The Habanero Industry:
Demand Exceeds Supply

By David G. Jackson

Habaneros, the current favorite hot chile pepper, are in short supply. Despite the fact they are being planted in record numbers from Costa Rica to the Caribbean to Mexico and coast to coast in the U.S., increased demand, bad weather and insects have caused problems for many growers. As a result, we will probably see a corresponding increase in prices over the next two to three years, as the developing habanero industry recovers.

Readers may remember what seemed like an endless number of hurricanes that battered the coasts of Central and South America and the Caribbean Islands in 1996. Television and newspapers reported the deaths of people and the destruction of homes, resorts and other businesses. What they did not mention was that these storms caused chaos in the habanero industry as well.

Increased demand has also taken the habanero market by storm. These chiles are becoming one of the most sought after ingredients in the world for hot sauces and salsas because of their unique aroma and flavor, as well as their highest ranking heat level (up to 500,000 Scoville Units). Right now, the demand for high quality habanero dried fruit, powder, and mash exceeds the supply, and this has resulted in a rush to grow more in the U.S., Central and South America and the Caribbean. One concern expressed by established growers is that habaneros may be "boom" now but "bust" later if the desire for super hot food fades. But many growers and processors are betting the farm that the trend will continue to grow and prosper.

And this has led to growing pains of another kind. Habanero projects are important in many countries because they provide small farmers with a good cash crop--if everything goes well. In places where the habanero industry is only one or two years old, farmers who previously grew sustenance crops are having problems that include learning to cultivate the labor intensive habanero (and other peppers), obtaining quality seed, dealing with disease and insects, and learning to follow the strict processing regulations to meet U.S. Department of Agriculture standards. Some producers estimate that one-half of the habaneros grown in Central and South America don't make it to U.S. markets because of insects, disease and general uncleanliness. Farmers must also be able to ship fresh products by air (which can be very expensive), and have good brokers who keep the products moving on the U.S. and world markets. Major markets include Canada, many countries in Europe, Japan and other Asian nations.

Sauce Manufacturers in a Bind

The McIlhenny Company, manufacturers of Tabasco® brands, confirms that quality habanero mash is in short supply. "We have not been able to obtain the quality and quantity we need for our new habanero sauce," said Gene Jefferies who buys mash for McIlhenny. "There has been a 10 per cent crop loss, and we can't get the red color varieties we need. We are working with growers in the U.S. and several other countries to be able to meet our demand." Other users are also searching for new reliable sources for habanero products in industrial materials and for medical uses.

Various sources have indicated that some sauce manufacturers are not using pure habanero mash, but are using concentrate. Most sauce manufacturers rely on mash made fresh from the field harvest.

Problems in Costa Rica

Cody Jordan is one of the founders of Salsarica in San Jose, Costa Rica, which claims to be the largest habanero processor in the world. Jordan established his operation fifteen years ago in Costa Rica because of the excellent growing conditions, cooperation from the government and the state university, and assistance from major growers. While Salsarica has year-round production and contracts to supply mash, powder and dried fruit all over the world, Jordan said they also emphasize research and development and are currently working on three new varieties of habaneros--purple, white and chocolate. "We grow most of our own product under very controlled conditions, and have chosen ten of the best farmers as our growers," he said. "One of the keys to our success is that our seed farms and nurseries are kept isolated from our production fields."

But even the best laid plans can go awry. "Seven hurricanes hit Costa Rica in 1996 and just about wiped out the crop," said Jordan. "Coupled with an infestation of pepper weevils that caused us to have to abandon some our best fields, it was a disaster that will take from two to three years for recovery. That is, if the weather cooperates." Jordan explained that it takes seven to nine months for a crop to gain full production, and since they normally plant in September and April, they lost one complete growing cycle due to the hurricanes. "We will recover," said Jordan, "although many farmers in South and Central America are having a difficult time."

Habaneros to the Rescue?

What's a small island nation to do? For years the farmers of Dominica raised bananas--not enough to compete with the big boys like Dole and Chiquita mind you--but enough to provide a good cash crop to a mainly European customer base. In fact, one in four workers on the Windward Island of The Commonwealth of Dominica has worked in the banana business.

Dominica was discovered by Columbus in 1493, and alternated as a French and British colony for several hundred years until it gained independence in 1967 from Great Britain as an Associated State. It became an independent nation in the British Commonwealth in 1978.

