American Breweriana Journal May/June 2006
Pittsburgh Brewing Company After Repeal
by Rich Wagner
In November 1932, "Gus" Fritz was interviewed by the Pittsburgh Press about his views on the impending return of beer. The 70- year-old German had found a job at Frauenheim & Vilsack's brewery, ending up as brewmaster. He considered his masterpiece to be formulating Tech Beer before prohibition and said, "I won't say that the old 'braumeisters' knew everything, I was a brewer from the time I was in my teens and I was still learning when I left, but they might know enough to brew a mighty fine kettle of beer that will put home brew to shame. Naturally, when good beer comes back it will be in demand and will make its own popularity. If it isn't taxed to death, it will find a market. ... I foresee a demand for light beer, not quite as high in alcoholic content as the beer of pre-prohibition days. A straw colored beer, with from 3.5-3.7 alcoholic content by weight, will be popular in my opinion, with the younger generation of beer drinkers."
After repeal certain technological and economic realities rendered the advantages enjoyed by the syndicate breweries of the Independent Brewing Co. of Pittsburgh (IBCP) and the Pittsburgh Brewing Co. (PBC) earlier in the century moot. Fully a third of the PBC branches had been built in the final decade of the nineteenth century and were considered modem plants in their day, but thirteen years had elapsed. Despite the fact that it had modernized and maintained its most productive branches prior to prohibition, PBC would reopen only three of its breweries after repeal: Iron City, Eberhardt & Ober, and Uniontown branches. The biggest emerged from the ashes of the IBC as the Duquesne Brewing Co., which opened six plants but closed half of them within a year. Other competitors included Sharpsburg's Fort Pitt Brewing Co., with a modem plant built in 1906, and Jeannette's Victor Brewing Co., built in 1908.
The post prohibition period was a highly competitive time for the survivors. The depression had taken its toll on the country's spirit and the return of beer helped bolster that, but the brewing industry was about to experience some of the most profound challenges it had ever faced. An entire generation had not known "legal beer," and it would take years before consumption reached pre-prohibition levels. The package became nearly as important as the product as new containers such as the beer can emerged, and advertising would become even more important than that. And brewers faced high taxes on beer, roughly half the wholesale price!
In addition to its unprofitable Tech Food Products ice cream business, PBC was operating at half capacity and paying heavy interest on a funded debt dating back to the founding of the company in 1899. In contrast, Duquesne's bondholders waived sinking fund interests for three years after repeal and Fort Pitt and Victor Brewing Co. were debt free. PBC's competitors were all making profits.
Commodore John Winslow Hubbard had purchased lots of PBC stock prior to repeal making him the largest shareholder, and the company looked to him to tum things around. At 70, the indefatigable Hubbard, known as the "Shovel King," was one of Pittsburgh's biggest tycoons and ran sixteen corporations.
But he had his work cut out for him. The price of grain went up 50% due to a drought, and PBC was suffering from an image problem that resulted when the company rushed "green" beer to market at the dawn of repeal. He dumped $90,000 worth of bad beer, purchased new packaging equipment, and took out space on a thousand billboards containing a pledge, signed by him, to give Pittsburghers the best brew they ever tasted.
In his first year, PBC showed a $100,000 profit, but this shrank to $20,000 after absorbing losses from the Tech Food Products division. But due to competitive pricing and high grain costs, the company's rivals saw their profits decline. The following year, PBC earned a profit of just over half a million dollars with $6.6 million in sales, a 40% increase over the previous year. Hubbard reported to stockholders: “We are pleased to report for the first time since repeal all of your brewing plants have been operated at a profit." That included Tech Food Products! Having put the company on firm footing, Hubbard left his post the following year.
By the late thirties there was a war brewing in Europe and the government started rationing materials. Brewers had difficulty getting raw materials such as barley, com, rice, and grits since anything food related was tightly restricted. Coal, oil, and gasoline, metal for cans and caps, copper for kettles, even packaging equipment was hard to get during the war effort. 1\venty percent of the brewers production was designated for sale to the military causing beer shortages among the civilian population, and workers were being drafted, which decimated the labor pool. After World War II there was a famine in Europe and barley continued to be rationed. The Korean Conflict meant a continuation of price controls and rationing.
