Chris Reed
Title:
Chief executive
Company:
Reed’s Inc.
Birth:
1958; Queens, N.Y.
Education:
B.S., chemical engineering, Rensselaer Polytechnic Institute
Career Turning Point:
Quitting engineering in 1985, moving to Los Angeles and starting his company in 1987
Most Influential People:
Musician Ravi Shankar, motivational speaker Barbara De Angelis, spiritual leader Maharishi Mahesh Yogi, author and teacher Shakti Gawain; his mother and father
Hobbies:
Recording and performing world beat/jazz music, yoga, meditating, traveling and music
Personal:
Lives with wife Judie, and two children, Kate and David, in Westchester
In the 1980s, Chris Reed left his career as an engineer to move to Los Angeles and start a rock and roll band. But Reed, who describes himself as having a natural bent toward entrepreneurship, eventually ended up starting his own beverage business, Vital Foods Co., with $5,000 in savings. He created a recipe for a carbonated ginger soda that he began distributing from his Volkswagen Beetle to individual stores around Venice. Because of his interest in the natural food industry and the overall health benefits of herbs, Reed still brews his sodas with real ginger roots, fresh fruit and spices, free of artificial flavoring and coloring. The company, since renamed Reed’s Inc., has an expanded lineup that includes Virgil’s root beers and is now sold around the country in Trader Joe’s, Whole Foods and Ralphs stores. Sales topped $10 million last quarter, and at the end of last year the company did an initial public offering on the Over the Counter Bulletin Board in pure Reed style with tags on the soda bottles offering shares to customers. The company sold 2 million shares at $4 a share, and last week was listed on the Nasdaq.
Question: Have you always been entrepreneurial?
Answer:
When I was 11, I wanted a guitar and amp. So I started a business. I would go out washing cars in the winter in Germany with my gloves and hat. Everyone’s car would be dirty and really looking like hell. And I was making about $8 or $9 an hour washing cars. This is 1970. Eight bucks tax free for a kid is like making $20 or $30 bucks now. So of course I had the greatest equipment, but I wasn’t your average kid. I was definitely out of the box and thinking, “How do I extract money from this world?” So I have that bent along with the bent of being into natural and organic, and I’ve married everything I’m into in this one company.
Q: Did being out-of-the box affect your engineering career prior to starting the soda company?
A:
I am pretty unemployable. I drive bosses crazy. At some point, I realized I needed to start my own business because I am just too high energy for a lot of corporate America. I wanted to create something that would have a legacy that would benefit the populace, something that wasn’t being done.
Q: How did it end up being soda?
A:
I looked into doing wind energy or solar energy. I used to liquefy natural gas and I have a degree in chemical engineering. But I also got into meditation and yoga and vegetarianism in 1976, before it was cool and hip. So I was also very much into herbs and all the health benefits. I wanted people to take health into their own hands and not wait for the silver bullet from the American Medical Association.
Q: Why ginger ale?
A:
Ginger is probably the top three or four herbs in the world for all of the health properties it has. Ginger is like a general tonic and it is great for digestion. I researched back to before 1850, when people used to brew their own sodas, which is a very little-known fact. I became enamored with brewing directly from the roots because it would give me the whole health properties of the ginger. I tested it in my kitchen for a couple of years, developing recipes.
Q: If it has such health properties aren’t you worried about selling it for general consumption?
A:
When I was developing it, I went to herbalists people who are very savvy about the health benefits of ginger. These herbalists in India and Chinese medicine herbalists all weighed in on this formula, because I was very deeply concerned in the early days with what was I doing to people. I’m not someone to casually put an herb into a product and affect people’s health and have the karma of that. I am a sensitive soul and I don’t want to cause any undue problems for people.
Q: So how did it finally get off the ground?
A:
In 1989, I finally found a brewery in the Valley to do a test run. I chopped all the ginger by hand. I was putting pineapple and honey in the first brews to sweeten it. And I had these other secret spices. I brewed up a 50- or 60-case batch; that’s like a thousand bottles. And each bottle has to be hand filled; it takes about a minute a bottle. And you had to crown it yourself. Then I went home, washed the bottles in my dish drainer, because they had gotten some soda on the outside. I got my stick glue out and I put the glue on the labels and put the labels on the bottles. I filled up my Volkswagen bug and went around town selling it. I remember convincing stores like Mrs. Winston’s on Ocean Park. I would drop of a case, and a customer would drink one bottle and take the whole case. I got reorders in the first three or four hours.
Q: Any mishaps along the way?
A:
Now, if you want to build a soda, you go to one of these flavor houses. But I have my own kitchen and I wanted to develop my own stuff. I developed ways of carbonating stuff, and it was a little trial and error, a lot of research, one destroyed kitchen in Venice. Whenever you are carbonating stuff, you are always pressurizing it. If you don’t do it quite right, the vessel you are pressurizing it in leaks in a catastrophic way. I can remember spraying every square inch of my kitchen with soda, blasting out of a canister and just never quite getting it clean again.
