Small Axe Peppers CEO John Crotty breaks down the hot sauce company's partnerships with community gardens and small businesses, the impacts of supply chain issues and inflation, and its latest hot sauce recipes.

Video Transcript

DAVE BRIGGS: The hot sauce shelf is a crowded one these days with big companies like Kraft Heinz, and Conagra, and Campbell's Soup, and Unilever all in the space, an industry estimated to be worth 4.7 billion by 2029. There is room for small business. Here with us is Small Axe Peppers CEO John Crotty. And Brooke DiPalma is with us as well. Nice to see you. So John, how are community gardens helping spice things up for you?

JOHN CROTTY: Well, we launched in the Bronx-- first, let me thank you for coming on. But we launched to the Bronx seven years ago with an idea to help community gardens and to make a hot sauce from those community gardens that would allow people to both help the gardens and enjoy quality taste. So we gave the gardens seedlings and seeds in the springtime and bought the peppers back for a premium. And we've made this award winning sauce for about the last seven years now.

BROOKE DIPALMA: Now John, the price of pepper is at a all time high, also the cost of transportation seeing a rise there. You're in the middle of harvesting season right now and looking to buy back from those community gardens. So how exactly are you accounting for inflation here?

JOHN CROTTY: Well, like many businesses in this era, transportation costs have gone up. And we're in the process of adjusting some of that. We've had some upward price adjustment to our distribution partners. To make sure that our costs are keeping in line with the cost that we've had to absorb in this new environment. That said, the gardens are still getting a way bigger premium than they had been getting before. And we've had more gardens come on this year than we've had in years past.

BROOKE DIPALMA: And looking at some of those numbers there, you're in 42 cities. You're in more than 122 community gardens. How are you recruiting these gardens? How are you adding them to your distribution lists of donations? And how are they getting the labor to fill the demand for these community gardens?

JOHN CROTTY: Well, I don't know how much people understand about community gardens. But these are precious assets. We started here in the Bronx. And they service communities that otherwise are not very well serviced by a variety of service providers and other things. They offer green oasis spaces in urban environments that really are the one and only green places in the neighborhoods they serve.

As to recruitment and telling the story, I mean, each bit of success leads to the next one. The gardeners have a very informal network, which they speak to each other all over the country. And [INAUDIBLE] launched in the Bronx. They had a lot of success there. It's amazing how many gardeners around the country knew people in the Bronx. So as the model expanded, word of mouth expanded, and quite frankly, shows like yourself are really helpful towards spreading the word about what we're doing.

SEANA SMITH: John, when it comes to small businesses, we've talked to a number of owners over the last several months are having trouble hiring. They can't get the workers that they need in the door. What are your experiences just in terms of the labor shortage and how that has impacted your production?

JOHN CROTTY: Well, labor has been difficult. And the community gardens have had a specific challenge through COVID in not allowing people to mix with each other. A community garden by nature is a meeting spot for the community. So COVID had a big impact on that. As it relates to being able to do the work, we've been blessed that the people here at the firm are able to produce. And we've had relative success with that. We're also fairly small. So that's a little bit the one time that's a benefit.

And the second part in terms of production, we make the sauce over in a production facility not too far north of here. And they've had great success in maintaining their workforce as well.

BROOKE DIPALMA: Now you've also partnered with Ilegal Mezcal. That was featured at Forest Hills Stadium. There you had a spicy margarita. How are you working with other small businesses to really boost your business essentially?

JOHN CROTTY: Right. Well, we try to make our weakness a strength. Namely, we're a small firm. We have a great ethos. And we've been able to work with other firms that have a similar ethos. Ilegal we met at Forest Hills Stadium. We were brought out there to do a sampling for the whole season. Forest Hills really likes what we're doing. And they liked a lot what Ilegal was doing. So we made a video. But combining the two drinks was really just the celebration of what we're doing at the stadium, and two brands that basically share a philosophy of how the world can work, and what it looks like going forward.

We're very proud of it. We're very happy about that partnership because we think as a product, as a brand, working with other brands to share that is really a critical environment, a critical thing that we bring to the table.

DAVE BRIGGS: Free tip here, John. Ghost pepper tequila, you guys got to keep collaborating because that would be outstanding in a bottle. And I will take the first one and make my own spicy margarita. But we want you to tell us how spicy this is. What's the heat level? Seana and I are going to try this out on some chips.