In March 1997 the World Trade Organization, at the urging of the United States, issued a finding that trade practices, which gave Dominica and other small island nations a break in competing with multinational firms by guaranteeing a them a market for their bananas in countries that once had colonies in the Caribbean, were unfair.

The islanders, who raise their banana crop on the steep slopes of volcanic mountains, were devastated. Rumors had it that many of the farmers were considering growing marijuana and coca (cocaine) which would take a lot less work and pay better than bananas. This, of course, did not set too well with the Dominica government and others. An economic crisis faced the 73,500 people on the 290 square mile island, located between Guadeloupe on the north and Martinique to the south. The World Trade Organization decision is being protested, but there appears to be no immediate solution in the near future.

To augment one source of revenue, efforts are being made to increase the tourist trade. Tourism has always been important to the island's economy, but there are obstacles. Mainly, there is no airport on the island that is large enough to handle full sized jets, and there is also a shortage of first class hotel accommodations.

Enter John R. Walter, a Tampa, Florida entrepreneur, who had been a regular visitor to the island for seven years. He had kept up with what was happening and decided that he could help by starting an habanero growing, processing and shipping business, now known as TPA Pepper Growers.

"Clearly habaneros are the chile of the future," said Walter. "There is a greater demand for them from sauce makers and we have been able to sell all we can produce--we can't keep up with the demand." In addition he noted, habaneros and other chile peppers have been grown on Dominica for years, mainly in small gardens. The habanero grows well in the island's volcanic soil, even on the steep slopes of the hills in the interior. And there is plenty of water. Dominica is known as "The Nature Island of the Caribbean" with many streams and waterfalls, and much of the island is a rain forest, which means year-round production of peppers.

"Start-up costs are considerable," said Walter, who also noted other problems which include damage done by periodic hurricanes, high transportation costs both for air and ship, and the general limited economic resources of the small nation. TPA is trying to expand production by working with the government to build a drying plant that can produce 800 pounds of dried habaneros per week from 8,000 pounds of fresh fruit. "Our mash is made on contract at this time and we have plans to start our own mash plant in the future," he said.

TPA is loaning money to farmers interest free so they can plant crops and work the fields until harvest. TPA will then purchase the crop, or the farmer may sell it on the open market. "If he can find a better deal, then he can go for it," said Walter.

The varieties grown are West Indian Reds (Dominica Reds) which average 250,000 Scoville Units. Seeds are obtained from the island's botanical gardens and are grown to seedlings in a 2,000 square foot green house. A major marketing effort is underway in cooperation with the government export organization, Dextra.

TPA also has friends such as Judith Stone of the Mad Pepper Co. in Madiera Beach, Florida who help make contacts for the growing firm. Stone wants to become a broker as well as a manufacturer of habanero sauces--her company has a small restaurant and they are happily trying new sauce recipes.

If the future of habaneros is as good as many people predict, then Dominica just might wind up a major grower and processor. All of this is due to a man named John Walter who believes that the power of peppers can save one island's economy--and he is willing to put money and effort on the line to make it happen.

Belize - Where it all Started

Marie Sharp decided to grow habaneros in 1981. Her family's farm was near Dangriga, Belize, a small community on the coast where there are wild habanero bushes that produce fruit year round. "This may be where the pepper started," Sharp said. Her first crop was grown on contract, but the buyer didn't need all that she raised--so she decided to make her own habanero sauce to use the large surplus.

"I made six recipes and family and friends chose the one they liked best. It was first known as Melinda's Sauce, but is now known as Marie Sharp's Habanero Pepper Sauce. In 1982 I started making it in my kitchen and marketing it only in Belize. We now have a good business in Mexico and the U.S.," she said.

Marie, her husband, three sons and daughter all work in the family business. They produce two sauces--a carrot based sauce and one which uses green habaneros and prickly pear cactus leaves. "Our sauces come in mild, hot and fiery hot--with the greatest sales in hot and fiery hot," Sharp said. They also make pepper jellies, chutneys, and steak sauce which includes tamarind beans, ginger and green mangoes. Their products are imported exclusively by International Business Trade, Inc., and recently they established a plant in Mexico to which they transport the mash from Belize.

