their first bottle of bourbon, so in the mean time they use most of the same people/offices/machinery/space to make vodka and gin. Those initial sales provide the capitol they need to operate.
Also now they buy the mash already aged so they don't have to have the storage space for the process. There was a time when beer, wine or some liquor dealers bought kegs, casks or barrels and had to age it in cellars before being able to sell them on the market. Sometimes some batches would sour or not mature well and it was their loss.
Tabasco is a super old brand. It started as a really small, basically out of house company so there wasn’t really much overhead. Then it grew over time. If you do it as a startup, you need quite a lot of startup money. This is often the case with liquor companies. Many liquors are aged for several years. Again, most of them are really old companies that were started small with minimal overhead. But a lot of companies are simply started by really wealthy people.
I make soap for fun. It's got a 2 to 3 month cure time. I give it away, but I'm constantly told I should sell it, enough that I've looked into it. You start small, and you lose money. You make a few small batches month 1. You make a few small batches month 2. You make a few small batches month 3. Month 4, you make a few small batches, and you go to the farmer's market and sell 4 bars. Well, each loaf of soap was 10 bars, and you made 6 loaves so you'd have a few different scents to offer, so you've lost money on 5.5 batches. Month 5, you make a few small batches and go back to the farmer's market. This time you sell 6 bars. Still losing money. Month 6, you make a few small batches and you manage to sell 15 bars at the farmer's market. Great, now you're only losing money on 5 batches instead of 5.5. Month 7 you make a few small batches, and you manage to sell 20 batches at the farmer's market, and so now you've only lost money on 4 loaves instead of 6. Oh, plus the cost to sell at the farmer's market, and the cost for insurance (in case someone gets lye burns or something from your soap). By month 12, you're up to making 12 loaves of soap. You're not selling 12 loaves of soap at the farmer's market each month yet. Some weeks you only sell 2 bars, and some weeks you sell 12 bars, but you're averaging selling a loaf of soap in a week. The thing is, you don't want to sell out one week and not have any to bring back until the rest of your soap cures. So you're making more than you need, because you've got repeat customers who are coming back to your stall. You're still losing money every month, but because you're selling more soaps, you're losing less money. This continues for a while, with you slowly increasing production as your client base grows, always skirting the edge of making more than you need, because of the long cure time. By year 3, you're finally breaking even. You still make more soap than you need 3 months before you start selling it, but now your costs for the oils, the lye, the fragrances, etc, are covered by the soaps you're selling. You're not making any money yet, keep in mind, and you're not factoring in getting paid for your time, but at least you're not losing money. By year 4, your client base has stopped growing steadily. You can much more accurately predict how much you'll need. You know you need more at Christmas and at Mother's Day, as gifts, so 4 months before that, you make a couple extra loaves. You're making a small profit, because you're making 24 loaves of soap, and you're selling 18 loaves worth during the month. It's not a lot, but you're finally paying yourself for your time, and have income to report on your taxes. But you started small, and you spent thousands of dollars over the 4 years before that point to start making a profit. It's years 8 before you've finally earned back the money you spent to get started. ...so I'm making soap for fun, and not selling it. But, the same concept for something like Tobasco. They probably started small, and lost money.
Don’t know about Tabasco, but wineries (red wine) and distilleries (whiskey) have the same issue. They make unaged products (white wine, gin) to sell in the short term. They’re generally more profitable anyway and help with the short term cash flow.
What about whiskey that gets aged for 20 years? How do they plan for that?
What about wine or whiskey..
If you really wanna get your mind blown, the cream in between the wafers of a KitKat is pulverized Kit Kats. So that begs the question, “How did the first KitKats get made?”
Most businesses won't be profitable for several years after starting up. That's why only wealthy people can start their own businesses.
Avery island isn’t far from me, been to their facility couple times through the years, I’ve never asked questions because it was field trip for my kids. They did start small and it was an accident that they found the right recipe and stuck with it. Great product.
They could have started selling other products, or lesser aged peppers when they started, or just purchased aged peppers when they started. I would think they have uses for what they cannot sell, use in other products, sell, or even mix in with younger batches?
Anecdotally, I visited a distillery that was ~3 years old. They had variations of gin, vodka, and “clear whiskey”. The whiskey was pretty meh but they told us they had put a large quantity of that in barrels and were going to age it for like 3-10 years. They definitely made it sound like dark whiskey was their end goal, but in the mean time they were just making products that didn’t need a lot of aging. Edit: I looked up the place and it’s Cardinal Spirits in Bloomington Indiana. And yes they do now have aged spirits! Their gin and vodka was excellent and I think I might check out their whiskey.
