Downey family sells iconic Tapatio hot sauce brand

Tapatío hot sauce, the family-owned brand founded by the Saavedra family of Downey, has been sold to Highlander Partners. (Getty Images)

DOWNEY – Tapatio, the iconic California hot sauce brand founded by the Saavedra family, has been acquired by Highlander Partners, a Dallas-based private investment firm.

The Saavedra family, which is from Downey, sold the company to Highlander, though the family will retain a minority position in Tapatio following the transaction. The Arnold Companies also invested a significant minority equity position alongside Highlander.

Financial terms of the deal were not disclosed.

Tapatio was founded in California in 1971 by Jose-Luis Saavedra Sr. The brand’s name comes from the term used to describe someone from Guadalajara, Mexico, reflecting its ties to traditional Mexican flavors.

The company has grown into one of the most recognizable hot sauce brands in the country. According to Highlander, Tapatio is the No. 5 hot sauce brand in the U.S. and has developed a loyal following, particularly in the Western United States. Its products are sold through big-box retailers, supermarkets, restaurant chains and other retail outlets.

Highlander said it plans to expand Tapatio’s reach into new markets, broaden its distribution channels, support new product development and move into complementary product categories.

“We are excited to partner with Tapatio, a generational business that is distinguished by a strong, authentic brand in the fast growing hot sauce category,” said Jeff L. Hull, president and CEO of Highlander Partners. “We believe that Tapatio is poised to benefit from several secular trends that are dramatically reshaping consumer food choices, and we look to take advantage of the brand’s significant whitespace opportunity.”

Jeff Partridge, partner at Highlander, said the firm recognizes the responsibility of taking over a family-built brand.

“It is both a privilege and an immense responsibility for Highlander to be the next steward of the Tapatio brand,” Partridge said. “We share the Saavedra family’s vision to maintain the brand’s legacy as we carefully and purposefully target opportunities to grow the brand geographically, introduce new flavors and products, and deepen penetration in both the retail and foodservice channels.”

Luis Saavedra Jr., former CEO of Tapatio, said Highlander was a strong fit because of its background in the branded Hispanic food category and its long-term approach to investing.

“Tapatio has a strong business with a proud heritage and identity,” Saavedra said. “Highlander shares our vision to maintain this legacy.”

Tapatio is known for its balance of medium heat and tangy flavor. Its hot sauce is made from red peppers, vinegar, garlic and spices, and is commonly used on Mexican food, eggs, soups and other dishes.

Stout served as exclusive financial adviser to Tapatio on the transaction. J.P. Morgan led the senior financing facilities, and NMP Capital provided financing and equity in support of the transaction. Katten served as legal adviser to Highlander.