when there's about to be a new era in the game, and many are going to write about that this week. he runs into rory mcilroy. nick: runs into the star of the next years. he's battled tiger it's all right 15 years and now he's got another youngster who's fully charged up. fully loaded with everything. talent, strength, desires. so no wonder sergio -- when he crouches down, it's going to hurt. jim: a lot of you just tuning in here at the top of the hour. "60 minutes" is coming up next except for those of you on the west coast. because of an earlier rain delay here we're down to the final strokes of this world golf championship and the open champion from royal liverpool is

about to back up that breathtaking performance with nother victory here. will have to get two putts to do it. that should be enough for mcilroy. nick: this is right on sergio's line. jim: the only thing that could cost him the title now is he forgets to put that back. nick: highly unlikely. he seems to be control of the situation today. i love the way -- it's a little more than aggressive, isn't it? there's a freedom to be that

aggressive. to stand up and the confidence -- this is a narrow golf course. think about trying to beat this guy on a slightly wider golf course. good luck. like we say, if he keeps this just brilliant form, he's going to be the number one favorite into all the majors for the next five years or more. jim: he's going to be a strong one for the coming days, that's for sure, as we all head to valhalla and the pga. and then, of course, at augusta eight months out he'll be going for the career grand slam. and sergio nudges it up there inside of a foot, which will secure him solo second. nick: yeah, it's tough. the reads weren't quite the

same. a couple of strokes weren't quite the same. jim: just one birdie on the day. it came at the ninth. got him back even with mcilroy at that time and eight pars and a bogey coming home. it's going to be a round of 6 once he knocks this one in. nick: he set a lofty goal of 63 but didn't need it. jim: and look who returns to number one. ory mcilroy! at his brilliant best again.

nick: keep that one. no, that's his tradition. jim: david? david: thank you very much, jim, rory. the open championship, the bridgestone invitational world championship. you have to feel pretty good going into the pga championship. >> oh, yeah, yeah, -- what i'm really proud of this week is just following up the open with a performance like this. i said straight after i didn't want any letdown, i wanted to just keep going and performing well until the end of the season. it's great to come to one of my favorite tournaments of the world. i love the golf course here in akron, and to perform like this, i'm pretty satisfied. david: well, congratulations on another great win. we look forward to seeing you next week. >> thanks. david: thanks, rory. jim: now we head to horse country. not that far from churchill downs. he'll go for a little triple crown. open championship, world golf championship and a pga in three consecutive tournaments. nick: he's the $50 million thoroughbred. jim: he is.

nick: sure is, isn't he? it's the $100 million, whatever the top prize is, i don't know. jim: there are the fedexcup standings after this competition. rory, 66. to take it by two. sir nick, can't wait for the next week. nick: thank you, james. yeah, it will be great. jim: folks, we'll see you from valhalla and louisville, kentucky, and the pga championship. and we'll be watching rory mcilroy. he is on some kind of roll. he takes another title here in front of the world's best players.

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captioning funded by cbs and ford >> stahl: financial analysts around the world fear china might be sitting on the biggest real estate bubble in human history. where's the proof? we found what are known as "ghost cities." look at these brand new towers with no residents, desolate condos and vacant subdivisions uninhabited for miles and miles... and miles. >> simon: you have been called an evil genius. >> yes, yes, i have. >> simon: he's talking about wolfgang beltracchi, a forger so brilliant that, for decades, he made millions while his paintings were hung in museums around the world. but his brilliance wasn't that he could copy a rembrandt or a cezanne; it's that he imagined

paintings they might have done, even shot fake photographs to document them. see that woman in front of those paintings? she's beltracchi's wife and partner in crime. >> there was no commercially sold hot sauce before tabasco. edmund invented the category. >> gupta: that would make this the first family of hot sauce. >> ( laughs ) that sounds real good. >> gupta: the first family of hot sauce turned tabasco into one of the oldest and largest family-owned businesses in the country. >> i'm looking at the color. and that's why i've got an incandescent light. i want to look at the color, i want to look at the seed. just let it sit there for a minute. and then, the heat kicks in. tastes like candy. >> gupta: tastes like candy? >> smells like money. ( laughs ) >> kroft: i'm steve kroft. >> stahl: i'm lesley stahl. >> safer: i'm morley safer. >> simon: i'm bob simon. >> pelley: i'm scott pelley. those stories tonight on "60 minutes."

