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Iron City Beer getting a new owner
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If the breathless anticipation building among denizens of regional watering holes has escaped your attention, here's the big news: Iron City Beer is getting a new owner.
The beer that has survived Prohibition and the imprisonment of three previous owners, that has labored under the misconception that it is exempt from paying its water and sewer bills, is about to become the ward of a new proprietor. Like the brewery's previous fiduciaries, its new owner will, no doubt, swear allegiance to the concept of restoring the golden lager to its rightful place in the pantheon of premium brews.
And no doubt, the new owner will mimic his predecessors and insist he means it.
Timothy Hickman, Iron City's leader since it emerged from bankruptcy in 2007, isn't talking about the pending sale.
Neither is the bruised brewer's purported suitor -- Uni-World Capital.
According to the New York City private equity firm's website, it focuses "on making leveraged buyout and growth equity investments in lower-middle market companies." Uni-World's previous investments include: Evenflo Co., which makes breast pumps, car seats, strollers and other infant-related products; True2Form Collision Repair Centers; and Answer Financial, an online insurance broker.
Coming after two administrations that brought considerable knowledge of the waste-hauling industry to the tap room, perhaps Iron City will benefit from Uni-World's diversified portfolio.
Reports of a possible sale to Uni-World have been circulating for months. Over that time, Iron City sales have continued sliding and are currently below 100,000 barrels annually, according to Cris Hoel, an attorney who represents Iron City wholesalers and retailers as well as competitors. Mr. Hoel said that represented about 10 percent of its peak production of 1 million barrels.
While no price tag has been put on the transaction, increasingly tepid sales generally do more for buyers than sellers. There are exceptions to that rule; Iron City's previous buyers have displayed a determined proclivity to overpay because they do not understand the beer business.
If the transaction is consummated, Uni-World faces the challenge of resuscitating a brand severely damaged even before Mr. Hickman's crew arrived.
The highlights of Iron City's current stewards' reign include moving production of the Lawrenceville beer to the Latrobe brewery abandoned by Rolling Rock -- after repeatedly pledging to keep it in Pittsburgh. Mr. Hickman, formerly chief financial officer of a Canfield, Ohio, physical therapy firm, characterized the decision to abandon Pittsburgh as "the best decision possible to maintain the integrity of our brand."
Elsewhere on the integrity front, Mr. Hickman upheld the brewer's recent legacy of dragging its feet when it comes to complying with agreements it negotiates with the Pittsburgh Water and Sewer Authority. After agreeing to terms in June, the brewery failed to make a $450,000 payment due on Sept. 18 and a $200,000 payment due Dec. 31.
Evidently, nothing adds more to the enjoyment of an iconic Vitamin I than spicing it up with a not so subtle aftertaste of mistrust.
Dealing with the repercussions of the current regime's community relations offensive will be only one of the challenges facing Iron City's new owners.
The beer market of recent years is a story of two pies. The first, dominated by national brands, isn't getting any bigger because sales are stagnant. The second, dominated by craft beers, is getting bigger as sales increase every year.
Jeff Bearer, 34, the Cranberry-based operator of the Craft Beer Radio podcast, identified three possible marketing strategies, two based on marketing the brand and one based on reformulating the beer. The new owner could try to out-market what Mr. Bearer referred to as "fizzy yellow beers" like Michelob Ultra or Coors Light. Or it could position itself as an "ironic hipster beer" such as Pabst Blue Ribbon ... "as in, 'Look, I'm wearing ugly pants and drinking bad beer because I'm hip,' " Mr. Bearer explained.
His personal preference, which he admits is not based on any knowledge of brewing economics, would be to keep the brand and reconstitute the beer. He suggested "Iron City Stout" and "Iron City Pale Ale" as possible reformulations.
"It's all about growing the pie, not getting a piece of a smaller pie," Mr. Bearer said.
Whether this sale can be described as one investment group with a short-term plan being replaced by another investment group with an equally short-term plan remains to be seen. There is nothing wrong with that as long as the product is in better shape when you sell the company than it was when you bought the company.
Try finding someone sober enough to argue that's the case with Mr. Hickman's group. There are indications Uni-World's management will be more beer savvy.
Mr. Hoel, who represented Iron City in better times, said wholesalers and retailers were optimistic the long-suffering beer will see the better days it deserves.
"There may be some opportunity left," he said. "It's hard not to want these brands to turn around."
First Published April 3, 2011 12:00 am
