Iron City vision: Start local, go global

Joe Napsha
| Thursday, April 7, 2011

The new owners of the Iron City beer brands in Pittsburgh promised on Wednesday to resurrect the iconic beer by rebuilding relationships with its loyal customer base, expanding its sales territory nationwide and beyond and increasing marketing.

"We're going to refresh the Iron City and Iron City brands to make sure they are relevant to the consumers, and we will invest money to ensure they can clearly see where the new Iron City brand is going," said Edwin R. Lozano, 43, who will be Iron City Brewing Co.'s new president and chief executive officer.

Uni-World Capital L.P., a New York-based private equity firm, and its affiliates bought the Iron City brands for an undisclosed amount of money. The deal closed on March 29 and does not include the property where the former Iron City brewery sits in Lawrenceville.

"This transaction is about restoring the brewery's legacy and to drive future growth, and we intend to invest future cash flow back into the business," said Christopher P. Fuller, managing partner of Uni-World Capital.

Lozano, who spent six years with Miller Brewing Co., leading a New York City sales team, said the new owners have the money to put a "tremendous investment" in Iron City's other brands, including American, Old German, Augustiner and Olde Froth 'n Slosh.

As for marketing the Iron City brands, Lozano said they are conducting research to determine what beer drinkers want from Iron City, and that will drive a marketing campaign next year.

While he has not led a regional beer brand, Lozano said he will take the "best practices" he learned at Miller and apply those to a smaller market. He spent seven years as a food service director for PepsiCo International, leading a sales organization that spanned 190 nations.

The new owners are planning different beverages, such as a craft beer, Lozano said. He envisions a nationwide market for Iron City brands, and even a global market that includes China, Russia and Chile.

"Job one will be to resuscitate a relationship with consumers in the region," said Cris Hoel, an attorney who represented the former Pittsburgh Brewing Co. in the 1980s and early 1990s. That relationship with the customers has suffered from "20 years of failure" at the brewery, Hoel said.

"Our pillars were the sports teams, the local distributors and the unions," Hoel said.

One of the wholesale distributors, Michael Morelli of Michael Morelli & Sons of New Castle, said the new group can succeed by rebuilding its customer base and doing the right marketing. That includes sponsoring Pittsburgh-area events, he noted.

But rebuilding a regional beer that had its heyday decades ago will be no easy task. "Not many have survived," said Eric Shepard, executive editor of Beer Marketer's Insights, an industry trade publication in Suffern, N.Y.

Lozano did not reveal current production levels for Iron City brands, which are brewed at the City Brewing Co. plant in Latrobe, but he predicted single-digit growth this year and double-digit growth in 2012. The company has 17 employees, and Lozano anticipates adding about five more by year's end.

Timothy Hickman, the former CEO of Iron City's Brewing, said he was confident the new ownership "will grow the brands."

His ownership group purchased Iron City out of bankruptcy in September 2007 and is leaving it in better condition than when they bought it, Hickman said.

"The goals have been met," said Hickman, saying his investment group had intended to keep the brewery for three to four years.

Hickman will work as a consultant during a transition period that may last a few months.

During his tenure as president, Hickman closed production at the historic 148-year-old Lawrenceville brewery, saying it was too costly to continue to operate an antiquated facility. That controversial move to the City Brewing plant in Latrobe cost about 50 jobs.

Hickman said several potential buyers are interested in acquiring the Lawrenceville site.

Lozano said any debts incurred by Iron City Brewing's former owners would not be assumed by the new ownership, including outstanding bills from the Pittsburgh Water & Sewer Authority.

The authority received a $450,000 payment in January to partially settle a $1 million billing dispute, but Hickman said a remaining $200,000 payment depends on the sale of two fermentation tanks. The sale has been delayed by negotiations with Pittsburgh's Historic Review Commission, which must approve alterations to the building so the tanks can be removed, Hickman said.

Yesterday, the commission put off a decision allowing removal of the brewing tanks. Hickman said he plans on getting the tanks out of the building the same way they were put there in the 1950s -- with the facade of the building removed. He said the building would be repaired once the tanks are removed.

Members of the commission said they are concerned that will damage the building and asked for a structural engineer to examine it.

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