Tabasco sales fire McIlhenny's imagination


AVERY ISLAND, La. -- The McIlhenny Co. likes to keep its peppers hot, its sauces fiery and its profits in the family.

Thanks to a happy marriage of history and geography, McIlhenny is the sole maker of a hot pepper-based concoction finding a growing number of devotees around the globe.

It's called Tabasco, which isn't a generic name but a trademarked McIlhenny brand. And the 127-year-old family-owned company is doing its best to keep sales growing, with a variety of recent spin-off products as well as a venture with H. J. Heinz Co. that puts Tabasco in Heinz ketchup.

"As long as we continue to grow the product line, we grow dividends," said Paul McIlhenny, vice president, who is from the fourth generation of McIlhennys to run the company.

The company won't say anything about its finances, but industry analysts put its sales at almost $100 million a year and growing. It sells its two-ounce bottles of Tabasco to more than 100 countries, in packaging printed in 19 languages.

McIlhenny's Tabasco is "a premium, high-quality hot sauce, with national distribution and a premium quality image," said Deb Magness, a Heinz spokeswoman. "They matched perfectly with Heinz."

A number of public companies think the entire company would be a good fit, judging by overtures they've made over the years, Mr. McIlhenny said. But the 100 family shareholders in the debt-free company are happy with things as they are. "We don't need to go public," Mr. McIlhenny, 51, said.

Heinz is so impressed with Tabasco that for the first time in the company's 120-year history it's allowing a product -- its famous ketchup, no less -- to be sold as a "co-branded" item, or with another company's brand identified with it. Heinz has test marketed Heinz Hot Ketchup, which is 4 percent Tabasco sauce, in Houston, New Orleans and San Antonio for about a year.

"It performed so well that this summer we'll be adding Atlanta, Little Rock and Memphis [as test markets]," Ms. Magness said.

Heinz sees the injection of Tabasco as a way to capitalize on a trend to hotter foods and increase adult consumption of ketchup, while McIlhenny hopes Heinz Hot Ketchup gets more people interested in pure undiluted Tabasco.

Meanwhile, Mr. McIlhenny noted, Heinz has "to buy enough [Tabasco] to meet the terms of the [license] agreement or pay a royalty."

Other recent products include New Orleans Style Steak Sauce, and Caribbean Style Steak Sauce.

Tabasco itself ("Tabasco" is a Central American Indian word meaning "land of hot and humid") is still made in much the same way it was 127 years ago. That's when Marylander Edmund McIlhenny, who as a young bank clerk moved from Hagerstown in the 1830s to Louisiana, first used a pepper plant that thrived on his wife's family property on Avery Island, La., to create a spicy antidote to the bland food that characterized the Reconstruction South.

Now the red, spicy sauce is making Avery Island ever more famous around the globe. Exports account for about 40 percent of the company's sales and international sales grew slightly faster than U.S. sales in 1994, Mr. McIlhenny said.

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