Instructions
Speak with the Macaroon locals. You will learn about a new non-player character, Grenadine, who is investigating something in the Capsicum Cavern. Grenadine is in the city, not the cavern, but the dwarfs will not let you see him until you travel to the cavern and find the Fire Millenium Gummy. Make sure to talk to each dwarf until one of them gives you the warp point to Capsicum Cavern.
Use the warp point to travel to Capsicum Cavern. Here you will speak with a dwarf who will send you into the cavern after two pots. Explore the cave until you not only find the pots but also find the Fire Millenium Gummy. If you get stuck in Capsicum Cavern, consult a walkthrough.
Return to the inn and speak with Rogan Josh. Rogan gives you some information about the Fire Millenium Gummy. He also tells you that Grenadine will be able to tell you more. If you continue to talk to him he'll elaborate on Grenadine's backstory. Sleep in the inn and watch the night time cut scene.
Travel to the northern side of town on the next morning. The dwarves here will let you pass because you have the Fire Millenium Gummy. Behind them you will find the Condimen Tower.
Climb the tower ladders up to the sixth floor. Here you will find Grenadine, he is the white bearded dwarf who has much to tell you about the Millenium Gummys.