Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 17, 1993 TAG: 9301150395
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: DWAYNE YANCEY STAFF WRITER
DATELINE: MITCHELLTOWN LENGTH: Long
THIS BEER FOR HIRE
TED REUTER once aimed to be "the Colonel Sanders of bugdom" by selling organic pesticides he mixed up by hand. The fame eluded him, but the fortunes did not. Now this entrepreneur's entrepreneur is setting up a brewery in Bath County and carving a niche in the beer business.
Ted Reuter made his first million digging up grubs, grinding them in a blender and peddling the powdery remains on weekends to homeowners in Northern Virginia's suburbs. The product was touted as a way to immunize lawns against Japanese beetles for 10 years at a stretch.
"Jolly Roger," he called his business, and what began as a lark soon became so huge that corporate chieftains came calling, with their checkbooks ready.
So, by the crazy logic of Ted Reuter's world, it kind of naturally follows that when he plunged into his next big business venture, he'd turn to brewing beer, and doing it in an abandoned schoolhouse in Bath County.
After all, the 54-year-old Reuter has always been the unpredictable sort, the kind of fellow who operates by the philosophy that "man needs a complete change every 10 years," the type of guy that former colleagues invariably call "a character."
When he was a White House correspondent for Mutual Broadcasting Service in the early 1970s, he moonlighted as a butcher. "You have to have a sideline," he explained.
When a routine assignment to cover an Agriculture Department research lab led to the discovery of an unused formula that wipes out Japanese beetles for years, Reuter turned it into a literal scoop, mixing up the formula himself and going into business.
When he cashed in the millions he made from selling his pesticide company, he up and moved to New Zealand, where he tried his hand at starting a science museum.
He still keeps a human brain in a jar on his desk.
And when he's not pushing his new beer business, he's talking about marketing another natural bug repellent, this one distilled from a tree in India. He's already got consultants working on it, he says. Or maybe he'll resurrect his Japanese beetle powder, now that the company he sold went under for unrelated reasons. He says he's got consultants looking into that, too.
Suffice it to say that Reuter is a natural hustler. It's that, as much as his 241-year-old family recipe, that is now the key to his beer business. "He's got energy-plus," says Al LaVie, a former colleague at Mutual. He's got something else, too, believes another former Mutual colleague, Dick Rosse. "He's got a Midas touch. I'm just awestruck by the guy."
Reuter has a knack for spotting tiny openings in a market that big companies didn't think were even worth cracking.
In the pesticide business, it was the organic angle. "The big chemical companies wanted to use chemicals to control Japanese beetles," Reuter says, "because they were a lot easier to make, a lot more profitable and you have to keep reusing them. The one bad thing about Milky Spore as far as chemical companies were concerned, it only needs one application and stays in the ground for 10 years." But that's why homeowners loved it, and the small niche in the market was big enough for him.
Now, with beer, Reuter is doing what the big breweries didn't think of - or didn't want to fool with. He's selling his beer directly to restaurants for them to sell as their own brand. There are other breweries, mostly small, regional ones, that also produce such "private label" beer, but apparently none that do exclusively that, according to industry trade groups.
In the three years Reuter Brewing Co. has been in business, he's signed up 156 restaurants in Virginia, North Carolina and the District of Columbia, where he sells about 1,100 cases every month. At $15.95 per case, that's just about $250,000 a year in gross revenues. That may be big money to him and Reuter says he's running in the black. But compared to companies such as Miller Brewing and Anheuser-Busch, Reuter's fledging operation is definitely small beer.
Beer Marketing Insights newsletter says the big beer companies control 99.5 percent of the nation's beer market. But that remaining sliver is a growing field, nonetheless. The past few years have seen an explosion of so-called "microbreweries" - from about 45 in 1987 to more than 300 today. Most of those are producing speciality beers, often available at a single restaurant, such as Roanoke's Blue Muse, now The Lone Star Cantina.