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this guy! bringing our competitors' rates to you -- now, that's progressive. >> stahl: for three decades, china had been nothing short of a financial miracle, a state- controlled economy that managed to navigate its way out of the tatters of communism to become the world's second largest, deftly managed by government

policies and decrees. but now, many in the financial world are looking nervously at china. that's because one sector chinese authorities concentrated on was real estate and construction and, as we first reported in march last year, that may have created the largest housing bubble in human history. if you go to china, it's easy to see why there's all the talk of a bubble. we discovered that the most populated nation on earth is building houses, districts and cities with no one in them. so, this is zhengzhou, and we are on the major highway or the major road, and it's rush hour. >> gilletulloch: yeah. >> stahl: and it's almost empty. gillem tulloch is a hong kong- based financial analyst who was one of the first to draw attention to the housing bubble in china. he's showing us around the new eastern district of zhengzhou in one of the most populated

provinces in china, not that you'd know it. we found what they call a "ghost city" of new towers with no residents, desolate condos, and vacant subdivisions, uninhabited for miles and miles and miles and miles of empty apartments. why are they empty? i've heard that they have actually been sold. >> tulloch: they've all been sold. they've all been sold. >> stahl: they've all been sold? they're owned. >> tulloch: absolutely. >> stahl: owned by people in china's emerging middle class who now have enough money to invest but few ways to do it; they're not allowed to invest abroad, banks offer paltry returns, and the stock market is a roller coaster. but 16 years ago, the government changed its policy and allowed people to buy their own homes, and the flood gates opened. >> tulloch: so what they do is they invest in property, because property prices have always gone up by more than inflation. >> stahl: and they believe it will always go up? >> tulloch: yeah, just like they

believed in the u.s. >> stahl: actually, property values have doubled, tripled and more, so people in the middle class have sunk every last penny into buying five, even ten apartments, fueling a building bonanza unprecedented in human history. no nation has ever built so much so fast. how important is real estate to the chinese economy? is it central? >> tulloch: yes. it's the main driver of growth and has been for the last few years. some estimates have it as high as 20% or 30% of the whole economy. >> stahl: but they're not just building housing, they're building cities. >> tulloch: yes. that's right. >> stahl: giant cities being built with people not coming to live here. >> tulloch: yes. i think they're building somewhere between 12 and 24 new cities every single year. uwutahl: unlike our market- driven economy, in china, it's the government that has spent some $2 trillion to get these cities built, as a way of keeping the economy growing. the assumption is, "if you build

it, they'll come." but no one's coming. this is really completely, totally empty and it goes up... gillem took us to this shopping mall that's been standing vacant for three years. can i find this all over china? >> tulloch: yes, you can. they've simply built too much infrastructure too quickly. >> stahl: but i see kfc behind you. i see starbucks over there. i see some other very recognizable american franchises coming in here. at least they... does that mean they have faith that this is going to ignite? >> tulloch: no, these are all fake signs, just to get potential buyers the impression of what it might look like if they moved in. >> stahl: they're not real? so, kfc didn't buy this space or rent this space? >> tulloch: no, they haven't. >> stahl: starbucks? >> tulloch: no. >> stahl: they just put the sign up? >> tulloch: that's right. >> stahl: it's all make-believe- - nonexistent supply for nonexistent demand. look at that-- swarovski, piaget.

they're hoping for high end, too. >> tulloch: h&m. zara. >> stahl: ( laughs ) and it's all potemkin. >> tulloch: yeah. >> stahl: it's surreal and it's everywhere, like the city of ordos in mongolia-- built for a million people who didn't show up. and no, you're not in england. you're in thames town, a development near shanghai built like an english village. >> tulloch: and it was finished, i think, around five or six years ago. and it must have cost close to a billion u.s. dollars. and you'll see, it's still standing there empty. >> stahl: well, i've heard that there is some industry there or some business, one business there. >> tulloch: marriage. >> stahl: wedding pictures! and what's more uplifting than a wedding, or ten? you can see these empty developments on the edge of almost every city in china. what about the idea that china is urbanizing? people are flooding into cities or want to, anyway, by the hundreds of millions.

and that this really is a smart move-- build the housing to accommodate the urbanization process. >> tulloch: well, so, people are being moved into the cities. but that doesn't necessarily mean that they can afford these apartments which, you know, cost u.s. $100,000 or whatever. i mean, these are poor people moving into the cities, so they're building the wrong sort of apartments. >> stahl: and what's worse-- to build all these massive cities, they've had to tear down what was there before, clearing rice fields and displacing, by some counts, tens of millions of villagers. on the edge of zhengzhou, gillem and i came upon a strange sight. i'm just watching what they're doing. do you have any idea? >> tulloch: i think they're trying to recycle the bricks. >> stahl: these villagers are salvaging what's left of their homes, bulldozed to make room for more empty condos already encroaching in the distance. there are all these empty apartments over here. can they conceivably move into those upscale places? >> tulloch: most people in china

