Video: The history, business of Tabasco

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CNBC
updated 3/11/2008 2:21:06 PM ET 2008-03-11T18:21:06

About 120 miles from New Orleans, the McIlhenny family bottles a precious liquid — Tabasco sauce — sold in more than 160 countries with labels translated into 22 languages. And although the family won't reveal much about its company's finances, some outsiders estimate those little bottles pull in about $250 million in sales each year.

The only place where Tabasco sauce is made is here on Avery Island. It's actually not an island at all. Three miles from the Gulf Coast, deep in Cajun country, the company home is a 2,500-acre dome of solid rock salt, formed when ancient seabeds evaporated.

The dome's surface soil is perfect for growing what it's most famous for, peppers. But peppers don't grow here naturally. They're here thanks to Edmund McIlhenny, a New Orleans banker, who moved to Avery Island with his family following the Civil War and shortly after came upon some pepper seeds.

Dr. Shane Bernard, the McIlhenny's full-time historian, says the source of the seed pods is a bit fuzzy, but they probably came from a soldier who'd been in Mexico fighting, or hiding.

"We know that he got them around 1866," Bernard said. "And sometime between 1866 and 1868 he perfected this recipe for Tabasco sauce."

McIlhenny's original recipe notebook is one of the company's most prized possessions. "My pepper sauce is made thus," he wrote. "To each gallon of ripe fruit add one coffee cup full of salt then mash thoroughly."

"In the old days, as now, we would smash the peppers, but back then it had to be done by hand," Bernard said. "The workers would take a pestle and a sieve made out of cypress or metal and smash the peppers through the sieve."

The sauce was mixed and fermented in stoneware jars and bottled in cork-topped cologne bottles before being shipped out, a five-day trip even to nearby New Orleans.

By the turn of the century, with a little push from the McIlhenny Co., Tabasco was becoming a household name. Proper ladies were advised that a bottle was a must on their dining room tables. And its presence was being requested farther afield.

When England's Lord Kitchener invaded Khartoum just a decade after Tabasco was first exported, Tabasco sauce came along. As it did some years later with another famous Brit, who discovered King Tut's tomb.

"We've got the photograph of Howard Carter in the tomb of Ramses XI where he and his fellow archeologists would eat lunch. This is around 1922 when he was searching for King Tut's tomb nearby in the Valley of the Kings." Bernard said. And right there on the table is a bottle of Tabasco sauce.

Through the 20th century, the world enjoyed Tabasco — one drop at a time.

The sauce has even appeared on — or over — dining tables out of this world. It has made its way into orbit to give shuttle astronauts' food packets a boost.

The secret to going from a backwater bayou to Earth-circling success? Jeffrey Rothfeder, author of "McIlhenny's Gold," says the answer is in the family's decision not to diversify.

"They could've invented Tiddly Winks, and then they would've been experts in that. It's just a focus that this family has put on the product," Rothfeder said. "The brand and the company being the most important thing that they do."

With their focus has come unusual longevity as a family business — 140 years.

"Fewer than 1 percent of family businesses last that long," Rothfeder said. "In fact, only about 30 percent even survive the first generation. So four generations is pretty amazing."

Durig those generations, little changed in the 50 acres of fields where Tabasco gets its start. Only 2 percent of these peppers actually end up in the sauce. The rest are harvested for their seeds, which are shipped to Latin America for planting there on behalf of the company.

Dave Landry worked for the company for more than 30 years.

"These plants here were transferred in the field in April. And these peppers will start ripening and turning to red beginning of August. And you can see these peppers are hand-picked off the bush when they're bright red," he said, walking through a pepper field.

The peppers are mashed and mixed with salt the same day they're harvested in Latin America. The salt, of course, is from Avery Island, dug out of the mountain of salt beneath it that's believed to go down as deep as Mount Everest is high.

When the mash arrives in shipping containers from Latin America it's dumped out, stirred, and poured into barrels.

Salt is added to the lids to form a hard crust, and then the barrels are stacked up — 40,000 to 50,000 of them — for three years of fermentation.

When the mash is ready to go, it heads from the warehouse to the factory where the liquid is drained out through fine sieves.

"The mash is transferred from the draining process into these large, 2,000-gallon wooden vats where vinegar is added. This is a mixture of pepper, vinegar and salt mixed for 28 days and then strained," Landry said.

The straining removes the seeds before the sauce meets a sea of tiny bottles into which it's drawn by vacuum much as it has been for almost a century. It then proceeds to capping where it receives the familiar red cap, followed by a little glue and the equally recognizable diamond label.

The McIlhennys produce nearly three-quarters of a million bottles per day. And the profitability of the sauce they contain has not gone unnoticed.

"All of the major food providers would love to have that brand in their stable," Rothfeder said. "I mean, it's such an iconic brand, you know, any company would want to have it."

Rothfelder estimates the company could be worth between $2 billion and $3 billion.

The McIlhennys claim they're not interested in selling to outsiders. Although many of them have moved far from their ancestral home, Avery Island may still have an effect on their psyches.

"This is very much an island-dwelling family," Rothfeder said. "They're very insular. They're very private. And when you live on an island that's 10 miles in diameter, that's the way you're gonna become. You're going to feel like you are you against the world."

Paul McIlhenny, the current president, was known in years past to weigh the crop himself on Avery Island. Certainly for him, it's more than just a home. It's the birthplace of a legacy.

"Avery Island to our family is not only a home site. It's a place where we've derived our income from since 1818, for a long time," McIlhenny said. "Edmund McIlhenny — we call him 'Grandpere' — but Grandpere I think would be thrilled to see that his family is now into the seventh generation of ownership, and they're still running the business and packing in one day more than he made in his lifetime. I think it's a combination of the place and the people that that make this place special and make us want to stay here."

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