Sharp said that the habanero business is growing so rapidly in Belize that they now contract to have their plants grown. "Habaneros are now grown in every district in Belize, and more fields are being planted every year," she said. Not only the volume, but the face of the business is changing. Originally the native habaneros were orange and yellow, but Sharp helped to develop a red variety for her sauce. Today, nobody wants the orange and yellow varieties.

Sharp believes that the future is bright for Belizean peppers. April 1997 prices were $.80 per pound.

Production Increases in California

GNS Spices, Inc. in Walnut, California is the largest single source habanero producer in the U.S., according to Frank Garcia who helped found the firm nine years ago. Their only product is habanero, which they provide to niche industrial and wholesale markets. GNS grows three habanero varieties of which two are patented, including the Red Savina (500,000 Scoville Units); and the Francisca, a thick-walled orange fruit (400,000 Scoville Units). They also produce the standard habanero (200,000 Scoville Units). "The Red Savina is really the pepper of the future because it is so strong that you can blend it with other ingredients and still get the aroma and flavor," said Garcia.

"We are still working to improve our product. We want to develop a thicker walled fruit which will stand up in storage for a longer time. Thin walled varieties often break down after only two weeks," Garcia said. "Habaneros are costly to harvest because the fruits are light. We are working on a variety that is upright with the fruit on the top, much like a jalapeño, that will be easier to harvest."

GNS Spices, Inc. produces the "whole nine yards" of habanero products, from dried pods to powder and mash. The Red Savina variety has a very strong red color and has only a 5 to 10 per cent variance in heat from year to year. Buyers are becoming more aware of Scoville Units, which has had a positive influence on the sale of GNS habanero varieties.

Seed is now available for the Red Savina through Shepherd Garden Seed and, beginning in 1998, through NK Lawn and Garden Seed Company. Francisca will be released in about two years. "We want to make seed available to the home gardener," said Garcia, "it is our way of giving back to people who have helped us."

GNS Spices, Inc. is concentrating their production in Ventura County and New Mexico. Going to foreign countries as a primary source has so many problems--use of pesticides, maintaining control of crops, and field rotation--to list a few, said Garcia. Growing in the U.S. also has problems, however, including cold weather, cost of harvesting, and finding qualified contract growers. Garcia is keeping up with his contract orders, but a surge in unexpected orders have resulted in plans to expand. "We are increasing our acreage," said Garcia. "Sixty per cent of our crop will be Red Savina, and the remaining 40 per cent will be split between the other two varieties."

Deep Heat in the Heart of Texas

They do things big in Texas--some 50,000 habanero plants have been planted in fields near Stonewall, located in the hill country near San Antonio and Austin. Jeff Campbell, president of the Stonewall Chili Pepper Company, has been raising peppers on his family farm since he was five years old, and the company is now a major player in the habanero business. Not only does Campbell raise them for use in his own products, but he also sells them fresh, powdered, and frozen on the wholesale market and from a retail catalog.

"At first habaneros were not even considered as a viable product," he said. "I took a bag to the first Fiery Foods Show back in 1988 and they were a curiosity. Over the years habaneros became a gimmick, then a fad, and suddenly people began taking the product seriously. Now it is a major part of the pepper market and just keeps growing," Campbell said.

Growing habaneros in the Texas Hill Country offers some real challenges. You have to start your seedlings earlier and plant later. The plants can stand a little cold weather, but the ground must be warm, so Campbell plants in May. Hail and drought are always threats.

Taking a look at the future, Campbell feels that the use of habaneros in sauces and salsas will increase as more people discover the flavor. He also believes that the use of capsaicin concentrates will decrease. "A lot of people are starting habanero crops and businesses, and that will eventually level off. A lot depends on the market, labor costs and maintaining quality crops, but growth of the industry will continue," he concluded.

Florida is Hot for Habaneros

Bren Ankrum runs the Purple Pepper Hot Sauce Shop located in the "world's largest flea market" in Pinellas Park, Florida. They have an 800 sq. ft. lot where they sell spice seedlings and Scotch bonnet habanero plants. He produces his own hot sauces including Orange Krush, made with an orange habanero variety grown in Florida.

"It took us six years of experimenting to develop the recipe, but we finally got it right. And our customers love it, particularly those from Canada. Many of our customers from north of the border are now growing habaneros in green houses. Can you believe that?" he said.

The market in Florida is exploding. There is a pepper plant in the yard of every fourth or fifth house. Growers in the Homestead area can't pick them fast enough. The price this spring, depending on the grade and color is from $1.50 to $3.00 per pound. "We are always looking for new sources, including the Caribbean countries like Dominica. We also assist other sauce makers to find habaneros," said Ankrum.