live on about less than $2 a day. and these apartments probably cost upwards of $50,000 or $60,000 u.s., so it's very unlikely. >> stahl: what will happen to them, do you think? >> tulloch: they'll be forced to relocate somewhere. i have no idea where they'll go. >> stahl: these are the immediate casualties of the building boom. and there's another problem-- analysts warn that all this building has created a bubble that could burst. so, if the bubble bursts, who's left holding the bag? >> tulloch: there are multiple classes of people that are going to get wiped out by this: people who have invested three generations worth of savings-- so grandparents, parents and children-- into properties will see their savings evaporate. and then, of course, there's 50 million construction workers who are working on all these projects around china. >> stahl: the prognosis of a bubble about to burst isn't only coming from financial gloom-and- doomers. we heard it from the most unlikely source. are you the biggest home builder in the world?

>> wang shi: i think. maybe. >> stahl: you may be? >> wang: yes. only the quantity, not quality. >> stahl: wang shi is modest, but his company, vanke, is a multi-billion-dollar real estate empire, building more homes than anyone in china. he was born on the frontlines of communism and joined the red army. but he secretly read forbidden books about capitalism, so that when china liberalized its economy, he rushed to the frontlines of the free market. even he thinks today's situation is out of control. are homes in china too expensive today? >> wang: yeah. >> stahl: here's a number that i saw. a typical apartment in shanghai costs about 45 times the averagd resident's annual salary. >> wang: even higher, even higher. >> stahl: what does that mean for your economy if it's just too expensive for the vast majority of people to buy? >> wang: i think that dangerous.

>> stahl: dangerous. >> wang: that's the bubble, so i think that's the problem. >> stahl: is there a bubble? >> wang: yes, of course. >> stahl: there is a bubble, and the issue is will it burst or not? that's the big issue. >> wang: yes, if that bubble... that's a disaster. >> stahl: if it burst? >> wang: if it burst, that's a disaster. >> stahl: to try and prevent the disaster, the chinese government decided to act. heard of their one-child policy? since 2011, china has had what amounts to a one-apartment policy, where it's very hard to buy more than one apartment in major cities. because of this, prices plunged. the bubble was being tamed. and yet, the taming was creating all kinds of unintended consequences. are many developers in debt? >> wang: yes, yes. >> stahl: and are many stopping development in the middle of projects because they don't have the money to go forward?

>> wang: yeah, that's problem. that's a huge problem. >> stahl: a problem because the slowing down of construction led to a downturn in the overall economy. unfinished projects dot china, and not just apartment buildings. look at this. can you believe it? analyst anne stephenson-yang, who has traveled across china, showed us a giant project all but abandoned in the port city of tianjin with concrete skeletons as far as the eye can see. the plan is to build a new financial district to rival manhattan, including a lincoln center and a world trade center, only taller. but it all seems frozen. >> anne stephenson-yang: there's supposed to be a rockefeller center here. i hope they have a christmas tree, too. skating rink. >> stahl: city officials told us everything stopped because developers want to build all the facades at once to match. but on the ground, we heard a different explanation.

workers told us that many of these buildings haven't had any work done on them for weeks, months, as if the developers just don't have the money to go on. >> stephenson-yang: it's true. you see that happen first. the migrant workers will go home. that's often the first sign that the debt crisis is starting. >> stahl: the debt crisis? >> stephenson-yang: well, when you stop paying your bills, then everything stops. >> stahl: it could become a debt crisis because of the huge loans most of the developers took out. if they can't repay them, the whole economy will seize up. the government's great fear is that all this could lead to social unrest, and that's not hypothetical; when regulations caused property prices to drop, it infuriated all those homeowners who watched the value of their nest eggs plummet. and there's already been some demonstrations over real estate around the country. >> wang: yes. >> stahl: have you had demonstrations against your showrooms anywhere, you're company? >> wang: often!

>> stahl: so often, wang shi shudders to think what would happen if the bubble actually burst. >> wang: if that bubble break, that maybe who know what will happened? maybe that... maybe the next arabic spring... >> stahl: arabic spring. you mean people coming out and demonstrating. >> wang: mm-hmm. >> stahl: a lot of economists say that it's too big for even this government to control. >> wang: mm-hmm. i believe that top leaders have enough smart to deal with that. i hope! >> stahl: you're doing this. >> wang: but that's uncertain. >> stahl: meanwhile, people who can afford it are still buying as much real estate as they can. they're even finding ways around the one-apartment restriction in big cities. can't buy in beijing? just cross the city line and the boom is in full swing-- flyers advertising new projects,

potential buyers crowding buses to see new construction, and new owners line up to register their new apartments. like us in our bubble, they just don't believe the good times will ever end. >> simon: wolfgang beltracchi is a name you may have never heard >> cbs money watch update sponsored by lincoln financial. calling all chief life officers. >> glor: good evening. switzerland says it will not impose trade and banking sanctions on russia. an explosion at a gm parts supplier in china this weekend killed at least 68 people. and goldman sachs is reportedly close to buying a steak in the messaging service perzo, an alternative to bloomberg. i've jeff glor, cbs news. it's great on strawberries, apples...