Q: Reed’s Ginger Brew is becoming more popular as an alcoholic mixer. How do you feel about that?
A:
Bacardi is using it as the ginger ale for a mixer. So here we have these incredible origins in health. Now we have huge liquor conglomerates doing rollouts of our stuff as a mixer. They mix it with rum, vodka, Grand Marnier. They make Pimm’s Cups. They do everything with it now. So it has kind of been a little bit weird.
Q: Weird?
A:
In the early days, Seagram’s called us to do a Captain Morgan’s ginger brew launch, and I told them no because I was a natural food company and this is not the right image for us. They wanted to do a 5,000-store trial in Southern California. I mean, good God, nobody walks away from that. But now that we have gone public, we are a little more mercenary. We have justified it morally by thinking if they are going to use a mixer, they might as well use one that doses them up with ginger and all of its health benefits.
Q: Did you ever imagine you would be this successful?
A:
When I first put it on the shelf I was just trying to do a real ginger ale. I figured it wouldn’t taste as good as commercial ginger ale, but like most of the natural food industry it is the natural version so you put up with how bad it is: that veggie burger, that tofu dog, that soy milk. You go through hell because you are into natural. But it turns out, that actually for some people at least, it tastes a whole lot better than commercial ginger ale.
Q: How do you feel about going on the Nasdaq?
A:
It’s a big deal. I’ll get to ring the bell before the end of the year. It was against all odds to go public. It’s not for everyone. I told people, I need to be the visionary for this company. The chi came to me.
Q: “The chi came to me?” Before you mentioned “karma.” It sounds like Asian thinking and religion is a big part of how you think.
A:
When I was in college in 1976, I started at Rensselaer Polytechnic Institute in Troy, New York. It’s a top engineering school and freshman year was a lot of stress. One of the guys on my floor did transcendental meditation, and I overheard him say the words reduce stress naturally. So I started meditating. Some of the people hanging out at the transcendental meditation movement were not just meditating but they were doing yoga and getting more and more into healthy eating. Meditation accelerates change, so I started changing my lifestyle, eating less that is heavily processed, more things in their natural state, because it felt better.
Q: How did you ever fit into corporate America?
A:
In the engineering industry, I developed new technologies that made some corporations like Air Products a lot of money, but I was thinking, “I want to make that money.” An awareness occurs: that was fun but I’m not actually sharing in the megaprofits of that corporation. I got a few “atta boys” and probably a lot of job security, but I wanted something else. I’m not saying everyone who meditates becomes an entrepreneur. I have looked at the greener grass back over the fence, which was a 9-to-5 job. There was less stress and more relaxing, but I will say it is really challenging and fun and creative to do my own gig.
Q: Did you do anything special to be successful?
A:
Early on, I would write the story of my business every week. If you sit down and write your story from beginning to end and what it is going to look like, you find out really quickly what you don’t know. Like, “I’m going to go get glass. Oh, wait, where do you get glass? And I’m going to get labels. Geez, where do you get labels? And I’m going to have it produced. Where the hell do you have it produced?” I mean there are gaps. You’re going to have this new soft-drink company? That’s a beautiful idea, but when you write the story of it, what you have every week is a huge to-do list.
Q: Sounds just plain daunting.
A:
You think, “My God, what have I done? This is the stupidest thing; there’s no way I’m ever going to do this.” Every time you get this negative spin going on, you grab your to-do list from your weekly story and you work it. You get on the phone, you start networking. You find people that use glass and you call them up. You find out who makes products and how you price it. You find out where you source ginger and how you are going to slice it. And you just plod through it. And it does help.
Q: You say playing world beat music is your hobby. Does that help you get through the week, too?
A:
I have a home recording studio and I go in and put down my ideas and play the drums, bass, guitar, vocals. I try to create songs and I also perform once weekly in small, intimate environments. It is mostly for my own personal enjoyment and for my friends.
Q: Do you have any regrets?
A:
Darius Bikoff was a solo entrepreneur with a company called Glaceau. He looked at us and saw that we were doing better than soda should be doing because we were using real ginger. He wanted to make functional drinks. I ran into him at LAX. He opened his briefcase and there was a jar in there, a Snapple bottle with no label and yellow fluid in it. He told me he added vitamin C to water and he was going to call it Vitamin Water. At the time, his company was doing $1 million in sales and we were doing $5 million. He wanted to buy us to bulk up. He had a great plan. Only Perrier had lemon-flavored water. But I was nervous about it; Darius was just very aggressive. Quite frankly, being five times larger, I thought maybe I should acquire them. My gut said yes, but my intellect couldn’t wrap around it.
Q: So why is that a regret?
A:
Coca-Cola bought them last year for $4 billion.
