An All Natural Icon Reaches Beyond Whole Foods

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Jonesing for Soda

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 kid 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.

"I've always been fairly entrepreneurial," he says. "Even as a child I used to wash cars for eight to ten bucks an hour -- something none of the other kids were doing." He defends his lack of formal business training, recalling a decision he made to launch Reed's ginger brew in flagrant disregard of the results of a market-research survey. "The results came up saying that brew is an old fart drink. Everyone associates it with being sick or assumes it's only used to mix with drinks. But you can do all the marketing research in the world, and you still won't always be successful. There are a lot of textbook results that don’t ring true. We don’t sit down to analyze the market for what to do next. We follow our gut instinct." In this case, it appears Reed was right.

The Right Herb at the Right Time

Reed's growth over the last few years can be attributed largely to the burgeoning natural foods market: the industry grew from sales of $2 billion in 1990 to about $55 billion last year. "The explosive growth dragged us along with it,” recalls Reed. “There was a deep need for more items." He put out six ginger brews between '85 and '96: Reed's Original, Extra, Premium, Raspberry, Spiced Apple and Cherry Ginger Brews.

Much of this explosive growth in the natural foods market can be attributed to consumer trends. "People are naturally picking a more health conscious lifestyle. Consumers are more educated, making health foods more popular. Some of the health foods stores attract more educated customers and it is here that this trend caught hold," explains Dan Fabricant, Vice President of Scientific and Regulatory affairs at the Natural Products Association. "In terms of sales trends, you can see there's a large uptake in health food and beverages."