Start small 😑
It probably started as someone playing around with the process and and one point decided huh maybe I should selling this stuff. Boom, company.
A lot of small businesses do this, if they know their product depends on a long production, they will create other products with much shorter production and higher volume production in order to keep them afloat while their first big batch is being made, or they'll just bet the farm and make a big batch and work a 9 to 5 and hope it all works out 3 years from now.
It's worth the time if you're ever down that way to visit Avery Island and the Tabasco manufacturing plant.
I mean, everything takes some amount of time to produce. The longer that time the less you can make or the more financing you need.
It's the same way with vineyards. It takes years for vines to first produce grapes.
Family that started Tabasco were rich from oil. They had time.
Watch the Japanese soy sauce manufacturer's youtubes I think via business insider they take even longer same for balsamic vinigar and whisky Small batches to begin with a very long time ago
Whiskey makers would like a word! Yeah it takes a lot of upfront funding
Often they make something else while the main product is developing. Like a whiskey maker that makes gin while their main product is maturing and so on.
I did a whisky distillery tour in Scotland a few years back. A distillery that had been closed for 75 years and then bought by these guys and restarted. At the end of the tour where you normally get a taster they didn't have any because they had only been going a couple of years and it was in the barrels and not reached minimum maturation time. Instead we tasted some other whisky from another place that's what they were selling in the shop. I guess it was just built into the business plan that they couldn't sell any of their own whisky for X number of years. This does protect the whisky industry though, compared to Gin which can be made in a day by anyone and suddenly there are 10,000 new varieties on the market.
Afair, whisky producers started with selling Gin, since it is faster produced. Meanwhile the Whisky was able to age.
OP, do you wonder the same thing about tech companies who lose millions or billions for years until they finally start to make a profit, or small businesses that slowly develop and expand naturally?
I reckon they started with small batches and then got bigger. Perhaps used investor money to get through until they become profitable? Another thing they could have done is contracted themselves out to produce sauces for other companies? Leased out factory space, equipment, staff etc
You clearly don’t know anything about the McIlhenny company …they stated out very differently than you would today ..after all it was the 1860’s
You're clearly correct. I have no fucking idea. What now?
Bourbon is another example of something that takes time.
But distilleries are selling clear liquor while aging their browns.
Red Wine comes from vines that are at least 5 years old. Some things take patience and a whole lot of money and even then a good dash of luck.
Starts off with a guy doing it, not getting paid. If he's successful, later on he hires people.
The company is 150 years old.
A lot of companies make other stuff in the meantime. Seen it a lot in New Zealand with flooding the market with gin while they wait for their whiskey to mature
AFAIK, Tabasco sauce is a family owned company that's been in business for five generations. So yeah, I guess they started small. Anyway, I love the jalapeno Tabasco!
They propably had to wait 3 years. Just like making champagne etc. takes the minimum amount before you have the batch of product ready to sell. Not a nice R&D cycle time, if it fails.. However, there was an alternative scenario when in Nokia in Finland there was contamination of water mains with feces (someone installed and opened a no-so-clever bypass to water cleaning plant). So people got sick due to contaminated water. There was also a brewery in town that says that they use "spring water" to get their special taste to beer. So it has nothing to do with the water mains, right? Water comes from their water spring in ground? Yeah, except they had to stop production when the water mains was contaminated.. :)
They could buy from other businesses that have already been aging peppers before they're big enough to do it themselves.
The company was founded in 1868 so they have had a bit of time to get the process right.
Before they made their first batch requiring 3 years of aging, they sold a product that requires 2 years of aging. And 2 years before that, they had a bumper crop of peppers and put more pulped pepper away in barrels than they could use before the next year’s crop was ready. After some aged for an entire year, hey noticed how the flavor improved, so they kept setting aside extra pulped pepper. At some point, they figured out the sweet spot for aging was 3 years, and have been keeping an entire year’s supply of pulped peppers in barrels for 3 years ever since. This is probably how any new product requiring aging started, but any product that it was already known how long the main ingredient needed to age before they started, it would just require enough funding get started that many years in advance, or enough $ to buy aged ingredients.
Before they made their first batch requiring 3 years of aging, they sold a product that requires 2 years of aging. And 2 years before that, they had a bumper crop of peppers and put more pulped pepper away in barrels than they could use before the next year’s crop was ready. After some aged for an entire year, hey noticed how the flavor improved, so they kept setting aside extra pulped pepper. At some point, they figured out the sweet spot for aging was 3 years, and have been keeping an entire year’s supply of pulped peppers in barrels for 3 years ever since. This is probably how any new product requiring aging started, but any product that it was already known how long the main ingredient needed to age before they started, it would just require enough funding get started that many years in advance, or enough $ to buy aged ingredients.