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>> simon: wolfgang beltracchi is a name you may have never heard before-- very few people have-- but his paintings have brought him millions and millions of dollars in a career that spanned nearly 40 years. they have made their way into museums, galleries and private collections all over the world. what makes him a story for us is that all his paintings are fakes. and what makes him an unusual forger is that he didn't copy the paintings of great artists,

but created new works which he imagined the artist might have painted or which might have gotten lost. as we reported in february, connoisseurs and dealers acknowledge that beltracchi is the most successful art forger of our time, perhaps of all time; brilliant not only as a painter, but as a con man of epic proportions. are you the best forger in the world? >> wolfgang beltracchi: maybe, yeah. in the moment. ( laughs ) >> simon: he agreed to meet with us in cologne and took us to a small wooden bridge outside his home. he volunteered to show us how he works. he was forging a max ernst, the german surrealist of the early 20th century. beltracchi was painting on this wooden bridge because ernst had done much of his work on a wooden floor. what do you think this max ernst would be worth? >> beltracchi: this one? >> simon: yeah. >> beltracchi: $5 million, i think. >> simon: $5 million. and you can do it in three days? >> beltracchi: yeah, oh, yes, yes, sure, or quicker.

>> simon: beltracchi estimates he has done 25 max ernsts. he is not copying an existing work; he's painting something he thinks ernst might have done if he'd had the time or felt like it. so you would be doing a cezanne that cezanne never painted, but that you thought he might have wanted to paint. >> beltracchi: yes, exactly. >> simon: so, in a sense, every beltracchi painting is an original. he just lied about who painted it. he says he has forged a hundred artists and can do just about anyone. could you do a rembrandt? >> beltracchi: yeah, sure. ( laughs ) >> simon: could you do a leonardo? >> beltracchi: yeah, yeah, sure. >> simon: who couldn't you do? >> beltracchi: maybe bellini. ( laughs ) bellini's really difficult. >> simon: he has sold his forgeries, of course, but says he can still see some of them because they're on public display. have you seen your paintings, your forgeries, hanging in museums?

>> beltracchi: yeah. all the museum, you know. ( laughs ) i think i am one of the most exhibited painters in museums of the world. >> simon: you are one of the most exhibited painters in the world? >> beltracchi: yeah, yeah. >> simon: that's quite an accomplishment. >> beltracchi: yeah. >> simon: you might have seen his stuff in new york's metropolitan museum, or in the hermitage in lausanne, to name just a couple. you can also see them in the homes of the 1%. actor steve martin bought this one. beltracchi's forgeries have also made it into art books listing the best paintings of the 20th century, and have been sold in many of the world's top auction houses. i have seen beltracchi forgeries on the cover of christie's catalogues. >> jeff taylor: yes, yes. >> simon: that's pretty good, isn't it? >> taylor: it is really good, it is really good. >> simon: jeff taylor teaches arts management at purchase college. he says, though there is no

shortage of gifted forgers, beltracchi holds the title. he has made more money than any other art forger ever. >> taylor: he combined all the nefarious techniques of everybody who came before him, and made very important innovations in exactly what is essential. >> simon: you have called him an evil genius? >> taylor: yes. >> simon: so aside from being a very talented painter, he was also a very accomplished con man? >> taylor: absolutely one of the best. >> simon: he started making a few bucks in the game when he was quite young, but his career really took off when he married helene, a perfect co- conspirator, in 1993. you were really the bonnie and clyde of the art world, weren't you? >> beltracchi: yes, bonnie and clyde, yeah-- without weapons, only with pencils. >> simon: but you were a pair, you did everything together. >> helene: yeah. >> beltracchi: everything together, yes, yes.

>> simon: they invented a story that fooled them all. helene said her grandfather hid his art collection at his country estate in germany before the war to protect it from the nazis. when he died, she said, she inherited it. but there was nothing to inherit, because there had never been a collection. every one of the works had been painted by wolfgang beltracchi. >> helene: when i said it's a collection of my grandfather, it was okay. >> simon: it was okay, but it wasn't true. >> helene: no, it wasn't true. but the others never asked me more. >> simon: because it was a good story. >> helene: yeah. >> simon: and you were a good actress in telling the story. >> helene: maybe. ( laughs ) >> simon: she and wolfgang even created fake labels from a real german dealer, which they put on the backs of paintings, staining them with coffee and tea to make them look old. they toured flea markets like this one to find canvases from the right periods. tell me what we're doing here. tell me what we're looking for.

