Mountain Man Brewing Company: Bringing the Brand to Light

Submitted by: Section B Group 8

Problem Statement: Mountain Man Beer Company (MMBC), founded in 1925, brewed one of
the best beer in West Virginia called Mountain Man Lager. In 2005, decline in US beer
consumption and changes in beer drinkers preferences MMBC was facing decline in revenues.
Over the last 6 years, the sales of traditional premium beer has declined by compound rate of 4%
and light beer sales has increased at same rate. In view of this, Chris Prangel wants to introduce
Mountain Man Light, a light beer targeting to the younger segment. However, this may lead to
product cannibalization, decrease in sales of Mountain Man Lager, brand erosion or may not be
perceived well by the loyal customers of Mountain Man. The issue is whether MMBC should go
for a light beer and capture the growing marketing as is done by its competitors or not? If yes
then whether it should introduce it with the Mountain Man brand name or use some other name.
Analysis: MMBC has three options either tap the growing market of light beer by launching
Mountain Man Light or introduce light beer by some other name or follow existing approach.
Introduction of Mountain Man Light
Advantages:

Catering to light beer market growing at a CAGR of 4%.

Targeting younger drinkers who constitute 27% of total beer consumption and are in

loyalty development phase.

Increase in revenue
Low advertising cost

Disadvantages:

Product Cannibalization
Brand erosion
Loyal customers may not perceive well
Addition to cost structure

Introduction of Light beer with a different name

Advantages:

Catering to light beer market growing at a CAGR of 4%.

Targeting younger drinkers who constitute 27% of total beer consumption and are in

loyalty development phase.

Increase in revenue
No product cannibalization or brand erosion

Disadvantages:

Additional advertising cost apart from addition to cost structure

Cannot leverage brand name

Continue with existing brewing of strong beer only

Advantages:

Focus on what the company is best at keeping its brand and loyal customers
No additional product line is to be setup and subsequent costs would not be incurred

Disadvantages:

Reduction in revenue
Aging demographic leading to shrinking market
May not be able to perform in the increasing competition

Feasibility Analysis of launching with different name

Cost Associated
RESEARCH AND DEVELOPMENT
ADVERTISING COST
SG&A
VARIABLE COST
REVENUE
UNITS(BARRELS)
SOLD
SELLING PRICE
Market Share in
2005
CAGR
ESTIMATED MARKET
SIZE

YEAR

18000
75000
900000
71.62
50440000
TARGET MARKET
520000 SHARE
97 TARGET SALES(UNITS)
TARGET SALES
18744300 ( DOLLARS)

0.25%
50684.595
4916405.715
4%
20273838

REVENUE FROM LIGHT

BEER
2005
4916405.715 ASSUMING 4% CAGR AND 0.25% GROWTH
2006
10226123 IN MARKET SHARE OF MMBC
2007
15952753

Comparing Revenue
YEAR
2006
2007
2008
2009

REVENUE
BEFORE
REVENUE AFTER
3040677
3040677
2991320
2669810
2931502
3908543
2872872
4724656

Analyzing the 5Cs

Context: The beer industry in US generates $75 billion with Eastern Central Region Accounting
for $13 billion. According to Industry experts, Product line extensions has actually helped
brewers obtain greater shelf space for products and created greater product focus among
distributors and retailers
Customers base their choice on taste, price, occasion, perceived quality, brand image, tradition, and local
authenticity. Mountain Man counts with 81% male drinkers, neglecting the 32% female market
segment. Its core drinkers were blue-collar, middle to lower income men with over 45 yrs (64% )
Competition: The beer industry is facing growing competition from substitutes like wine and
spirits-based drinks. The competition fell into four categories: Major Domestic producers
accounting 74% dominated by Anheuser Bush, Miller brewing Co. and Adolf Coors; second-tier
domestic; Import beer companies; and specialty brewers or craft beer industry.
Company: Established as a domestic premium quality beer company with a revenue of over $50
million in 2005. Its beer is known for its flavor, bitter taste and slightly higher than average
alcohol content.
Collaborators: Off-premise locations, such as liquor stores and super markets, is Mountain Man
main sales channel as it sells70% of its production at these locations.
Recommendation: The company should tap the growing light beer segment and younger
demographic through launching Mountain Man Light via brand extension. The product should be
designed keeping in mind the younger generation and thus a change of label and color of bottle
would be recommended. Advertising can be done through online media and discounts on
purchase of high quantity can be used for promotion. It should capture on premise location like
bar, pub which are frequently visited by younger generation.