USA : Competition struggle of regional brewers

According to industry experts, it’s difficult that regional breweries like Pittsburgh Brewing survive in a market dominated by major producers like Anheuser-Busch, Coors, Miller and others. This point of view was shared by Pittsburgh Tribune Review on July 31.

"Very few regional brewers that sell the type of brands that Pittsburgh Brewing sells have been able to survive," said Eric Shepard, executive editor of Beer Marketer's Insights, a trade publication based in West Yyack, N.Y. "You can count them on one hand." Shepard said regional brewers are hindered by limited geographic reach and they often can't match the operating efficiencies or the advertising clout of the larger-scale producers.

"The regionals have it very tough because the big guys have all the marketing muscle," said Peter Reid, editor of Modern Brewery Age, of Norwalk.

Modern Brewery Age ranked Pittsburgh Brewing as the nation's 11th largest brewer based on its reported production of 372,000 barrels for 2004. That's far below the nearly 1 million barrels the company said it made when an investment group headed by Joseph Piccirilli acquired the company 10 years ago and pales in comparison to the more than the 103-million barrel production at Anheuser-Busch, 38.6 million at Miller Brewing and 22.6 million at Coors Brewing.

The publication lists Westmoreland County-based Latrobe Brewing Co., producer of Rolling Rock beer, as the nation's No. 8 brewer, with 1.05 million barrels. Latrobe Brewing is owned by Labatt International of Canada. Regional brewer D.G. Yuengling & Son Inc. in Pottsville, Schuykill County, has been successful is carving a large niche in the national market because of its rather distinctive taste, industry analysts said. That success is behind its ranking by Modern Brewery Age magazine as the nation's fifth largest brewery.

Pittsburgh Brewing's ability to innovate has contributed to its longevity, Piccirilli said. The company claims a number of industry "firsts, including the first snap-top can, the first twist-off reseable cap, the first light beer, and the first draft beer available in a can. More recently, it attracted national attention as the first regional brewery to use aluminium bottles on a large scale Iron City beer.

Production of the new packaging has "far exceeded expectations," said Ed Martin, spokesman for CCL Container Corp., a subsidiary of CCL Industries Inc., of Toronto, which makes the bottles at the company's can manufacturing plant in Hermitage, Mercer County. Without being specific, Martin said CCL has shipped "millions of bottles" to Pittsburgh Brewing in the months since its initial order of 500,000 bottles, which use metal supplied by North Shore-based Alcoa Inc.

In March, Pittsburgh Brewing expanded the use of the packaging for I.C. Light, with a limited run of bottles bearing the likeness of golfing legend Arnold Palmer. In June it announced plans for the likeness of former University of Pittsburgh and Miami Dolphins' football star Dan Marino to appear on Iron City aluminum bottles and cans to coincide with Marino's induction into the Pro Football Hall of Fame in August.

That's the kind of marketing that can help the company, said Paul Kelly, manager of Kelly's Beer Distributor on Brighton Road on the North Side. That's what they did in the 1960s and '70s when they used pictures of the Pittsburgh Pirates and Steelers," Kelly said. "It boosted their hometown image."

Kelly, whose company supplies PNC Park and many of the bars and restaurants on the North Side and parts of he North Hills, said Pittsburgh Brewing products still top his sales list, with about 22 to 25 percent of his business, but that figure may have been over 60 percent 20 to 25 years ago.

"We brought a new product (the aluminium bottle) to market in less than four months," said Piccirilli, explaining the company has be to more nimble that its national competition. The new packaging has helped Pittsburgh Brewing reach into a number of new markets, including parts of Florida, Iowa, Illinois, Michigan, New Jersey, North and South Carolina, Texas, Wisconsin and Washington. D. C. This was as well helpful in what concerns the attraction of new business in the region.

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