>> beltracchi: we're looking for a painting like that, because we need something that is 1919, 1910. see, that's a french one. >> simon: you can get that completely clean? >> beltracchi: yeah, yeah, completely clean, yeah. >> simon: they sent paint pigments to labs to make sure they had been available at the time the artist had painted. you were really perfectionists, weren't you? >> beltracchi: yeah, yeah, sure. >> simon: and hearing you talk, you were really good criminals. >> beltracchi: yeah, yeah. >> helene: yeah. >> beltracchi: yeah, it's true. ( laughs ) >> simon: to back up their story, they found an old box camera like this one, dressed helene up to look like her grandmother, hung up some forgeries behind her, and took some bogus photos on pre-war paper. >> taylor: to make it look like an old photograph, which is, in rld,n the documentation aspect, is golden. archival photographs are sort of the... the el dorado. >> simon: now, when you see

something like that, do you say "you've got to hand it to him?" >> taylor: yes, yes, you do. >> simon: he was off and running. >> taylor: he was off and running. >> simon: running to luxurious estates they bought in germany and in france, vineyard included. they gave parties gatsby would have loved and they traveled the world in style, by land or by sea. bonnie and clyde had taste. >> beltracchi: this is... was my boat, yeah. >> simon: i don't think you're translating correctly. this isn't a boat, it's a yacht. beltracchi was riding high and thought he would stay up there forever. he was turning out forgeries like this max ernst, which went for $7 million. but then in 2010, he got busted by this tube of white paint. the dutch manufacturer didn't include on the tube that it contained traces of a pigment called titanium white. that form of titanium white wasn't available when ernst

would have painted these works, and beltracchi's high ride was over. jamie martin, one of the world's top forensic art analysts, uses science to help determine whether or not a painting is genuine. we asked him to examine this beltracchi forgery for us. >> jamie martin: his fakes are among the best fakes i've seen in my career. very convincing, very well done. >> simon: and what you're saying is that, basically, he got away with it for 40 years because nobody was examining them properly? >> martin: nobody was examining them closely enough. >> simon: he showed us what he does, how he uses a stereo- microscope to study every millimeter of a painting's surface, and to select and remove samples. you actually take little pieces off of the painting? >> martin: we take very little pieces. we take only the minimum amount that's required, smaller than the width of a human hair. >> simon: he uses what is called raman spectroscopy, which can

help detect historically inaccurate pigments. that's what cut beltracchi's career short. he was sentenced to six years in a german prison; his wife, helene, to four. but the chaos they wrought has not been undone. now, galleries and auction houses who vouched for his forgeries have been sued by the collectors who bought them. you have... in fact, you've really upset the art world, haven't you? >> beltracchi: yeah, sure. they all hate me, these experts now. >> simon: do you think the experts are just incompetent, or that they are also frauds, that they pretend to know more than they know? >> beltracchi: no, no. nearly all the experts we have met, we met, they were serious, really serious. their only problem was that i was too good for them. yes, that was their problem, that's all.

>> simon: and with all the legal problems they now have, many experts are very hesitant to use their expertise. >> taylor: i think they're terrified. i think that beltracchi particularly put them in a very nervous position. >> simon: so being an art expert today is a risky usiness? >> taylor: it's so risky that a lot of authentication boards have shut down. there's just simply too much legal peril out there. its one of the reasons why a lot of experts will not give their opinions. >> simon: many foundations representing major artists like andy warhol, keith haring, and willem de kooning are refusing to authenticate works brought to them at all. francis o'connor is the world's top jackson pollock expert. he says he can spot a fake pollock in a second, but these days is keeping his opinions to himself. what if i were to come to you

and say, "this has been presented to me as a pollock." >> francis o'connor: someone comes to me about once a week. i just let it go by. >> simon: let it go by? >> o'connor: in other words, ignore it. >> simon: i'm not quite sure i understand. if i come to you and i say, "hey, this has been presented to me as a pollock," and you can see right away that it isn't, you're not going to tell me, "this is not a pollock"? >> o'connor: i would be very hesitant to give any opinion at that point, because of the legal situation. >> simon: where do i go to see whether my painting is a real pollock or not? >> o'connor: there is nowhere to go. >> simon: when collectors do have suspicions about their paintings, one of the few places they can go is jamie martin's lab. ballpark figure-- if you've examined, say, 100 paintings, how many of them are fakes? >> martin: i would say probably 98% are fake. >> simon: no kidding.

