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Last call for chief at Genesee Brewing Co.

Rochester Business Journal
April 4, 2014

Gone from the Genesee Brewing Co. and holding company North American Breweries Inc., former CEO Richard Lozyniak hopes the next stop in his career will not force him to leave Rochester.

“I love the area, except for the weather this winter,” he said on March 26, his final day at the St. Paul Street brewery. “I’d really like to stay.”

Lozyniak ran the brewery and NAB’s other businesses for five years, then for 15 months after the company was acquired by Cerveceria Costa Rica S.A.

He and his mentors at private-equity firm KPS Capital Partners L.P. in New York City turned the High Falls brewery into a moneymaker and a job creator. Employment runs as high as 600 during peak months in the summer.

The brewery was all but bankrupt in early 2009 before being acquired by KPS, said Claude Wright, owner and CEO of Henrietta-based Wright Wisner Distributing Corp., which delivers the brewery’s products in Monroe County.

“It was to the point where there was a week where they had to make a decision to either pay the employees or buy raw materials such as cans and glasses for production the following week,” Wright said.

The brewery was called High Falls Brewing Co. LLC then. KPS formed NAB on Feb. 16, 2009, after agreeing to buy the Rochester facility and the perpetual production license for Seagram Co. Ltd. wine coolers and malt beverages from Pernod Ricard USA LLC. The Seagram products have been made at the brewery since 2008.

The deal closed three days later. The next day, on Feb. 20, KPS reached an agreement to acquire the Buffalo-based U.S. operations of Labatt Brewing Co. Ltd.

Lozyniak, who already had turned around two KPS companies, was in town by the end of the month to begin work.

“The first day I came here, I got in a cab and said, ‘Could you take me to the brewery?’” he recalled. “The guy said, ‘Where is it?’

“I think people know where it is now. I think the pride in our people and our community is what makes me the most proud.”

More than 300 brewery employees are represented by the International Brotherhood of Teamsters Local 118 in Brighton.

“Anytime a new owner comes into a struggling business, the question is always ‘Are sacrifices going to be made by the employees?’” Local 118 president Paul Markwitz said.

“Rich was adamant that the employees were a key component of the historical success of the brewery and were going to be a key component going forward and that employees were going to be part of its success. We weren’t asked to engage in concessions.”

Markwitz worked at the brewery from 1993 to 1996 and has been the local’s business agent there since 1996.

“At first, understanding that Rich was not overly familiar with the brewing industry, there was a level of uncertainty at the time of the acquisition,” Markwitz said. “But Rich did a super job of pulling together fragments within the industry that were struggling to form North American Breweries.”

For someone who relishes rebuilding distressed companies, however, operating the finished product pales in comparison. Lozyniak, 52, plans to take at least six months off before making his next career move.

“I love the business community,” he said. “I’ve got some friends …, and they’re introducing me to everybody in town, so if there’s an opportunity for me to maybe buy a company or find another turnaround situation, I would love to do that.”

A native of Connecticut, Lozyniak graduated from the University of Rochester with a degree in economics and earned his MBA from the Simon School of Business.

Time of change
Cerveceria paid $388 million for North American Breweries Holdings LLC, or nine times the KPS investment, industry sources reported. KPS has not disclosed the financial details.

KPS sold to Cerveceria on Dec. 11, 2012. Cerveceria is a holding company of Costa Rican food and beverage business Florida Ice and Farm Co. S.A.

“It was my intention to stay,” Lozyniak said. “The owners of the company have been great owners. The folks at FIFCO have invested a lot of money back into the brewery.

“But when you take a company from not doing so well to good, that’s a lot of fun and that’s what I’m good at. This is a very good company now. I think they need a different type of leader to get it to great.”

Stepping away from the brewery is best for him, too, Lozyniak said.

“I just like getting my hands dirty,” he said. “Things are pretty clean here now. I’m really looking forward to the next challenge. You feel really good when you see a situation like this, where you are not only saving jobs, you’re creating jobs.”

The Genesee brewery employs some 550 people, up from 335 when KPS bought it.

“If you can come into a place and save 300 jobs and add a couple hundred more, yeah, you can pat yourself on the back,” Lozyniak said. “It wasn’t me; it was the team. But you feel pretty good about it.”