Reuter just happens to have figured out a unique way to sell his, one that enables him to avoid the huge cost of advertising because the restaurants themselves push the beer. Reuter dreams someday of going national, and making private label beer at restaurants, if not as common as Miller and Bud, at least something more than a novelty.
The executive director of the Brewers Association of America, a New Jersey-based trade group of regional breweries, thinks Reuter just might be able to pull it off. "He's a very smart guy," Henry King says. "He may well be able to. Without any question, there's a market out there. But you've got to be a marketer, though."
`No one believes it'
None of this may have happened if Reuter hadn't gone out to a Agriculture Department research lab in Maryland to cover a story in the early 1970s.
He was content to be a Washington radio journalist until he met a scientist whose life's work had been finding natural ways to repel Japanese beetles. Specifically, the researcher had found a way to take the beetle-killing milky spore bacteria, which flourish inside the bodies of ordinary grubs, and turn it into a powder suitable for spreading on lawns. The license to market the stuff was available for free, but the big chemical companies weren't interested.
Only a small lab in New York was making it. Reuter, with an eye toward picking up some spare change, plunked down $1,700 to buy 12 barrels. Then he hired some teen-agers to go door-to-door on weekends. In six months, Reuter's "Jolly Roger" pesticide service had made $30,000-plus, more than he was making a year at Mutual.
But when Reuter ran out of Milky Spore powder and tried to re-order, the lab told him months would pass before it made any more. Fortunately, Reuter's wife, Mary, had been a chemist before she became a stay-at-home mother. They decided to mix up Milky Spore themselves.
The hardest part was finding the grubs. The Reuters would get up at dawn, drive to a sod farm, and spend the morning on their hands and knees plucking up the grubs left exposed when turf farmers rolled up the sod like carpet.
The easiest part may have been bluffing and blustering his way through the new government regulations being promulgated about pesticides.
The free license from the Ag Department to produce Milky Spore didn't include the go-ahead from then new Environmental Protection Agency to actually sell it. Reuter paid EPA regulators a visit.
"I said `will you approve this Milky Spore?' They said `don't you know it takes millions of dollars of research data to prove that it doesn't harm anything?' I said `I don't know anything about all of that stuff. All I know is this was developed over at the Agriculture Department and there's a little company making it in New York but they don't make enough of it. This is something you fellows should be extremely proud of, because it protects the environment, that's why EPA was created, and if you guys don't give me a registration for this product, I'll hold a press conference at the National Press Club and you'll have to tell the world why you won't allow this.'"
At that point, Reuter says he tossed his press credentials down on the desk. "They picked them up and looked at them. They went into a huddle and came over and said `Mr. Reuter, you're right, a lot of us were with USDA when Milky Spore was being developed. We're going to give you your registration, but just remember, this is a special favor of you. That was it, and I walked out of there with the registration in my hands, and no one to this day believes it."
Reuter left radio, turned his weekend sideline into Reuter Laboratories that by the early 1980s employed 65 people and was doing $1.7 million a year in sales. Calling on his radio background, Reuter hit the talk show circuit around the country to promote the concept of organic pesticides. But Reuter lacked the money necessary to expand the enterprise and in 1984, sold out to a Detroit company for $2.2 million. The new owner promised to keep Reuter on as a spokesman and turn him into the "Colonel Sanders of bugdom." The Washington Post featured Reuter in a story headlined "Grubbing a Fortune."
Instead, in the late 1980s, Reuter sold his place in Northern Virginia, bought a Bath County hideaway outside Hot Springs - then promptly shipped out to New Zealand, with his wife and six kids.
Financially, Reuter didn't do badly for himself in New Zealand, either. For a time, the banks there were paying him 27 percent interest. "As it turned out, I made a little money on it," he says.
`Gee, you can't do that'
When Reuter came home after his year-and-a-half sabbatical Down Under, he bought - and later sold - a weekly newspaper outside Fayetteville, N.C., turning a tidy profit. He also picked up an understanding of the printing business. So when he came back to Bath County in 1991, Reuter looked for a way to combine his newfound printing expertise with the old beer recipes passed down from his German ancestors who ran a "brewhaus" in 1752.