>> martin: that's just the numbers. >> simon: at his trial in 2011, prosecutors said beltracchi had created 36 fakes which were sold for $46 million. but art historians believe, and beltracchi told us, that there may be more than 300 of his fakes all over the world. german police have uncovered 100 so far, and the numbers keep climbing. do you think we'll be uncovering fake beltracchis for years to come? >> taylor: absolutely. there's going to be many more out there. but one thing we know about fake art works is, short of having them burned or destroyed, they have a strange way of finding their way back onto the market, generation after generation. >> simon: and no one disputes that they are awfully good, beautiful. this $7 million dollar fake max ernst is being shipped back to new york. its owner decided to keep it, even after it had been exposed as a fake. he said it's one of the best max ernsts he's ever seen.

beltracchi spent a year and a half in this grim penitentiary, but is now allowed to spend many days at home, where he is launching a new career. beltracchi is painting again and is signing his works "beltracchi." he needs to get his name out there, which is probably why he agreed to talk to us. he's lost everything and has settled multiple lawsuits totaling $27 million. did you ever think that you would wind up in prison? >> beltracchi: no. >> simon: at what point did you realize, "uh-oh, i'm in trouble, this is over"? >> beltracchi: when i was there in prison. ( laughs ) >> simon: not before then. >> beltracchi: not really, no. >> simon: do you think you did anything wrong? >> beltracchi: yes, i use the wrong titanium white, yeah.

>> now sabs sports update presented by pacific life. sergio garcia held a three-stroke lead through three rounds of the bridgestone invitationa. but rory mcilroy caught him to win by two strokes. rory is now the new world's number one. tiger woods withdrew from this tournament today after reaggravating a back injury. his status for next weekend's pga championship, which airs here on cbs, is in doubt. for more sports news and information, go to cbssports.com. this is steve obermeyer reporting. is part of the fun. all it takes is a little advice and a lot of planning. a retirement income from pacific life can help you live comfortably after you stop working. for more than one hundred and forty five years, we've been helping people achieve long-term financial security. learn how to create a retirement income at pacificlife.com. pacific life. the power to help you succeed.

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>> stahl: now, cnn's sanjay gupta, on assignment for "60 minutes." >> gupta: tabasco is more than a mere condiment, it's an american artifact. the sauce was first made in 1868, and within a few years it was being served in the white house. since then, it's made its way to nearly every country in the world. it's one of america's most prolific exports, which is why we decided to take a closer look. and, as we first reported in march, what we discovered is that every bottle of tabasco has been made by the same family, a very private family, producing their famous sauce, known

locally as cajun ketchup, on their very own private island in the middle of cajun country for five generations. the mcilhenny clan has done it by adhering to 150 years of tradition in how they make their sauce, and also what they say about it publicly, which is typically very little. letting "60 minutes" come in with our cameras and our questions was a break from tradition. avery island is located in the bayous of louisiana, west of new orleans. only two miles wide, the island has been owned by the mcilhennys and their family for almost 200 years. >> tony simmons: this is where we take our pepper mash... >> gupta: it's 9:00 a.m. that means tony simmons, the fifth-generation c.e.o., is heading to the warehouse for his daily taste test. farmers all over the world grow the peppers, mash them, and ship it all back to avery island. you do this every morning that you're here? >> simmons: every morning i'm here, i check these barrels, if they're making mash. where's this from? >> colombia.

>> gupta: that means every bottle of tabasco in the world has his personal seal of approval. >> simmons: so i'm looking at the color, and that's why i've got an incandescent light. i want to look at the color, i want to look at the seed. and when i taste the mash, usually, what i'm looking for is i get some salt out on the edges of my tongue, and then about the time you think, "well, this isn't that much of a big deal," the heat comes late. you want to try? >> gupta: sure. i'm... i'm watching you first, though. how was it? >> simmons: i do this every morning. it's not so bad for me. >> gupta: is that a good chunk? >> simmons: yeah, that's good. you just put it on the front of your tongue, and then just let it sit there for a minute >> gupta: if you think tabasco is hot, the raw ingredients are ten times hotter. >> simmons: and then the heat... the heat kicks in. >> gupta: yeah, it does. >> simmons: so. >> gupta: wow, tony. i have newfound respect. >> peru. >> simmons: tastes like candy. >> gupta: tastes like candy? >> simmons: smells like money. ( laughs ) >> honduras. >> gupta: are there secrets in here, though, that you don't