NAB added Independent Brewers United Inc. of South Burlington, Vt., to its portfolio in August 2010. That is the holding company for craft beer makers Magic Hat Brewing Co. in Vermont, Pyramid Brewing Co. in Seattle and MacTarnahan’s Brewing Co. in Portland, Ore.

KPS spent $30 million to modernize the Rochester brewery and $3.9 million more to develop the Genesee Brew House, a restaurant, beer-tasting room and museum on the brewery grounds.

“He was the CEO, but his strength is production,” Wright said. “He built employee morale. Instead of having outside crews come in and paint and rewire and everything, all the production workers essentially rebuilt the inside of that plant. Rich is solely responsible for that.

“They repainted the entire outside of the brewery. They relit the sign on top of the brewery that had been out for years. They painted the storage tanks facing St. Paul with three can labels. It made it a focal point for the community.”

Cerveceria has invested more than $10 million in the brewery since the purchase, Lozyniak said.

Cerveceria has upgraded a can pasteurizer on one line. It has replaced the pasteurizer on a second line and installed a pressure-sensitive labeler on that line. The new owner also installed a $500,000 beer filter that allows ethanol to be recovered from beer waste.

“We’ve put a lot of investment into our packaging lines over the last year,” Lozyniak said. “The big three that we put in really were not only good projects for the company but tie into the triple-net bottom line philosophy our new owners have around sustainability.”

The triple bottom line is intended to measure a company’s commitment to social and environmental good as well as its financial success.

“Our water usage, our electricity usage and the effluent that we’ve been putting into the sewer system have been reduced remarkably,” Lozyniak said. “Not only did we do the right thing for the business; I think we did the right thing for the community with those investments.”

Profitable business
NAB turned a profit in each of the four years under KPS ownership after losing money every year since 2004, and it was profitable in 2013 for Cerveceria, Lozyniak said. He declined to provide financial details.

The High Falls brewery produces Genesee beer and cream ale, the Original Honey Brown Lager, and Dundee Ales and Lagers craft beers.

One of Lozyniak’s goals has been to raise brand awareness and market penetration in Rochester.

“When I first got here, you couldn’t find Genesee in a bar. Now people are proud that we’re here,” he said.

“It’s been a long slog,” he said. “When I got here in 2009, you wouldn’t even know this brewery was within 100 miles of here. Now we have really good representation.”

Genesee products had a market share of less than 5 percent in 2009 before Lozyniak and KPS took over. The brewery has a 7.75 percent share now, Wright said.

“It’s a 56 percent increase,” he said. “If you sold 100 cases, less than five cases was Genesee. A 56 percent increase in a consumer product like that is remarkable.”

Including Labatt beers, the brewery’s share in Monroe County is 29 percent, Wright said, with peak employment nearly twice what it was before Lozyniak arrived.

“Those are good paying jobs in Rochester, with benefits,” Wright said. “We’re sorry to see him go.”

Lozyniak’s legacy is the brew house and museum, which has been visited by more than 250,000 people from every U.S. state and 28 countries since it opened in September 2012, he said.

“That’s my baby, in more ways than one,” he said. “The brew house has been an unqualified success. That being said, this is the guy who went over budget on it by about 30 percent, so I got in a little bit of trouble with KPS.

“But we’re crushing it. It really has been fantastic. We thought it’d be open five days a week, five hours a day. Now we’re open 11 hours a day, seven days a week.”

Lozyniak refuses to take all the credit for the brew house success, citing the efforts of NAB brand manager Janine Schoos and director of engineering Mark Minunni, the project manager.

“That transformed our neighborhood and transformed the brewery, and it’ll be there for a long time to come,” he said.

Fun businesses
Lozyniak worked for KPS for nearly 14 years, serving as CEO of Blue Ridge Paper Products Inc. from 1999 to 2007 and as CEO of Bristol Compressors Inc. from 2007 to 2009. NAB was the most enjoyable assignment of the three, Lozyniak said.

“Unequivocally,” he said. “If you’re in the beer business and not having fun, something is seriously wrong.

“It’s probably the strongest relationship business I’ve ever seen, and people think long term about growing the business as partners. … There’s a work ethic here in Rochester and also at all of our other breweries. People are craftsmen.”

Lozyniak does not expect his next job to measure up to his five years at the Genesee brewery.

“On a personal level,” he said, “I can’t imagine anything more rewarding than what we’ve done here.”

4/4/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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