SEANA SMITH: I'm a little nervous, John.

DAVE BRIGGS: But while we do it, please tell me about the spice level that we should expect.

JOHN CROTTY: Well, we started with the Bronx hot sauce. And I should say the chef for the hot sauce shares two unique distinctions. One, he's classically trained at the Culinary Institute of America and has been an award winning chef. And the second is he and I went to grammar school and the nursery school together. The Bronx hot sauce is the Goldilocks of hot sauces. It's just right. I can't see which bottle you had there.

BROOKE DIPALMA: We have the Detroit. The Detroit ghost pepper hot sauce.

SEANA SMITH: This is hot pepper.

JOHN CROTTY: Detroit ghost pepper hot sauce is probably one of the hottest ones we make.

BROOKE DIPALMA: One of the hottest.

DAVE BRIGGS: Dear God.

SEANA SMITH: Yeah, I don't know how you get much hotter than this, John.

JOHN CROTTY: No, it does. In the spice world, it's not overwhelming at all. You can do significantly hotter than that.

BROOKE DIPALMA: I'm scared.

DAVE BRIGGS: You didn't [INAUDIBLE].

JOHN CROTTY: We have eight flavors to meet a range of talents and tastes. We try to gear and engineer some of the flavors to be responsive to the city there in. In the Bronx, it's serrano, Chicago has a spicy relish, LA as a habanero mango. I'm sorry. I don't want you to be in pain [INAUDIBLE].

SEANA SMITH: No, no. It's good. It's good. It's good. It's just hard when you're talking. You don't really have access to water that easily. It's a little bit hard just in terms of how we're trying this. But John, very good though. Very good.

BROOKE DIPALMA: John, we got to know though, what is your favorite?

JOHN CROTTY: You might have left out the mezcal.

SEANA SMITH: What did you say there, John?

JOHN CROTTY: You might have left out the mezcal.

BROOKE DIPALMA: No.

SEANA SMITH: There we go. That is the heart of the issue. John Crotty.

JOHN CROTTY: There you go. A little [INAUDIBLE] would blend perfectly.

SEANA SMITH: There we go. Well, you got to join us in studio next time. You'll tell us exactly what we need in order for that proper tasting. John Crotty, great to have you. Thanks so much for joining us.

JOHN CROTTY: Thank you very much for having us. Really appreciate this opportunity.

SEANA SMITH: Brooke you've been a little quiet over there. Did you go in yet?

BROOKE DIPALMA: My lips are currently on fire. But we're going to move past. There's definitely mezcal in our future.

DAVE BRIGGS: I will say, usually a ghost pepper lingers for a lot longer and makes me uncomfortable. But it's good now.

BROOKE DIPALMA: Oh no. It's lingering. It's lingering all right.

DAVE BRIGGS: See, I'm-- I mean, my wife thinks I'm a wuss with spice. I actually--

BROOKE DIPALMA: Oh, I'm bad with spice. Do you?

DAVE BRIGGS: It was delightful.

BROOKE DIPALMA: But there's some ginger habanero, green market. Probably should have done that one.

SEANA SMITH: Might have been a little bit easier.

DAVE BRIGGS: Oh, that's my guy.

[INTERPOSING VOICES]

SEANA SMITH: Will we see these at Chipotle maybe, right Rachelle?

RACHELLE AKUFFO: We're expected to. Well, I mean, you never know, right? I mean, I grew up on spice. It takes a lot. But I started to-- a few beads of sweat, a few tears in Dave's eye. But I think you're OK now Dave.

DAVE BRIGGS: I'm good.

RACHELLE AKUFFO: You made me worry there for a second.

BROOKE DIPALMA: I have to say these two are very bold because I will not take another bite of this ghost pepper. But they just keep chowing down on whatever this is.

SEANA SMITH: It's good. It's good. This one is my favorite. And it is called--

BROOKE DIPALMA: Which one is this one? This is the green market one.

SEANA SMITH: This is the market one. That one's very, very good.

BROOKE DIPALMA: But again, a bit lighter.

SEANA SMITH: If you're big with the spice, you got to go with the ghost one. All right.