Millions of Americans are obsessed with this Japanese barbecue sauce
[NEW YORK] Justin Gill was getting desperate. In his yearslong quest to mass-produce and distribute his grandmother's home-brewed Japanese barbecue sauce without pumping it full of preservatives, he'd borrowed US$250,000 from relatives and friends, maxed out his credit cards and turned his Northern California home into a fulfilment centre. But he needed more capital in the months following the brand's 2019 release.
So the landscaper and father of three resorted to short-term, high-interest loans, where borrowing rates compounded daily. 'Every US dollar I could find or borrow, I put into Facebook ads,' said Gill, who prayed that the traffic would translate into sales of the almost US$10-a-bottle speciality sauce-which he called Bachan's, after the Japanese word for 'granny'-before one of his creditors seized his house.
His desperation turned out to be short-lived. Sales of the umami-forward, savoury-sweet condiment exploded, from US$35,000 in its first year to US$1.5 million in 2020, thanks to Gill's hustling, the brand's healthful sheen and, in no small part, the onset of the pandemic, which dramatically reshaped the way US households shop and cook. Now revenue is on track to exceed US$100 million in 2025, said a source familiar with the company who was not authorised to speak publicly. (A spokesperson for Bachan's declined to provide specifics on profitability, revenue and other financials.)
Bachan's ships tens of millions of bottles per year to more than 25,000 retail locations nationwide, including Costco, Walmart and Whole Foods. The company said that its products are stocked in around 5 per cent of US household pantries, alongside ketchup, mustard and other long-time American staples. 'We are everywhere we want to be right now,' said Gill, 43. Still, 'we would love to be at 80 per cent'.
The red-topped squeeze bottle has certainly broken into some big-name fridges. In a TikTok video, TV personality Bethenny Frankel tells her 2.8 million followers it's 'probably the best Asian sauce I have ever had' as she dips her sushi rolls into a reservoir of hot and spicy Bachan's.
Model-turned-businesswoman Hailey Bieber, who has 2.5 million YouTube subscribers, coats her 'signature' air-fried wings in the original variety in a cooking clip. 'I put it on salmon, chicken, anything you can think of,' she said as she mixes her sauce, which is pretty much just Bachan's with cayenne, honey and a squirt of Sriracha. 'I love this sauce.'
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Gill grew up eating his grandmother's barbecue sauce slathered on fried rice, beef sukiyaki and crispy chicken drumettes. Its business potential became clear to him at a young age, when customers of his father's landscaping business who were gifted bottles of the secret family recipe came back asking for refills. By the time he decided to turn that seed of an idea into a real product, Gill knew he needed to be able to make it at scale without compromising quality.
He stuck with his grandmother's list of 10 pronounceable ingredients including a mirin that the same family in Japan has been making for seven generations and developed a cold-fill process that gives the product a longer shelf life without pasteurisation.
Unlike more traditional barbecue sauces, which often get their sweet, peppery or smoky taste using some combination of brown sugar or corn syrup, vinegar and tomato paste, Bachan's flavour profile is closer to America's take on teriyaki, brimming with soy, ginger, garlic and green onion.
'People are sick of the same old brands,' said Alex Hayes, co-founder of Harris & Hayes, a food consulting company, of the booming popularity of condiments such as Bachan's. 'They are looking for excitement and newness.'
The chief catalyst for the brand's almost overnight success was arguably the pandemic. As consumers forced indoors got bored with cooking at home, they began scouring their social media feeds for fresh ideas; the brand's bright cap and signature octopus-stamped bottle were hard to miss.
'It was coming fast and furious,' said Mike Keefer, vice-president of sales, who in those early days schlepped sauce in the back of his pickup from the manufacturer's warehouse to Gill's home to ship to customers.
By the end of 2020, Bachan's was the top-selling barbecue sauce at Amazon.com. Keefer estimates the company landed more retail accounts in one-year than a normal food startup would be able to secure in five.
The sauce also caught fire because Japanese condiments and flavours have been gaining in popularity think miso, yuzu or matcha, which are seemingly everywhere on modern US menus. Health-conscious consumers looking for alternatives to ultra-processed foods have also helped sales. Another tailwind: The brand pushed retailers to stock Bachan's in the barbecue aisle, rather than the international section, helping to position it as a mainstream brand in the fairly staid barbecue sauce category.
The firecracker growth got the attention of investors. In 2021, after a partner discovered the condiment on Amazon, Prelude Growth Partners offered to invest US$10 million in Bachan's. Gill turned them down. 'I didn't want to give away too much of the company,' he said.
Prelude called back and proposed US$4 million; this time, he accepted. 'I will never forget seeing a wire come over for US$4 million,' Gill said, adding that, up until that point, he was not even taking a salary.
The company became profitable the following year. Shortly after, Sonoma Brands Capital led a US$13 million fundraising round. Gill still holds a majority stake.
The infusion of money allowed Bachan's to increase production at its third-party Bay Area plant and expand its offerings into new Japanese-inspired flavours: sweet honey, miso and roasted garlic, to name a few. The company has launched dipping sauces too.
As rivals encroach-barbecue mainstay Kinder's introduced its own Japanese sauce in 2023-Bachan's will soon roll out fresh branding, including rejiggered labels that place more visual emphasis on its name. Gill dreams of a partnership with a national restaurant chain, perhaps Wingstop or Buffalo Wild Wings, though no talks have yet happened, he said.
Would Gill ever want to cash out and walk away? Better-for-you condiments are certainly having a (multiyear) moment. In late 2020, McCormick & Co bought the hot sauce brand Cholula from private equity firm L Catterton for US$800 million in cash; last year, Campbell's purchased Sovos Brands, which makes Rao's pasta sauce, in a deal valued at US$2.7 billion. In October, PepsiCo announced it was buying Siete Foods, a seller of salsas and sauces, plus gluten-free tortillas, for US$1.2 billion.
Gill said that he has no plans to sell anytime soon.
'We get a lot of firm interest from parties-private-equity firms and large food conglomerates who want to buy the business,' he said. 'But at some point, we may need some help, and I think that's when I would be more open to bringing on a strategic partner.'
As for Gill's actual bachan, Judy Yokoyama, she is not involved in the business but is still on occasion the star of the show. Every year, when Gill hosts Bachan's Day in his hometown of Sebastopol, fans line up to meet, greet and share a selfie with the 89-year-old grandmother whose secret recipe started it all. BLOOMBERG
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