After the war there were coal, steel, and brewery strikes ahead. The breweries in Pennsylvania were involved in a rivalry between Teamsters AFL and Brewery Workers CIO unions, and when strikes shut down local breweries, beer from St. Louis, Milwaukee, and elsewhere came in to fill the void.
In 1948 S.E. Cowell was president of Iron City and implemented a $4.9 million modernization program which included stock house expansion, improved filtration systems and a more efficient bottling line. He said at the time, "Iron City's success has always been, and will continue to be, a combination of efforts....Competition forces the brewing industry to develop new equipment, new processes.... [and] when science discovers something pertinent to brewing or when engineers develop something new for breweries, Iron City will be among the first with it."
By the early 1950's the so-called "Beer Wars" began in earnest and the nation's shipping brewers emerged with the largest advertising budgets and economies of scale. Television revolutionized the way beer was sold. Local breweries sponsored television and radio shows but competition was fierce. Among the "Big Three" in Pittsburgh's market, Fort Pitt acquired Victor Brewing Co. in Jeanette in 1941, and by 1949 was selling more beer than Duquesne. PBC closed its Uniontown branch in 1948, then Eberhardt & Ober branch in 1952. Duquesne closed its plants in McKees Rocks in 1951 and Carnegie
in 1952. PBC spent $6M modernizing their plant. The following year they added a Sales Promotion Department to remain competitive. Fort Pitt closed its Jeannette branch in 1955 before going out of business two years later.
So, by the 1960's there were only two breweries left in Pittsburgh to slug it out. PBC worked with Alcoa to develop the industry's first "Snap Top" can, which it introduced in 1962. Within the year the company's canned beer sales were up over 200%. Distributors and tavern owners hailed it as the biggest innovation since the invention of the beer can. The company also introduced the "Tub of Beer," a unique 24-can package made of waterproof corrugated paperboard which held ice to chill beer for picnics and parties. These two innovations were among twenty-three featured in the trade magazine Packaging Design as "Top Packaging Ideas of 1962."
The following year PBC introduced Iron City draft beer in cans to compete with Duke's draft beer in bottles. To compete with the snap top can, Duke introduced the "Lift-Top" bottle. In 1965 another "Iron City First'' developed in conjunction with Alcoa came in the form of the resealable, no deposit quart bottle.
Duquesne and PBC discussed a merger in 1965 but were prevented by anti-trust legislation. PBC had earned profits for thirteen years, a record $1.4 million in 1966, but by 1972 was losing money. In 1971 there was a boycott of Iron City Beer sponsored by the NAACP who exerted pressure to get PBC's workforce more diversified. The company responded, but there was a "white backlash" boycott which further hurt sales. These troubles were exacerbated by rising grain prices and inflation.
Iron City Commercial’s song lyrics:
Drink, Drink the beer drinkers beer Iron City Beer i.s the beer drinkers beer: Beer after Beer after Beer after Beer after Beer after Beerafter Beer after Iron City Beer.
Iron City Commercial:
To the tune of Scotland the Braue: "Come all ye lads and lasses. get the beer that none surpasses. Buy Tech and try it, Tech! Tech, the bonnie beer."
Bob Prince, announcers for the Pirates: "Crack open a frosty cold bottle of Iron City Beer."
One of PBC’s more comical innovations was the introduction of its "Olde Frothinoslosh" brand which started as a response to KDKA disc jockey Rege Cordie who aired a series of zany commercials for the fictitious "Pale Stale Ale for the Pale Stale Male." PBC packaged 500 cases of Iron City Beer with "Olde Frothingslosh” labels for friends of the company for Christmas in 1954. The next year the brand "went public" and quickly sold out. In 1962 the brand was being marketed as far away as Washington, D.C. Then in 1968 cans of "Olde Frothingslosh" were introduced featuring "Miss Frothingslosh" a 300-pound go-go dancer named Fatima Yechburg who advertised the beer "so light the foam's on the bottom ... made with hippetyhops on the banks of the Upper Crudney in Lower Slobbovia...."The brand continued on into the late 1970s and the cans adorn many a collection.