First, he hired a marketing team to sound out restaurants about private label beer. "Some restaurants said `gee, you can't do that.' Others said, `gee, you mean we can have a beer with our own name on it?' Some wanted to taste the beer. Most liked it."
So he plunked down $354,000 to get started. Reuter found a small brewery in Pennsylvania to brew his beer until he can get his own operation set up in Bath County sometime this summer. And for the past three years, he and his six-employee staff - which at time has included three of his oldest kids, now in their 20s - have been making the rounds.
Reuter's pitch to restaurateurs is that private-label beer is a way to distinguish themselves in the marketplace. "What makes him different from the restaurant down the street?" Reuter says. "They're all selling Budweiser. Now he has a chance to offer something no one else has."
Restaurateurs such as Bob Pollitt, who runs Sgt. Pepper's British Pub in Roanoke, buy both the pitch - and the beer. "When people ask for Miller Lite I say how about `Sgt. Pepper Lite.' They say `oh, you brew it in the kitchen?' It just fits right in with the decor." It helps, Pollitt says, that Reuter's "is an excellent beer. I've got regulars that like it" - and now ask for it by name.
Reuter has placed his beer at such prominent restaurants at The Tobacco Company in Richmond and King Street Blues in Alexandria. Most of his customers are in Richmond and Northern Virginia.
But Reuter finds he does best at small restaurants that emphasize their atmosphere.
He recalls one big restaurant in Richmond that ordered 30 cases and was never heard from again. Ever the marketer, Reuter paid a visit, incognito. "The waitress came over and I asked what kind of beer do you have? She went through all the options, Miller, Miller Lite, Miller Dry, Bud Lite, Bud Dry, Michelob, on and on she went, 30 different kinds.
"She never once mentioned her own. I said I heard somewhere you had your own beer. She said `you know, I think maybe we do.' Well, I wanted to jump up and slap her in the face. But you know, waitresses come and go all the time and at a big establishment, the owners are gone, too. So in those places, it just doesn't work."
So Reuter sees the key to expansion as lots of shoe-leather work selling additional small restaurants to carry his - their - beer.
\ Company: Reuter Brewing Co.\ Located: Mitchelltown, Bath County.\ Founded: 1990.
About the beer: Reuter makes three types of beer. "The dry light is like Miller and the dry regular is like Michelob," Ted Reuter says. There's also a heavy, sweet European-style beer that he likens to Tuborg.
What it's called: At most places, the beer is simply named after the restaurant that sells it. At others, there's no limit to creativity, except the scrutinizing eye of the federal Bureau of Alcohol, Tobacco and Firearms, which has to pass judgment on every label.
"They got after us for using the phrase `bold taste' one time," Reuter says. "I said what's wrong? They said, `oh that implies strength.' Lowenbrau had `strong character.' I said `how can you deny us `bold' for implying strength when Lowenbrau is actually using the word `strong'?"
So at King Street Blues restaurant in Alexandria, it's Hog Light, in honor of the Washington Redskins offensive line of "Hogs," - or at least was, until a lawsuit forced a change to Pig Light. At Tully's in Harrisonburg, it's Fat Lady Beer. At the Sign of the Whale in Alexandria, it's Whale Beer. And at Bad Water Bill's restaurant in Strasburg, it's Bad Water Beer. "The more outrageous the name, the more it goes over," Reuter says.
\ Where it's available in Western Virginia:\ \ Roanoke
Montano's International Gourmet
Sgt. Pepper's British Pub
W.R. Brews (The Official American Beer)\ \ Blacksburg
Arnold's
Buddy's\ \ Lexington
The Palms\ \ Covington
Cucci's\ \ Monterey
Highland Inn (Black Sheep Tavern Beer)\ \ Waynesboro
Purple Foot
Scotto's
Keywords:
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