Selling the sizzle: our 2004 small business of the year has been making hot stuff a family affair for three-quarters of a century.

• Author: Gray, Tim
• Position: COVER STORY, achievements and awards

Credit a razed barbecue stand with one of North Carolina's enduring contributions to Southern cuisine. Sixteen-year-old Thad Garner bought the Dixie Pig in Winston-Salem and its handwritten recipe for barbecue sauce in 1929, shortly after graduating from high school. A few years later, Norfolk & Western Railway expanded its adjacent rail yard, forcing him to close and scout for a new location. In the meantime, customers still wanted to buy his sauce. So he, his parents and siblings started making and bottling it in the kitchen of their farmhouse in what was then the countryside.

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Customers began asking for a spicier sauce, and the Garners concocted one with cayenne peppers. Thad and brothers Ralph and Harold thought the name Mexican Joe would underscore its piquancy and give it an exotic flair. Their father, Samuel, wanted none of that. They were Americans, and so was their sauce. He insisted on moving the name across the Rio Grande. As for Joe, he didn't like that, either. He wanted something connected to his clan. Texas Thad would've tangled customers' tongues. Texas Ralph? Even worse. That left Harold's nickname: Pete.

Thus was born Texas Pete, the best-selling hot-pepper sauce in most of the South--and No. 3 in the nation, according to Information Resources Inc., a Chicago-based market researcher that tracks scanner sales at all major grocers except Wal-Mart. Even if you've never heard of T.W. Garner Food Co., you've seen its hot sauce, a must-have condiment in Tar Heel barbecue joints, where the thin, tapered-neck bottles nestle against the napkin dispensers.

The Garner family still makes Texas Pete, though a new generation is in charge. President Reg Garner, Vice President Ann Garner Riddle (his sister) and Secretary and Treasurer Hal Garner (their cousin) run the company much as their grandfather and fathers did. They make a pleasing product at a competitive price and generally steer clear of consultant-bred strategies that often land companies in trouble. In the age of Enron, the Garners and their company typify the old-fashioned values of thrift and craftsmanship--the commitment to doing a few things very well.

"They're not a company that looks for a lot of recognition," says Gayle Anderson, president of the Winston-Salem Chamber of Commerce. "Theirs are very simple business principles. Treat people--customers and employees--right, and they'll take care of you. If there's a problem, make it right right away."

SMALL BUSINESS OF THE YEAR

T.W. Garner Food Co.

Headquarters: Winston-Salem

President: Reg Garner

Employees: About 65

Founded: 1929

Projected 2004 revenue: $20 million

Business: Making and selling sauces, jams, jellies and preserves

Those down-home virtues, which have kept it in business 75 years, are one reason T.W. Garner Food is BUSINESS NORTH CAROLINA'S Small Business of the Year. Judging the competition, sponsored by BB&T Corp., were Larry Keen, the N.C. Community College System's vice president for economic and work-force development; Gwen Holtsclaw, president of Fayetteville-based Cheer Ltd., last year's winner; and David Kinney, BNC's editor in chief.

The company makes sauces, jellies and jams and sells them mostly in the South. And if it seems a bit stodgy--it abhors debt and has been in the same location since 1942--it has managed to thrive in an intensely competitive niche of the food industry. Almost anybody can make sauce: All it takes is a kitchen and a dash of ingenuity. But competition hasn't kept the company from being consistently profitable, providing jobs for about 65, with sales of more than $20 million last year--more than half from its Texas Pete line.

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The Garners' conservatism does have its downside. Their refusal to take on debt means Texas Pete hasn't become a behe-moth like the rival they refer to, half-jokingly, as "the other guy's product." The other guy is Avery Island, La.-based McIlhenny Co. Its product is Tabasco, the country's best-selling sauce, whose sales dwarf Texas Pete's outside the region. "There's no question that somebody, if they had a boatload of money, could take this thing national in no time," Reg Garner says of his brand. "But that's just not our game plan."

Doing that would mean taking on debt and answering to bankers or selling stock and giving control to investors, two things that the Garners have no interest in doing. About 20 people, all family members, own the company's stock. The Garners aim to expand outside their stronghold in the Southeast. But they're doing it slowly and cautiously, rather than following the sizzling-today, scorched-tomorrow approach of, say, fellow Winston-Salemite Krispy Kreme Doughnuts.

"I'm seeing Texas Pete in New England now, which didn't use to be to be the case," says Jennifer Trainer Thompson, Massa-chusetts-based author of The Great Hot Sauce Book. "They make a consistent product, which is admirable and hard--chili peppers vary crop to crop. They're definitely coming on."

The company started making hot sauce at the behest of its customers but entered the jam-and-jelly business in 1943 to survive. The year before, the Garners had built their plant next to the old farmhouse. It brought higher capacity, and the family needed to use it. Since then, the company has expanded the plant, now about 75,000 square feet, about half a dozen times.

With World War II had come rationing of commodities. The Garners secured a sugar ration from the government, which let them make jams and jellies they could sell to the military as provisions...