Friday, July 11, 2008

Supply-Side Guest Memo: Chris Reed Plans to Grow His Two-Decades Old Reed's Natural Beverage Company Into the Big Leagues

Natural~Specialty Foods Memo Editor's Note: Chris Reed founded his Reed's Ginger Brew beverage company nearly two decades ago. Since starting the natural beverage company, Mr. Reed has focused distribution of the brands (Reed's Ginger Brew and Virgil's Root Beer) primarily in the natural foods and upscale food and beverage retailing segments of the industry, along with higher-end foodservice establishments, mining the niche market for consumers who are willing to pay a premium for all-natural and unique-tasting beverages.

However, last year the ponytailed natural soft drink entrepreneur took his company public. Following that move, the company experienced not only a cash infusion, but grew its sales by about 24% between then an now, largely by gaining distribution in new retail stores, including a number of what can be described as more mainstream-oriented supermarkets. The beverage company currently has annual sales of about $13 million.

The June, 2008 issue of Fast Company magazine has an article about Reed's plans and strategies to grow the Reed's natural beverage company (and the brands) even further into the food and beverage retailing mainstream channel, and how he and his team members plan on doing so, along with growing the company in general.

Read the article, "An All Natural Icon Reaches Beyond Whole Foods," by Saabira Chaudhuri in the June, 2008 issue of Fast below. The first few paragraphs are reprinted below, with a link to the rest of the piece below that:

An All Natural Icon Reaches Beyond Whole Foods
By: Saabira Chaudhuri

As Reed’s ginger brew makes a play for the big leagues, the natural question arises: Can the brand's success be attributed to the marketing or is it all about the taste?

Chris Reed isn't your typical CEO. He's a tie-dye aficionado who sports a ponytail, eats vegetarian, and enthuses ceaselessly about the benefits of yoga, Ayurveda, and meditation. He comes off more like a freewheeling Californian—maybe a wave chaser or an amateur home grower—than a guy from Queens who runs a multi-million-dollar business.

But when you ask him about the inspiration for his soda company, Reed’s, you uncover a side of him that is ambitious and openly profit seeking. "I'm a renaissance man. I'd rather not make money for other people when I can make it for myself," Reed says unabashedly. Last year, his company brought in sales of around $13 million outselling established brands like Izze (owned by Pepsi Co.), RW Knudsen, and Hansen within the natural foods category, a group of about 3,000 markets that includes Whole Foods and Trader Joes. It is now the number one player in natural sugar/fructose sweetened soft drinks.

In January of 2007 Reed’s went public and experienced a 24 percent increase in growth that year. Now, after 18 years in business, the company is looking to branch beyond just natural foods, and go mainstream.

Home Brew

A self-made businessman with no formal business background, Reed started out wanting to be a rock and roll guitarist. He tried working the music circuit for a few years, playing rhythm and lead in a band, before he reluctantly decided to get serious and go the conservative route, trudging off to study cryogenic engineering at the Rensselaer Polytechnic Institute. After the oil and gas industry crashed in the mid '80s however, Reed came to terms with the fact that he just wasn't cut out for the life of an engineer.

At 29, he packed up and moved to Hollywood to study guitar at the Musicians Institute. Simultaneously, he started working for a friend who owned a 1-800-DENTIST outlet. At first he just answered the phone. Eventually, he started selling to the dentists, displaying an unexpected aptitude for bringing in dollars that prompted him to consider starting his own business.

While Reed already possessed a deep-seated interest in Ayurvedic and Chinese medicines, many of which incorporated ginger, the inspiration for creating his eponymous brew only came while he was traveling across India in 1988. There, the roadside sugarcane juice vendors often infused their drink with ginger or lime and it was during this trip that Reed settled on ginger brew as the best vehicle to get ginger to the American public.

Back in the States, he did some research at UCLA and found that before soft drinks were commercially made, they had been brewed at home. So, he decided to brew his own line of natural soft drinks, and began experimenting with recipes in his Venice Beach kitchen, tinkering for almost two years before he settled on a spicy-sweet concoction.

With the aid of a loan from his father, Reed launched his first batch of ginger brew for less than $5,000 in the summer of 1989. He sliced 90 pounds of fresh ginger by hand, brewed the product at a small brewery with no bottling operation, bottled it on his own, slapped on labels with a stick of glue, and loaded 36 cases into the back of his VW bug for distribution at four local stores.

Click here to read the rest of the article from the June issue of Fast

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