If you want to learn how to start a hot sauce business, then let’s start from the top.
It’s definitely a niche business with its own pros and cons, but considering Complex just recently made $10MM in revenue from their hot sauce sales, there’s plenty of opportunity left. You just can’t do it like the first hot sauce. You have to be smarter and faster.
Let’s talk about how to do this…
Is Hot Sauce A Profitable Business?
This question always gets me, because the answer is that it “depends”.
The hot sauce business is generally a tougher product to sell online than some other categories due to its price and profit margin. However, that doesn’t make it an unprofitable business. It just means you need to control your customer acquisition costs.
In other words, the lower your CAC, the more profitable you will be.
This is actually how Complex sold $10MM worth of hot sauce with lots of profit. Instead of marketing it with ads like most DTC brands would, they featured their hot sauces on their famous show, “Hot Ones”. This allowed all of their sales to come in organically.
You want to do the same.
With that said, there is something you can do to boost your margins.
The Secret To Amazing Hot Sauce Profit Margins
There are 2 ways to make more profit with hot sauce.
1/ Reduce costs
2/ Increase price
We’ve already talked about reducing costs. Now let’s talk about increasing your prices.
The secret to making this happen is to have a value proposition that positions your hot sauce of a premium priced product. In the world of food, this is generally going to mean some special ingredient or formulation that is exclusive to your brand.
It doesn’t have to be a complicated matter. It just has to sound really cool.
For example, people buy sea salt everywhere. But there’s a huge difference in price between regular sea salt and Himalayan sea salt. The Himalayan sea salt is always going to be more expensive because it’s a much more exclusive sea salt.
So look for a premium ingredient you can build your whole brand around.
Other options include going after a diet, such as keto-friendly hot sauce. Naturally, this will lead to more expensive ingredients as well as help a niche audience. These are both reasons to increase your pricing.
What you don’t want to do is look and sound like all the other hot sauces.
So let your ingredients do the marketing for you. This is key when learning how to start a hot sauce business.
The Hot Sauce Business Plan: Build
Once you’ve got an idea for a premium priced hot sauce, I suggest you do what Complex did to get ready for your big launch.
Build your own audience of hot sauce lovers.
Of course, you don’t need to come up with your own blockbuster Youtube series. Instead, the cheapest way to build your own audience of hot sauce lovers is to spend 6+ months doing recipes on a video based marketing channel like Youtube or TikTok.
This works because it’s what people want to see.
It allows you to demonstrate your product even though there’s no way for your customer to taste it. By posting weekly or even daily videos where you make delicious looking foods using your hot sauce, you’ll increase the likelihood of people wanting to buy your product.
This is actually how most food marketing works.
Besides taking the time to make great video content though, you want to make sure you’re also building an email list. So as you grow, start funneling people to an email newsletter where they can get the latest news about your upcoming hot sauce brand.
The Hot Sauce Business Plan: Launch
At this point, you’ve spent 6+ months building an audience. That means it’s launch time.
Once you’ve set up your Shopify store to take orders and have all of your logistics ready to fulfill those orders, all you need to do is sell your hot sauce to people who have already said they wanted to hear about it.
The official term is “owned media”, which includes any media you own such as your website, email newsletter, and SMS. It’s also possible to include social media, but since these accounts can always be banned/deleted, it’s not a true “owned media” asset.
So how does this look like when implemented?
It all simply means that you start sending emails to your newsletter, asking for people to buy your product. It also means promoting your hot sauce on any other marketing channels you have and telling your friends about it.
Besides owned media though, you can also do earned media.
This is when you give free hot sauce to reporters and influencers in exchange for promotion.
It’s not easy, but it is a free and effective marketing channel. Plus, it can bring a ton of credibility to your hot sauce brand. Combined with your owned media efforts, doing these two things alone can bring in a ton of sales to form the foundation of your business.
In fact, you can’t learn how to start a hot sauce business without mastering this step.
The Hot Sauce Business Plan: Scale
Once you get to this point, you have a solid base of organic traction.
The downside with organic traction though is that it’s slow and doesn’t cover all of the bases you need for a well diversified marketing mix. The good news is your organic traction gives you the data you need to make smart decisions, which effectively will improve your ability to scale.
This primarily means advertising.
If you do everything right so far, you’ll have a premium priced hot sauce line, which can work with paid ads. So start promoting a “sample bundle” and send people to a landing page instead of straight to your Shopify store. This will give you the best chance of success.
Besides ads though is wholesale/retail.
The online version of this is Amazon. The offline version of this is retail.
Ideally, you will have already made at least 1,000+ sales before you have to worry about either. With that said, regardless of when you start, you want to go with Amazon first because it’s easy to get in. You don’t need to get any “OK” from anyone else. Plus, once you drive enough traffic to your listing, you’ll start generating organic sales from it as well.
Then you can worry about retail last.
For best results, you want to have enough sales so you can walk up to any retailer and tell them you want to put an amazing selling product on their shelves. The more you’ve proven your product, the more likely you can get it placed on shelves.
Do this right and you’ll now have access to the massive wholesale marketing channel, which is actually where the hot sauce business thrives the most.