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New Iron City owners all in

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Wednesday, Nov. 30, 2011
 

Seven months into operating Iron City Brewing Co., Edwin Lozano is confident the company's new ownership group is turning around Pittsburgh's iconic beer brand.

Lozano, president and CEO of Iron City, predicts the company will boost production by 17 percent next year compared to 2010 production under the previous ownership. Lozano is so confident, in fact, that even before the first bottle of beer is sold in 2012, he figures Iron City will top its own sales target.

"We realize that is an aggressive target, but I'm confident we will beat it," said Lozano, who came to Iron City with 15 years of beverage industry experience in sales and marketing and operations with Miller Brewing Co., Pepsi Cola and Coca-Cola.

Lozano declined to specify how much beer Iron City is producing this year at the City Brewing Co. plant in Latrobe.

Iron City was ranked 33rd among the nation's top 50 brewers, based on 2010 beer sales volume, according to the Brewers Association, a trade group in Boulder, Colo. Iron City produced about 90,000 barrels of beer in 2010, the last year under former President Tim Hickman, said association director Paul Gatza.

In 2009, before the Iron City shutdown production in Lawrenceville, it produced 165,000 barrels at the old brewery, Hickman said then. In the early 1980s, the brewery produced about 1 million barrels when the Iron City brand was strong and the IC Light brand was introduced, said Chuck Puckett of Peters, a beer historian.

Lozano's goals for Iron City are ambitious, especially in light of industry statistics showing that beer production nationwide in 2010 fell to 212.5 million barrels, from 214.0 million barrels, according to the Beer Institute, a Washington, D.C.-based trade group.

What works in Iron City's favor is that in its key Pennsylvania market the per capita thirst for beer — 21.7 gallons last year — has remained steady during the past five years. More beer was shipped to Pennsylvania distributors last year — 1.5 million barrels — than any state other than California, according to the Beer Industry, a Washington, D.C.-based association.

Lozano says some of Iron City's growth may come from acquisitions, and the company may get into the craft beer business.

"We are looking at quite a few. Some are national and two have breweries," Lozano said. The company can't discuss details or timing for any deal, he said.

While a lot of craft beer brands might be available for sale, "when you get to the bigger offerings, there's not that much" for sale, said Benj Steinman, editor of Beer Marketer's Insight, a trade publication.

Iron City Brewing's owners, Uni-World Capital L.P., a New York private equity firm, has money to expand its beer business holdings, Lozano said. It acquired Iron City's brands and assets in April from an ownership group once led by Connecticut equity fund manager John N. Milne.

Milne's ownership group bought bankrupt Pittsburgh Brewing Co. in September 2007, when there were doubts the brand could survive. Before Milne went to federal prison in March 2010 for conspiring to falsifying the books and records of an equipment rental company, his ownership group closed the historic but outdated Lawrenceville brewery in July 2009 and moved beer production to the City Brewing Co. plant in Latrobe.

Unlike previous owners and managers, who had experience running waste hauling, equipment rental and physical therapy businesses, Lozano is a beverage industry veteran who says the brand's previous problems were more linked to lack of experience in ownership and management.

"The brands and what they represent are strong and viable," Lozano said.

To make Iron City more visible, Lozano said he is raising Iron City's profile by increasing its marketing expenditures — more than four times in 2011 compared to last year.

That's good news says Ken Vecenie, owner of Vecenie Distributing Co. of Millvale and an Iron City master distributor. He is pleased with the new owner's knowledge of the business and their increase in spending on the Iron City brand.

"That hasn't been done for a long time," Vecenie said.

"To a certain extent, (marketing is) more important for a small regional brewery. Without it, we would get lost," compared to the massive advertising budgets of the national brands, Lozano said. He wants to go 'head-to-head" with the national brands but only in Iron City's core market of Western Pennsylvania, Ohio and West Virginia.

"Mainstream beer is a marketing game. It's hard for the regionals to go toe-to-toe with the big guys," said Steinman of Beer Marketer's Insight.

Lozano said he wants to expand Iron City's reach to the eastern seaboard, and down to Florida. If a venture to the South is successful, Iron City could add production at City Brewing's Memphis, Tenn., brewery, he said.

Vecenie says that so far, Iron City is "doing quite well. Sales are up over last year, and they had a successful launch of IC Light Mango," Vecenie said.

IC Light Mango was Iron City Brewing's first major marketing initiative under the new ownership. The fruit-flavored beer was inroduced in June and was so well-received, it had a second run in September, Lozano said. Iron City plans to resume production of beer in the spring.

Iron City also introduced another new beer, Iron City Amber Classic Lager, which recently reached the distributors, Vecenie said.

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