Reed’s feels the fizz of renewal
With new ginger wellness shot bottles hitting shelves next month, the “craft” soda company Reed’s has a new, concentrated burst of innovation as it enters its second full year based in Connecticut, after moving its headquarters to Norwalk from Los Angeles.
It is only the latest jolt for the company under CEO Val Stalowir, beginning with the introduction last year of zerosugar flavors of its Virgil’s root beer and Reed’s ginger beer.
That was followed this year by the Moscow Mule readytodrink cocktail sold in cans, Reed’s first foray into alcohol. Stalowir is now positioning Reed’s for a hempbased beverage, once the Food & Drug Administration clarifies rules for the category. And he suggests additional new product ideas are bubbling in the background, without divulging details.
Under Chris Reed, who created the company in 1989, Reed’s gained an early cult following in taking on CocaCola, PepsiCo, Cadbury Schweppes and Canada Dry, first with its ginger beer and then with its purchase a decade later of Virgil’s and its line of root beer.
But in attempting to capitalize still further on that early name recognition, Reed attempted to branch his company into other lines of soft drinks, including those bottled for sale under other company’s labels, struggling with production issues and denting profits over time.
With losses growing, Reed’s directors named as board chair John Bello, who gained industry fame building up the South Beach Beverage Co. and selling SoBe to PepsiCo. Bello chose Stalowir as CEO to lead a turnaround of Reed’s.
“Reed’s ... is a company that has had its ups and downs,” stated Mitchell
Scott, who tracks Reed’s stock as a portfolio manager with Choice Equities Capital Management and who met with Stalowir this past spring at — of course — The Ginger Man restaurant in Greenwich. “The ... sale of its L.A. plant (finalizes) the move away from the capitalintensive manufacturing operations, and the company will devote the lion’s share of its resources towards marketing and brand building going forward.”
A clean cut
Stalowir has since sold or scotched more than 100 individual products Reed’s had bottled, settling on a core of about 40 Reed’s and Virgil’s varieties before starting a fresh examination of new categories for expansion like the new ginger shots in the offing.
Stalowir, who lives in Easton, decided to bring the headquarters of Reed’s east to Norwalk where SoBe had been based, driven by a desire to capitalize on the cohort of beverage industry experience in the region, with Pepsi, Diageo in Norwalk and Nestle Waters in Stamford among the big brands locally.
“The infrastructure here is very good, in terms of finding people who have beverage industry experience,” Stalowir told Hearst Connecticut Media. “It just made sense to have a clean cut with the old culture, and bring the new culture here. That motivated us, and it has worked out pretty well.”
If Stalowir has Reed’s in fullbore innovation mode, he said it is with a tight focus on the company’s core ginger beer and root beer heritage including the introduction of canned versions that appeal to bigbox warehouse clubs, convenience stores and other mass retail chains.
Chris Reed remains a board director and has led some of the product development efforts. Last winter, he formed a new company to take over the historic Reed’s bottling operation in Los Angeles, which continues to produce soda for Reed’s as well as other companies.
“Chris took it as far as he could,” Stalowir said. “He was competing in way too many categories — he was in ginger beer, he
was in soft drinks, he was in kombucha, he was trying to do an energy drink. That’s a lot of (products) competing in a lot of categories.”
The transfer of the bottling operation to Chris Reed’s new company has not been without its own set of hiccups. Reed encountered problems getting the plant he inherited to full production, and another bottler struggled with a conversion to new labels. But Stalowir said the company has gotten its hands around most of those problems, and is nearing full, normalized production.
Times Square buzz
Stalowir grew up in Revere, Mass., on Boston’s north shore, with his parents, Ukrainian natives who ran a restaurant. He told Hearst Connecticut Media he envisioned his own career path in the food business, and after getting an MBA from the University of Michigan joined Quaker Oats where he worked on brands such as Cap’n Crunch and Near East.
His beverage industry breakthrough came with the collapse of the Soviet Union, when CocaCola hired him to lead its entry into the Ukraine market, as well as Belarus. It was a startup experience in a new nation with the support of a major corporation, and Stalowir spent five years building up Coke’s market presence successfully against the incumbent Pepsi.
Having leaned on the legacy name of Reed’s in his first year on the job, Stalowir is renewing that startup ethic as the company starts its second year in Norwalk with about 30 staff and plenty of room to grow, with the company reinvigorated with the buzz of the Moscow Mule, hemp and ginger shot efforts and more to come.
The company lost $7.7 million in the first six months of this year, but revenue was up slightly to $17.9 million during that period and Stalowir believes the company’s marketing efforts are about to pay dividends, including a billboard “takeover” of Times Square last spring.
“Reed’s should be the premier ginger company,” he said. “Ginger is a ‘super food’ — it’s great for you. … We felt like (investigating) the other areas we should be exploring to build on this.”