An All Natural Icon Reaches Beyond Whole Foods

By: Saabira ChaudhuriFri Jun 27, 2008 at 3:55 PM

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?

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The Whole Package

In its attempt to go mainstream, Reed's aims to set itself apart through innovative marketing efforts. A recent initiative is its attempt to put its brew on tap, just like beer, in Southern California grocery stores, so supermarket goers can pull a free cup of the draught to try. "It's creative, innovative, and cheap. We went public because of this program," enthuses Reed. "Every supermarket chain I've ever shown this to gets excited, and we demo our product to a small city’s worth of people every week."

Reed's is also the only soft drinks business in the world to package its brew in a five-liter keg -- a selling point for both the thrifty and the environmentally conscious. The company packages its spiced apple brew and top varieties of its ginger brew in champagne-like bottles to compete with brands like Martinelli's, an attempt it says proved highly successful in California supermarkets. In addition, the company offers a one-liter swing-lid bottle, fashioned after that offered by European beer maker Grolsch. "We're creatives. We do unique packaging that other people don't," says Reed.

Beyond the packaging, another big marketing initiative is Reed's move to co-brand with other large companies such as Dewar's. A few nightclubs, like the Borgata Casino in Atlantic City, New Jersey, now offer cocktails that incorporate Reed's ginger brew. "We've brought ginger ale into the 21st century -- made it hip, modern," says Reed.

While other drinks in the natural beverages industry also offer health benefits, Reed maintains that his is one of the few brands to retain the essential characteristics of a soda, giving him an edge over companies like Honest Tea and Glaceau (which produces Vitaminwater) that don't resemble sodas at all. "Unlike with beer or ice cream," he says, "with soft drinks there's a super premium that has completely divorced itself from the underlying product. Companies couldn’t figure out how to make a better cola or fancier soft drinks, so they just made better packaging. That’s where we come in."

Marketing expert Seth Godin, however, thinks Reed's success boils down to the fundamental fact that its product is good. "It's so easy to think that marketing and the product are two different things, but they’re not. Their product is different, it's spicy. People talk about the drink for what it is -- and not because they've changed their bottle."

Beyond Whole Foods

Although experiencing healthy growth, the natural foods market is still only 5 percent of the national retail food industry. "Reed’s is doing well, but will they be able to cross over? That’s the question," says Honest Tea CEO Seth Goldman, whose company wooed Coca-Cola into buying a majority stake in February.

"Despite our 66% annual compound-growth rate," Goldman says of Honest Tea, "we still aren’t reaching all the people we want to reach." He knows that for his company to act as an "agent of change," turning the public on to healthier eating habits, it needs to widen its reach, something that can most expeditiously be done with the resources of a company like Coke.

Widening distribution is a clear goal for Reed as well -- "it's the whole reason for us going public" -- and his company has been running a test market in Southern California over the last two years on the viability of taking its product mainstream. There are plenty of opportunities for growth, with the company taking advantage of new, larger distributors -- like Manhattan Beer Distributors (the largest Coors distributor in the country) -- convenience stores, delis, cafes, club stores (like Sam's Club and Costco), and of course grocery stores.