want the rest of the world to know? >> simmons: our formula is only red tabasco mash, vinegar, and a little bit of salt, so i don't know how many secrets we could really have with a process that simple. >> gupta: it was simmons' great- great grandfather, edmund mcilhenny, who created the sauce shortly after the civil war. he began selling his concoction in old cologne bottles in new orleans, calling it tabasco. >> simmons: there was no commercially sold hot sauce before tabasco. edmund invented the category. >> gupta: he is sort of the father of hot sauce? >> simmons: he's the father of hot sauce. >> gupta: that would make this the first family of hot sauce. >> simmons: ( laughs ) that sounds real good. >> gupta: the first family of hot sauce turned tabasco into one of the oldest and largest family-owned and operated businesses in the country. you're the fifth generation family member to run this business? >> simmons: mm-hmm. >> gupta: how unlikely a story is this? >> simmons: only 30% of companies outlive the founder or move to a second generation. and only 12% of companies

actually make it to the third generation. so, for us to be the fifth generation and still be doing this is a much smaller subset, i'm sure. >> gupta: from the beginning, the company has always been run by, and for, family members. the top management, board and 130 stockholders are all mcilhenny descendants. estimates are that sales are close to $200 million a year. am i in the right ballpark? >> simmons: you're probably in the right town. ( laughs ) >> gupta: could you put me in a better ballpark? >> simmons: no. like i said, we just don't give out financial information. >> gupta: what about margins, profit margins? can you talk about that? >> simmons: nope. >> gupta: none of it? >> simmons: none of it. it's a private, family-held business. >> gupta: is there any advantage to not sharing this information? >> simmons: we're not sure. but we're probably not going to find out, either. ( laughs ) >> gupta: harold "took" osborn, another of edmund's great-great-

grandsons and tony simmons' younger cousin, is next in line to run the company. everyone calls you "took." i mean, you're one of the senior guys in the company, the number two. what does that say about this culture here? >> harold osborn: when i came here, i... i put my name in the company directory as "harold." i didn't get any calls for the first six months because no one knew who harold osborn was. they all knew me as "took." >> gupta: a decade from now, will one of the best-known companies in the world be run by a guy named took? >> osborn: well, we might... we might change that a little bit. ( laughter ) >> simmons: they going to call you mr. took? >> osborn: mr. took. ( laughter ) that's right. >> gupta: even though he's the heir to the tabasco crown, osborn inspects the pepper bushes himself, much as his ancestors did, as this company film shows. >> osborn: you have to walk through the field. and we take rope. and we, say, this plant, that plant, you can almost see the personality of the plants. and then we tie a string around them and come back and pick just those plants for next year's season.

>> gupta: the company grows peppers on 20 acres of avery island-- not to produce sauce, but to produce seeds, which are sent to farmers abroad. >> osborn: it's essentially an heirloom plant. it's essentially the... the original stock. >> gupta: so you're saying these peppers are genetically the same as the ones that... the original peppers? >> osborn: as far as we know, yes. we've never modified them. >> gupta: these peppers are hand-picked. why not use a machine or some sort of automation to make that easier? >> osborn: we don't want to change the plant. that's the way most... like, in the cucumber world, or potatoes or anything else, you modify the plant to work for a harvester. every time you breed something, you give away something, and taste is always the first thing that gets cast away. >> gupta: key to the taste of the sauce are the seeds, and they're irreplaceable. >> osborn: we have a vault in our... in our office. >> gupta: a vault? >> osborn: a vault. we keep them... >> gupta: you keep seeds in the vault? >> osborn: keep seeds in the vault. >> gupta: farmers in latin america and africa use those seeds to grow ten million pounds of peppers. they mix them with salt, grind them, and ship the mash back to

avery island, where it's aged in oak barrels that were once used by the finest whiskey makers in the country. the barrels do have to be modified, though-- in particular, the metal hoops. >> coy boutte: we'll have to put stainless steel on them. >> gupta: why? >> coy: the acidity of the peppers. >> gupta: the peppers could eat through the steel that's down there in the first place? >> coy: correct. >> gupta: coy boutte is in charge of the warehouse. he's also a fourth-generation tabasco employee, something that's pretty common around here. >> coy: my grandfather, he ran our processing department. my mom works in our h.r. department, and my dad runs our maintenance shop. >> gupta: how big a part of your life would you say tabasco is? >> coy: it's my whole life. i was born and raised here. >> gupta: do you eat tabasco every day? >> coy: i eat tabasco every day- - morning, lunch and supper. >> gupta: as the mash slumbers for three years, spider webs grow on the 60,000 barrel inventory. the last time i saw this many barrels is usually a place like a winery. >> simmons: we think about our process similar to the way, i think, a winemaker would think about his process.