In 1972 Duquesne shut down following a long strike and sold their brands to Schmidt's of Philadelphia. Iron City was the last man standing in the fight. The regionals were dropping like flies and from 1965 to 1975, 100 out of 150 breweries were out of business.
In 1976 PBC's new chairman, George L. Pfeil reported the company's first profits in over five years after a loss of nearly $1 million the previous year, which he attributed to a no increase wage package, job cuts (450 employees down from over 600 in 1972), a lower inflation rate, and new equipment. PBC had just opened a $2.8 million warehouse and installed high-speed bottling equipment in order to improve efficiency. The brewery was producing 60% of its capacity. He also said the company would have to sell 1 million barrels a year to remain profitable. In order to do that he increased the company's advertising budget by 25% bringing it to $2 million. President John Slais said the company was struggling against increasing pressure from national breweries who considered the Pittsburgh market a "plum." In response, he said PBC's advertising would be directed at the youth market to boost sales, implementing a marketing strategy based in "positive realism."
Over the years PBC, like other struggling regionals around the country did what it could to survive. It acquired the labels from Cumberland's Queen City Brewing Co. (MD 124) and the August Wagner Brewing Co. in Columbus (OH 156) to gain market share.
To capture the 21-38 age group, the brewery introduced Sierra, a supposedly "hip" brand and capitalized on the Robin Hood Cream Ale, the Ohio brand which was popular with the college crowd, as well as Mark V, a low-calorie beer that didn't do as well. Hop N'Gator, a mixture of beer and Gatorade was a forerunner of today's "malternatives." PBC also began making malta, another strategy that proved successful for more than one regional brewer.
PBC had something else going for it. Only 20% of the beer sold in Pittsburgh was from national brands. PBC still had a 37% market share. The company was producing 900,000 barrels a year, two thirds of which was sold locally. And while its price advantage over bigger brands may have partly explained this market share, it had something more to do with tradition and local pride. Iron City Beer was still sold in locally produced steel cans after most breweries had switched to aluminum. And PBC was the only brewery permitted to use images of Pittsburgh's sports teams on its labels and advertising through a special agreement with the State.
In the hey-day of can collecting, Pittsburgh seemed to be coming out with a different can every week (over 40 between 1971 and 1977). They also did a considerable business with private labels, notably the Oyster House, Seven Springs resort, and two food chains in Ohio.
William E Smith, Jr., was named president of PBC in 1978 and is credited with ending a $4.9M losing streak from 1972-1978 with the introduction of I.C. Light. By 1980 I.C. Light accounted for 70% of the light beer sold in the area and together with Iron City Beer the two brands accounted for 30% of the beer sold in Pittsburgh.
Smith became legendary by appearing in the company's television commercials and making countless public appearances to promote the brand. He brought in a new packaging manager and it introduced a plant modernization plan to improve efficiency. But mostly, he increased production to the one-million-barrel mark in 1981 for the first time in a decade. Demand had pushed the brewery so close to its capacity that the company reduced its distribution area.
Smith considered franchising the I.C. Light brand to meet demand. He cut hops in Iron City Beer by 20% to make it more mainstream, but even with the reduction Iron City Beer still had 15% more hops than national brands. He told a reporter, "We use Pittsburgh steel, glass, cans, cartons and labels-even a Pittsburgh advertising and public relations firm. From start to finish, Iron City is a hometown product." He started a series of commemorative cans that linked the brewery to the successes of the Pirates, the Steelers, and Pitt's football team. Smith told stockholders that PBC had "turned the corner" and at the end of the year he moved to Milwaukee where he took on even bigger challenges at Pabst Brewing Co.
PBC was the nation's tenth largest brewer, one of 36 remaining independent regional breweries, and in 1983 turned a $3.4 million profit. The following year a $7 million capital improvements program was implemented. They began contract brewing Samuel Adams Beer for Boston Beer Co. and were a primary producer of that brand until 1999. Like many other regionals, contract brewing led to PBC introducing their own all malt product, I.C. Golden Lager.
