Highlander Acquires Tapatio Hot Sauce Brand

Highlander Partners has acquired Tapatio, a hot sauce brand founded by the Saavedra family. Co-investing in the transaction alongside Highlander are The Arnold Companies and the Saavedra family.

Tapatio’s core product is Tapatío Salsa Picante Hot Sauce, a medium-heat condiment made from red peppers, salt, spices, garlic, and vinegar. The sauce is sold in multiple bottle sizes, including five-ounce, 10-ounce, 32-ounce, and gallon formats, as well as single-serve packets. Consumers use the product across a wide range of foods, from Mexican dishes to eggs, meats, soups, and snacks. The company has also expanded its brand presence through licensing partnerships and adjacent products, including Tapatío-flavored snack offerings.The brand sells through both retail and foodservice channels. Supermarkets and big-box retailers carry its bottled sauces for household use, while restaurants, cafeterias, food trucks, and distributors purchase larger formats and packets for menu use and resale.

The Tapatío brand of hot sauce was founded in 1971 by Jose-Luis Saavedra Sr., when he began making the sauce by hand in Maywood, California, before relocating operations to Vernon, California, where the business is now headquartered. The Tapatío brand takes its name from a term used to describe someone from Guadalajara, Mexico.

“Highlander is a perfect fit given their extensive background in the branded Hispanic food category, and we are pleased to have a partner that invests their own capital and takes a long-term strategic approach to growing companies,” said Luis Saavedra Jr., former chief executive of Tapatio. “Tapatio has a strong business with a proud heritage and identity. Highlander shares our vision to maintain this legacy.”

With Highlander’s investment, the company plans to expand into additional geographies, broaden distribution, accelerate new product development, and enter 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 Hull, president and chief executive 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.”

Highlander Partners uses a buy-and-build investment strategy focused on businesses operating in sectors where its principals have deep expertise, including consumer products, food, and manufacturing. The firm is headquartered in Dallas.

“It is both a privilege and an immense responsibility for Highlander to be the next steward of the Tapatio brand,” said Jeff Partridge, a partner at Highlander. “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.”

Dallas-headquartered The Arnold Companies is a family investment management and operating company. Its operating divisions include TAC Energy, a wholesale fuel and energy marketing company; TAC Investments, the firm’s private and public investment arm; TAC Central Services, a provider of financial, accounting, human resources, information technology, and operational support; and Bar Cross Ranch, a 40,000-acre working ranch in Wyoming. The firm employs approximately 150 people across its four divisions.

Stout served as the financial advisor to Tapatio. J.P. Morgan led the senior financing facilities, with NMP Capital providing both financing and equity.