Four-Step Strategy Aims to Put Iron City on Top

Article excerpt

Tim Hickman leaned against a crate of beer in the Iron City brewery warehouse last week and with a sweep of his hand gestured to the thousands of cases stacked to the rafters.

"Two months ago, this was empty," said Hickman, the new president of the new Iron City Brewing Co. "We could have played a football game in here."

The brewery was bankrupt and unable to pay for ingredients, halting production for five weeks in the fall, he said. Company officials were forced to send letters to regional beer distributors explaining why they could not replenish sold-out supplies of Iron City and its other products, including Iron City Light and Augustiner.

Part of a new ownership group that took over the historic Lawrenceville brewery in September, however, Hickman has settled with creditors, cut costs and re-started beer production.

He also has overseen the development of a marketing strategy that he believes will help the 147-year-old brewery turn a profit for the first time since the turn of the century.

To do so, Hickman said, he must convince the beer-drinking population that Iron City's product has not declined, despite its persistent financial problems.

"The quality of Iron City has not changed. It is and always has been a premium beer," he said. "But the perception of the beer during the bankruptcy deteriorated. The consumer assumed that the quality of the beer was going down."

To convince beer-drinkers otherwise -- and to assure continued profitability and stability -- Iron City will make four major changes:

Upgrade the facility on Liberty Avenue to assure consistent production.

Lila Prezioso, a South Side marketing consultant contracted by the brewery, said market research shows that regional beer drinkers want the brewery to succeed.

"But they don't want to be guilt-tripped into buying the product," she said. "They want a consistent product. They want the price to be stable, and they want to know that it will be in the store."

Iron City expects to produce more than 233,000 barrels of beer in 2008. Last year, the brewery turned out about 172,000 barrels. The 2008 projection would be the most beer brewed at Iron City since 2004.

Stop competing with beer-producing giants.

"We can't compete with them, so we won't try," said Tony Ferraro, vice president of sales and marketing. "We're a regional beer."

That means Iron City will no longer try to match the prices of, say, Budweiser, Miller and Coors. In the next few weeks, drinkers will pay $1 to $1.25 more than they do now more for a case of Iron City, Ferraro said.

In addition, Iron City will launch a new marketing campaign in 2008 tied closely to the celebration of Pittsburgh's 250th birthday. The goal is to promote Iron City as the "beer here," Ferraro said.

Saturate the bar scene.

Iron City struggles to get into many local bars because they use outdated Hoff-Stevens kegs, Ferraro said. Bar owners prefer the more modern Sankey kegs, in part because they are slimmer and can more easily fit under the bar, Ferraro said.

The brewery is investing $1.4 million to replace its 15,000 kegs. The new kegs will be in bars by April, Ferraro said. The goal is to have Iron City flowing in every bar in the region.

Redesign packaging and labels.

That means out with the old -- and "ugly," according to Ferraro - - blue-and-gold Augustiner boxes, cans and bottles, and in with an amber-colored scheme similar to its original design.

In addition, the retro silver-dominated label of Iron City Light will be replaced with a more modern black-and-gold color scheme and design.

One thing that won't change, however, is the "iconic" red and white logo of Iron City beer, Hickman said.

But the label will get a new slogan: "The official beer of the Pittsburgh Nation. …