In 1986 PBC merged with the Alan Bond's Swan Brewery Co. Ltd. of Perth, Australia.
Swan's XXXX and Toohey's were soon being brewed at PBC. Bond purchased Heileman Breweries in 1987, the nation's fourth largest brewer. With Swan producing nearly half the beer in Australia, the combination would become the fourth largest in the world.
It was during this period that some say PBC lost some of its local identity. Advertising was reduced and PBC was viewed as a Heileman production facility more than a "Burgh thing." In 1993 Alan Bond ran into financial difficulties and the brewery was sold to entrepreneur Michael Carlow. He created Pittsburgh Food and Beverage Co. as a holding company for his three firms: PBC, Clark Bar America, and L.E. Smith Glass Co. Unfortunately, he was convicted of a $31M check kiting scheme against PNC bank that thrust his companies into bankruptcy.
Joe Piccirilli, the son of an Italian immigrant who created a trash hauling empire, and someone with a great deal of local pride, sold his family's business and, with a group of investors purchased PBC in September, 1995. He did everything in his power to keep the company afloat. In 1997 PBC purchased the brands of the Evansville B.C. (IN 33). And the company contract brewed Key West's famous Hog's Breath Lager.
But the big news came in 2004 when, again in conjunction with Alcoa, PBC introduced the industry's first aluminum bottle. It was the biggest thing for the company since the introduction of I.C. Light! The company could barely keep up with the demand. But the debt Piccirilli inherited when he bought the company was weighing it down.
Last summer PBC appealed to the Pension Benefit Guaranty Corp. to take over its pension fund obligations. PBC suffered $1.2 million losses over the last three years despite $1 million in cost reductions and forbearance by lenders, government agencies, and other concessions. Their only alternative was to declare bankruptcy but the company had been told by suppliers that credit would not be extended if the company did that.
In December PBC filed for bankruptcy. This move was an attempt to prevent Pittsburgh Water and Sewer Authority from shutting off services over $2.5 million of unpaid bills dating back to 1996. The brewery had contested those charges on the grounds that since 90% of its product is water, its sewer bill should not be calculated based on its water consumption.
The good news, I am told by Bud Hundenski (ABA 2882), a long-time PBC supporter, was the Steelers winning the Super Bowl this year. He said the locals rallied around their Iron City Beer and the brewery couldn't keep up with the demand. He also said the company is investing in advertising like never before in an effort to increase sales. It truly is anyone's guess what the status of PBC will be in June. I will simply close with some quotes from a letter Bud wrote in response to a recent Post Gazette cartoon which cast Iron City Beer in a bad light:
As a native and life-long resident of our area, I found [your cartoon] to be very distasteful if not offesnive ... . why is it that no one from your newspaper cites all the positives PBC has done for our community, in being a steady workplace here for the past 144 years?. . . The tender-loving care used to produce our local brands is evidenced and has been acknowledged over the years by outsiders, with the many awards having been bestowed upon them at the annual GABF in Denver, CO!... This product, for example, came to fruition through the efforts of six local manufacturers!
Compare this, for example to (other brewers) purchasing glass bottles from Mexico and their neon signs from China! PBC has a proud tradition of not only employing generations of families at their Lawrenceville plant, but contributing back to the local economy on an ongoing basis. Their long-time sponsorship of our professional sports teams and ongoing contributions to our local charities and community causes, is normally taken for granted, if not shamefully overlooked! Maybe these facts might be taken into consideration the next time before you consider slamming our local brewery.
NOTE: This article has been edited from the way it originally appeared. All captions contained images which are not included.
Breweries have been tagged with numbers that identify them in American Breweries II (Van Wieren 1995) which has since been re-issued as American Breweries III, Mid-Atlantic Edition (Van Wieren 2016). This provides a quick reference to each company's “headstone information” including name and address changes, dates in business.
Be sure to check out a much more recent article on the Unaffiliated Breweries of Western Pennsylvania to get a perspective on both PBC as well as IBCP and the unaffiliated breweries. There was also an article on “PBC After Repeal” in the May/June issue of ABJ.