For over 25 years, Huy Fong Foods and Underwood Ranches maintained a mutually beneficial relationship where the Sriracha producer encouraged the pepper farm to specialize and expand. With verbal assurances of continued purchases, Underwood invested millions in land leases and specialized equipment, becoming almost entirely dependent on Huy Fong for revenue. The partnership prospered as Sriracha grew into a global brand, with the farmer expanding operations based on the manufacturer's encouragement.

In 2016, Huy Fong secretly created Chilico as a new pepper supplier while recording Underwood's harvesting techniques with drone footage. When demanding new terms, Huy Fong offered just $500 per ton—below Underwood's $610 cost average—while threatening to withhold $18 million in pre-payments. The manufacturer then used confidential footage to help other farmers optimize production for their benefit, leaving Underwood facing financial catastrophe with no alternative buyers.

Underwood suffered $14.5 million in losses over two years and had to lay off 40 employees after Huy Fong abruptly switched suppliers. In court, Underwood won a $23 million verdict against Huy Fong, including $10 million in punitive damages for what the jury deemed quasi-criminal conduct. Today, Underwood produces its own Sriracha sauce, while Huy Fong reportedly uses cheaper pepper mash, explaining the declining quality that sparked the original discussion.