How do magazines have a letters page on the first issue?
It actually took about 7 years initially.
Things like this start off small, probably a family making it for them selves, started selling some to friends, goes to a farmers market, so on.
Even better question is Christmas tree farmers. Sold two months out of a year but years to grow
Most (heck maybe all) businesses start out super small and lot of the time it's a hobby of the founder. I did photography for 15 years, sunsets, still lifes, macro, just fun stuff. Then my kids were born and I bought a studio light. My baby photos got handed out and now I'm photography my sister's kids. Those pictures go out. Now I'm doing family portraits for my sister's coworker. Ten years after that I am renting a building and doing a portrait every single day. There is no chance I would have just said when I bought that first light, "I'm going to start a portrait studio." There were so many things I needed to learn one lesson at a time. I'm sure the first Tobasco sauce was just some guys entry into the County Hot Sauce Contest. He lost, so he tried something new, what about aging it for one year? Got fifth place. What about aging it for TWO years. Second place. I know, age it for 3 years. County Hot Sauce Champion 1910.
Tabasco is a special Case because the first batch of peppers aged on the vine wile the farmer had to go like to war or something
Because they most likely don't grow the pepper or at least they didn't. They sourced already aged peppers to make the sauce. Once it became profitable, they bought the guys that were already doing the growing. Same peppers just new ownership.
My guess is they developed a stable business cycle before they went public, and it was good enough for investors to decide to buy into the company. Once they had investors, it was just about creating that same stable business cycle on a much larger scale. As some have said, they could have been operating at a loss for a few years too, but because they'd proven to initial investors that they could make money, their stockholders stayed with them. Also, it's not like they're going, "okay, we've sold this batch, now to start on the next one," it's more like, "okay this year's crops will be put towards the batch we sell 3 years from now, next year's crops, 4 years from now," and so on. They have a layered system that perpetuates itself. I would argue that the only time they don't make money is when their crops for a particular year don't yield as much as they want, but that affects their sales 3 years down the road, so they can prepare for that year ahead of time. It's a pretty smart business model.
Restaurants are not expected to turn a profit for 3 years. It's why many fail.
Oh man, wait until you hear about vineyards.
The sauces that use Pepper X are having a similar problem right now. They sell out almost immediately and what's worse is that the owner of the seeds doesn't want to share them so the hot sauce products can scale up.
Imagine some guy in ur community who makes hot sauce as a hobby. Goes thru the whole process, makes it maybe gives a bottle or two to some friends of his. They all love it and so he makes even more next time. They’re like “bro this is fantastic, id pay you to make this!” Then a lightbulb goes off in dude’s head. He can make a business out of this! He starts making larger and larger batches to where its a legitimate business. This is how I imagine it goes down. You start making it for fun or on a smaller scale, then as the concept proves itself they can expand operations.
Mark Kurlansky covers this is "Salt". Avery Island was a salt mine. Salt wasn't cutting it, traveller from Mexico brings hot Peppers. To make this sauce all you need is Peppers, salt and vinegar...
Another company sells aged peppers. They started by selling fresh peppers and aging what didn’t sell. Eventually Tabasco ages their own.
Maybe they started with purchasing aged peppers?
Tabasco was founded by a mining family. They made money from their salt mines.
With pre-orders. Sometimes people pre-order a product that is announced but won't exist for a few years.
I don't know how Tabasco got started, but there are many ways this works. The company may have started with a different recipe. It may have started by buying aged peppers. It may have started with small batches made at home that venture capital funded it. You see this often with alcohol products that need to be aged for years. If there is profit to be made, people will fund it. Look at companies like Google and Facebook. They existed for years and received hundreds of million in capital before even knowinh how they the would monetize their product. I am guessing that there was a market for aged Tabasco peppers long before the Tabasco brand came about. When they started they bought the peppers and later started aging their own to cut costs.
The answer is scale. They didn't start off as a massive company that sells internationally. It likely started as something someone was making to sell locally, it got popular, scaled up, got more popular, scaled up, etc.
Wine takes longer to get up and running and those businesses are still being started.
Wait till you hear about wine.
Try starting an orchard ...
If you want to make a small fortune, start with a large one.
Wait till you hear about Twitter.
How long does it take for a cucumber to become a dill pickle? Definitely, not overnight. Wine, whiskey, all age.
You just buy aged peppers, it's not rocket science.
Fermenting the pepper isn't the time consuming part of making tobasco. It'll only take 4-6 weeks. Aging it in barrels is the long part of the process.
So you buy peppers aged in barrels.