Wednesday, June 17, 2009

... and after a few deep breaths...

Ok, I've calmed down a little. Let's re-examine this Iron City business like mature adults. Today Latrobe pitches yeast on the first batch of non-Iron.

I understand that you can't always be a nice guy in business. Sometimes one option is so insanely beneficial compared to the other options, you really have no choice but to go with it. So they're moving to Latrobe, trying to turn things around, want to spend the savings on advertising and a new canning line- wait, a new canning line? Weren't they moving primarily to avoid the cost of installing a new canning system? Oh, for fuck's sake...

Then there's this one quote from the article that... didn't make me angry so much as caught my attention: "The beer drinkers in Pittsburgh did not support Iron City." At first I took that personally, but I took a few deep breaths and looked at it again. He's simply stating that the Pittsburgh market alone doesn't provide enough income to keep the company afloat. And while it doesn't anger me, I find that claim dubious at best.

Every single bar I've been to in Allegheny County has at least one IC Light tap. Some even have a regular Iron City tap, and all of them have bottles of both available. Often they'll also include other Iron City brands like Old German in their refrigerator. I find it hard to believe that establishments outside the Pittsburgh area sell more Iron products than the nearly 2000 bars in Allegheny County.

Let's break it down: There are only 3,140 counties in the US. So for even the number of taps to be equal, you'd have to be able to find one bar with Iron on tap in at least 2/3 of those counties. So I'll find a yinzer bar in Denali, Alaska? Fergus, Montana? Ector, Texas? Seems to me the consumption of Iron City drops off sharply as you leave Allegheny County. So the Pittsburgh market being an insignificant fraction of their income seems a bit far-fetched to me, but he has the figures, I don't. I'll have to remember to ask for a stubby of Old German next time I find myself in Wichita.

Oh, and because they are cutting bait, the Pittsburgh Water & Sewer Authority has decided to demand $600,000 from them. You see, back in 2005, the Water Authority brought it to Iron City's attention that they hadn't payed a water bill for quite some time. Since they stopped writing checks, they've run up a tab of about 2.6 million dollars. Which is impressive, since the average beer is 90% water. They were essentially fencing stolen water. The Water Authority agreed to cut them a break on the bill if they stayed in the city. Iron City still didn't pay a dime. And now that they're moving, the Water Authority is pissed and wants their fucking money.

Iron City also owes money to other organizations totaling more than $180,000, which kind of seems like pissing into the river when compared to the $2.6 million the Water Authority could potentially assrape them on. They're lucky this is only Pittsburgh. In other places, breach of contract is dealt with more harshly.

But because they're sitting so pretty, they've hinted that they would like to buy back Rolling Rock from Busch. Ok, I think it's time to go into this strage saga, so pardon my digression. Some time ago, Corona was kicking ass and taking names in the flavorless beer department. Busch was getting jealous of Corona, after all, Bud is the KING of fizzy water! Now here's where it blurs between fact, legend, and corporate secrets. Supposedly, Busch tried to buy them, but Corona said ¡No! So Busch did what any sensible business would and accused their competitor of pissing in their beer... allegedly. Officially, it was a Heineken distributor who was successfully sued by Corona over this rumor, so this could be a bullshit part of the story. Anyway, what did happen next was people started buying Rolling Rock instead of Corona, believing the clear streams of Latrobe to have less urine per volume than Corona.

Anyway, folks out West started drinking Rolling Rock with a wedge of lime, as they did with Corona, and Bush saw a potentially easier company to muscle in on. So they bought Rolling Rock, and sales plummeted.

Now we come back to the thrust of this story. Rolling Rock ain't selling like the hoppy hotcackes Busch expected, so they're thinking about unloading the brand. And wouldn't it be nice to bring it back to Latrobe? And who would be the people in the best position to do that? If you're drunk, stupid, or the CEO of Iron City, you might say Iron City could buy them. But you'd be forgetting the pants-shittingly insane amount of money they owe to everyone. Maybe they could start spending Monopoly money?

So to avoid spending money on new equipment and water, they'll have to buy new equipment and settle up their old water bill they were avoiding. So until their water bill savings tops whatever Pittsburgh forces them to pay in overdue bills, those financial advantages are canceled out. They're also pissing off nearly everyone in the city that comprises their primary market means absolutely nothing to their bottom line. And now they want to spend more money buying back other brands with damaged reputations and increase production so they can meet the huge demand that will suddenly appear once they start making the beer in a different building. The financial wizardry of Iron City continues to astound me. Seriously, what joker gives these people financial advice?

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