>> gupta: once simmons approves the mash, it moves on to the next pungent stage. >> simmons: we add vinegar to fill the tank, and then we mix it and stir it for up to about 28 days. >> gupta: takes your breath away. ( coughs ) do you ever... ( coughs ) do you ever get used to it? >> simmons: ( coughs ) i don't know if you can get used to it, but it doesn't affect you quite as much if you... >> gupta: after awhile? >> simmons: ...after awhile. >> gupta: the sauce is then strained and bottled. the company's 200-person workforce can produce more than 700,000 bottles a day. this is a big product around the world. i mean, how big are we talking about? >> simmons: we are currently shipping to 166 countries. >> gupta: do you want to be in every country in the world? >> simmons: well, yes, we do. ( laughs ) >> gupta: meanwhile, the hot sauce industry in the u.s. is on fire with revenue of more than a billion dollars.

eating spicy food has risen in popularity. it's even become a competitive sport... >> you got hotter? >> this'll be a 20-minute burn. >> gupta: ... as can be seen at this chili festival near dallas. >> that's hot! >> gupta: lately, tabasco, the grandfather of condiments, is trying to keep pace with these brash new rivals. >> simmons: the market itself has been growing. and the more people that come into this category, we think, the better it is. because if you begin to use hot sauce, we think, sooner or later, you're going to find tabasco. and when you do, we're going to get you. >> gupta: you're going to hook them. >> simmons: we're going to hook them. >> gupta: avery island is located in hurricane country, making tabasco very vulnerable. in 2005, hurricane rita caused massive flooding. how at risk was tabasco? >> simmons: we had four inches before water would've come into a food plant. and you can imagine, we would've been shut down for months and months. >> gupta: that's very close to being on the edge. >> simmons: it's the only place in the world we make tabasco.

>> gupta: in order for the family to protect tabasco, they must first protect avery island. fighting the erosion of louisiana's picturesque bayous is a constant challenge for took osborn. >> osborn: some of the problems that we have are saltwater intrusion. if you bring direct sea salt in, it'll kill all this grass. >> gupta: without the grass, the area's biodiversity will also disappear, so the company has a program to replant new grass. >> osborn: it's an indigenous grass. it's very inexpensive to do. it's very effective. it grows fast. what you see here, this grass will start spreading out b the... by the roots. and it stops the sediment that's floating by. and the sediment drops out, and builds marsh. >> gupta: in just a few years, this will turn into this. as much as they like to talk about their conservation efforts, the family also leases their land for oil and gas drilling, as well as salt mining. those two things seem at odds with one another.

>> osborn: no, because we use those resources to... to actually help the parts of the land where the oil isn't. >> gupta: how does that benefit avery island and tabasco? >> osborn: all this land protects the island, protects it from storms, protects it from erosion. and it's part of our heritage. ♪ ♪ >> gupta: that heritage includes unique cajun musical and culinary traditions that the mcilhenny family cherishes. >> simmons: if you work on the leg to get some of that nice crab meat... yeah. >> gupta: and at the heart of cajun cuisine is cajun ketchup. could you do what you've done here with tabasco someplace other than avery island? >> simmons: i think we could make tabasco. but i'm not sure that the joy would be anywhere near as great if it... if it wasn't being done where it is. >> gupta: they are fiercely protective of their island, their business, and their sauce, which has been trademarked since 1906.

now that i've been here for a couple of days, i sort of feel like i got the... the formula for this tabasco down. and if i wanted to go out and create "sanjay's tabasco sauce," what would happen to me? >> simmons: if you called it "sanjay's tabasco sauce," you'd get a cease and desist letter from us pretty quickly saying that you can't use the word "tabasco" in that context. you could call it "sanjay's hot sauce made with tabasco peppers," but you couldn't call it "sanjay's tabasco sauce." >> gupta: how far would you guys go to enforce that? >> simmons: we'll go to court with you. absolutely. >> gupta: there will be no other tabasco sauces out there? >> simmons: no. >> gupta: there have been rumors that there have been offers for purchase of tabasco. people that offer a billion dollars, maybe even more. is there any amount of money that would make this company for sale? >> simmons: the shareholders of the company would have to decide what they want to do. >> gupta: and they say, "mr. c.e.o., what's your recommendation?"

>> simmons: you know, i like owning a family business. ( laughs ) >> join sanjay gupta on a journey back in time to avery island. go to 60minutesovertime.com. sponsored by viagra. this is the age of knowing what you're made of. why let erectile dysfunction get in your way? talk to your doctor about viagra. ask if your hearis healthy enough for sex. do not take viagra if you take nitrates for chest pain... ...it may cause an unsafe drop in blood pressure. side effects include headache, flushing, upset stomach, and abnormal vision. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. this is the age... ...of taking action. viagra. talk to your doctor. been all fun and games, here at the harrison household. but one dark, stormy evening... she needed a good meal and a good family. so we gave her purina cat chow complete.