NEW ORLEANS — The old brick building where Dixie Beer was brewed before Hurricane Katrina is vacant. More than two years after the storm flooded it and looters devastated it, the building with its looming tower and ornate iron gates is gutted and surrounded by padlocked fences.

But a century after its founding, the beer is coming back, say Joe and Kendra Bruno, who've struggled to keep the brewery going since buying it in 1986.

"We've worked too hard to give up now," said Joe Bruno. "Dixie is fine. A lot of people want it back on the shelves, and so do we."

Beer industry pundits seem lukewarm on the brewery's prospects. After all, Katrina was but one of a series of disasters that befell the Dixie brand since founder Valentine Merz started production of the pale amber brew on Halloween 1907.

Of the 13 beers that were once brewed in New Orleans, only Dixie Brewing Co. was left by the early 1980s. With microbreweries the rage, and the national market dominated by heavyweights such as Miller Brewing and Anheuser-Busch, Dixie became the last major independent brewer in the Deep South.

Once the city's favorite beer — living up to the slogan, "Around here it's Dixie Beer," demand fell in 1975 after fumes from a chemical used to clean floors tainted the beer's flavor. The bad batch haunted Dixie's reputation long after the brew was back to normal.

By the time the Brunos bought the company from Neal Kaye Jr. in 1986, the brewery was almost $14 million in debt. Kaye had bankruptcy papers drawn up and was ready to file if the sale fell through.

The Brunos won't discuss their finances. Kendra Bruno is the granddaughter of the founder of Barq's Root Beer, a very successful soft drink producer in the South, and Joe Bruno was a real-estate developer before getting involved with Dixie.

The couple won't say how much they paid for the busted but once-beloved brand. "We only paid our lives, our blood, our sweat and tears," Kendra Bruno said. "We love the place Dixie has always had in this city."

To compete with the craft beers, they developed Blackened Voodoo Lager, a dark beer, and Jazz Amber Light. They also produced a dessert beer, White Moose, with a taste of white chocolate.

Dixie was producing just less than 50,000 barrels a year with national distribution, and things were looking up until Katrina's storm surge smashed levees and poured salty water into 80 percent of New Orleans on Aug. 29, 2005.

The floodwaters took almost three weeks to recede. Bottling and packaging equipment was ruined, carefully collected memorabilia was destroyed.

The loss was in the millions, Kendra Bruno said, and the couple did not have flood insurance. The building was left with gaping holes, through which looters carried away everything from the wiring and the giant copper vat where the beer was brewed, to the cypress barrels where it was stored.

Now Dixie faces a fight just finding shelf space.

Most of the U.S. beer market is controlled by three companies, said Megan Haverkorn of Beer Business Daily, a trade publication. Anheuser-Busch has about 50 percent, Miller 25 percent and Molson Coors Brewing Co. 13 percent, she said. What's left over is being gobbled up by micro-brews or the so-called craft beers.

"Craft beers are huge right now," Haverkorn said. "They're getting a surge of growth similar to wine and spirits. People are kind of trading up from their regular beer."

After Katrina, the Brunos tried using a small brewery near New Orleans, but it couldn't produce in quantity. So a deal was worked out with Huber Brewery in Monroe, Wis., to produce Dixie.

Dixie brewmaster Kevin Stuart travels to Wisconsin to oversee the production, using a New Orleans recipe.

Dixie is being distributed in Louisiana, Massachusetts, Illinois and Colorado, Kendra Bruno said. Plans are to expand to Texas, Florida and New York, and eventually into the international market. "We're sort of doling it out at this point," Kendra Bruno said. "So far, the production can't keep up with demand."

But after a two-year absence, attracting fans again is going to be difficult, according to Steve Hindy, founder of Brooklyn Brewery in Brooklyn, N.Y.

"Dixie had a pretty good niche pre-Katrina, especially for its specialty beer," Hindy said. "Blackened Voodoo was in a lot of restaurants in New York and specialty bars, but things have changed a lot since Dixie disappeared. The beer business is much more competitive now."

The Brunos have secured Distinguished Brands of Littleton, Colo., as a distributor, but Hindy said even that's not a quick fix.

"Distributors will take your beer; the hard part is at retail," he said. "There is limited shelf space, and it's hard to get."

Still, the Brunos are plowing ahead. Rebuilding is expected to begin soon, with operations beginning in 2009.

"We want to put a smaller, state-of-the-art brewery in the building," Joe Bruno said.

A European-style beer garden is planned for the rooftop, and specialty shops would be a draw for shoppers. One model for the Brunos' plan could be the former Jax brewery on the edge of the French Quarter.

At Jax, which was redeveloped in the 1980s after the brewery closed, trendy shops and restaurants are big draws.

But the Dixie Brewery is on a Tulane Avenue strip that was depressed before Katrina and has been slow to recover.

The renovation of Dixie could spark an upturn for the whole area, Joe Bruno said.

After years of, as Kendra Bruno said, "making more beer than money," the ambitious plans will again be costly. But even after the losses to Katrina, the Brunos have no doubt they'll do it.

"Where will we get the money?" Joe Bruno said. "Who the hell's business is it. Nobody thought we'd get the money to keep going as long as we have. But we're not done yet."'