"When you think about it," he said, "it is a baby boomer type of business. It's like the mini-breweries that make specialty beers across the country. Many restaurants are now making or serving a variety of specialty sauces and salsas, many with an habanero base. The habanero flavor is really catching on, and I see nothing but increasing business in the future."

According to Ankrum, there is even a "Pablotini" drink served in the Zocalo Restaurant in Philadelphia. It has tequila, lime juice and an habanero floating over a bed of lime peel. That ought to make your spark needle jump a notch!

Small Farms in Yucatán; Big Fields Near Tampico

Pedologues, Inc. is an unusual business. It has been exporting peppers in dried and mash form from Mexico to the Middle East for many years, with very little product going to the U.S. the company has extensive fields and processing operations near Tampico, Mexico, and their primary varieties have been jalapeños and serranos. But the surge in demand for habaneros has resulted in a change of business plans for this company.

James Brown of Peachtree, Georgia, the company founder, is a soil scientist who has worked all over the world, including several assignments for the U. S. State Department. While working in the Middle East country of Oman, he met a producer of hot sauce who needed a supply of mash. Brown had worked in Mexico and knew that he could provide the product. So in 1991 he started his business of growing, processing and exporting pepper mash. He exports his products from Mexico to Oman, Qatar, Saudia Arabia and Kuwait. "The Arabs like their sauces spicy, but not real hot," said Brown. "We have been shipping mild to medium heat products for many years. There wasn't a demand for anything as hot as habanero in the Middle East and we had not considered shipping to the U.S. until we were contacted about becoming a source for habaneros."

He already had several hundred acres of jalapeño and serrano peppers under cultivation near Tampico, and is converting some of his fields to grow habaneros. A little over a year ago he started buying fields of habaneros from individual farmers and co-ops in Yucatán. "It was a real learning process for me because the habanero business is quite different from our on-going operation. Habaneros are more expensive and they come in different colors and degrees of heat. I personally prefer the yellow, but the reds are what sell," Brown said.

He marketed in the U.S. for the first time this past winter and has sent several limited loads of product to speciality hot sauce companies. In addition, he is going to sell certified seed to farmers and will soon be in full scale production--from seeds to mash. "Our goal is to have 400 acres in habaneros," said Brown. "The pods will be processed into mash in less than 48 hours after they are harvested."

In order to be successful, a grower or producer has to know how to ship mash, and know the tariffs and regulations better than the border inspectors. "I have saved several shipments because I knew the regulations and was able to show the inspectors that I was legal." he said. "Our crops weren't hurt by the hurricane season, so we probably have more habaneros to offer than many other growers."

Ultimately, Brown is looking for a steady growth and wants to be a consistent supplier of habanero products. "We sell anything from one gallon containers to tanker truck loads of mash only on the wholesale market," Brown said. "Sauces made with habanero sell themselves as more and more people acquire the taste. The world awaits..."

Contacts for Habanero Powder, Dried Fruit, Mash, and Sauces

TPA Pepper Growers
102 Magnolia Lane
Tampa, Florida 33610
1-800/493-9520

Food, Ltd.
P.O. Box 453
Belmopan, Belize
011-501/82-0234

Salsarica
P.O. Box 19510
New Orleans, Louisiana 70179-9570
504/897-5522

GNS Spices Inc.
P.O. Box 90
Walnut, California 91789
800/870-6657

Mad Pepper Company
1331 Gulf Blvd.
Madiera Beach, Florida 33708
1-888/456-6604

Pedologues, Inc.
256 Commerce St.
Peachtree City, Georgia 30269
770/487-2641

The Purple Pepper
7801 Park Blvd. C-20
Pinellas Park, Florida 33781
813/545-0324

McIlhenny Company
Avery Island, Louisiana 70513
318/365-8173

International Business Trade, Inc.
4624 West Esplanade Ave.
Suite 101
Metairie, LA 70006

PH: (504) 457-2047
FAX: (504) 457-2049
(Agent for Marie Sharp, Dangriga, Belize)

Quetzal Foods International Corporation
Contact: Stewart Jeffery
P.O. Box 13643
New Orleans, LA 7018-3643
PH: (800) 486-0830
FAX: (504) 486-1922

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