MOUNTAIN MAN BREWING COMPANY

CASE ANALYSIS

Group 2

ANSHUL SETH-IPM2011014
CLINTON THOMAS-2014PGP094
INDRANIL CHAKRABORTY
-2014PGP136
KARAN DEV-2014PGP155
PATNI SAPNA RAVINDRA2014PGP251
SUNEET BADLA-2014PGP384
VAIDA HEMACHANDAR2014PGP410

CASE FACTS:

Guntar Prangel founded the Mountain Man Beer Company (MMBC) in

1925.
Chris Prangel, an MBA graduate returned home to manage the
marketing operations of MMBC and had to inherit this family owned
Business in five years
MMBC brewed one beer MOUNTAIN MAN LAGER , also known as West
Virginias Beer
The companys sales had experienced a decline for the First time in
2006
Chris wanted to launch MOUNTAIN MAN LIGHT in hope of attracting
younger drinkers to the brand
Light beer sales in US had been growing at a Compounded annual
rate of 4 %
Traditional Beer sales reduced by 4% annually
MMBC was a reputed company throughout the east central region of
US
In West Virginia, it had held top position among lagers
The sole brand loyalty rate for Mountain Man Lager was 53% which
was higher than the rates of competitive products such as Budweiser
at 42%, and Bud Light at 36%
By 2005 Mountain Man generated revenues of $50440000 and sold
over 520000 barrels of Mountain Man Lager thus Selling price/ barrel
= $97.
Price was $2.25 for 12-ounce serving in bar and $4.99 for a six packing
convenience store
In 2005, MML won Best beer in West Virginia for 8th year straight,
won Best Beer in Indiana and was selected as Americas championship
lager at the American Beer Championship
The brand was positioned with its Core drinkers-blue collar, middle to
lower income men over age 45 and was able to milk the brand loyalty
because of its quality and unique taste. They had a patented formula
which had its distinctive quality, bitter flavor, slightly higher than
average alcohol content and competitive price which appealed to the
45+ men.
Despite the strong brand and strategic position that MMBC created, the
company experienced a decline in revenue of 2% in 2005. The decline
is due to changes in beer drinking patterns, markets, and
demographics in the region as well as the U.S. in general.

This was due to competition from wine and spirits as well as new
national health recommendations to decrease alcohol consumption for
improved health.
This movement of consumer purchasing practice, makes adding a light
beer product attractive.

KEYS TO SUCCESS OF BRAND MMB LAGER

1. Media campaign Highlighting it as West Virginias brand, made with
west Virginias labor and capital, to create regional loyalty for the
brand
2. Quality-MMB lager was associated with high quality, perfect
smoothness, percentage of water content and drinkability. MMBC
wanted the new consumers should experience the same Quality
3. Their success was due to a loyal customer base, high brand recognition
and support, and a product with high perceived quality
4. Mountain Man Lager met the following needs of this target audience: a
need to feel toughness, pride in an East Central quality product, and an
affordable price.
5. MMBCs strategic focus ensured its position and profitability in the
otherwise declining market in which a number of players were wiped
out.

THE 4CS OF MARKETING:

Customers:

The beer industry in US generates $ 75 Billion in annual sales.

Taste, price, occasion, perceived quality, brand image, tradition and
authenticity is what customers base their choice on.
Eastern Central Region represents $13 billion in annual sales out of
$75billion.
81% of Mountain Mans consumers are male drinkers.
The target segment of MMBL has been blue-collar, middle to lower
income men over age 45.
While their target customer brings them the focus and loyalty
needed to build brand awareness and equity, MMBL doesnt target
other market segments such as the white-collar class and other
potential niches.
Brand Loyalty Rate for Mountain Man Lager is 53% which is greater
than that of the competitors.

Competitors:

Competitors for Mountain Man are Anheuser Bush, Miller brewing

Co. and Adolf Coors possessing 74% market share of the overall
brewing market.
These three companies have 84%market share in the light beer
market.
They rely heavily on traditional advertising as well product
diversification to create barriers of entry for other brands.

Company:

Mountain Man Brewing Company has revenues of over $50 million.

It was founded in 1925 by Guntar Prangel who established itself as a
premium domestic quality beer known for its flavor and bitter taste.
Oscar Prangel, the retired president and owner, focused on
maintaining the quality and serving a specific market niche building
brand equity among blue-collar, middle-income men.

Collaborators:

A QUALITIVE ANALYSIS
EXTERNAL FACTORS:

OF

THE

POSSIBLE

INTERNAL

AND

WEAKNES
S
Small Target Customers
(Excludes first time
drinkers and women)
Only one product
Presence in only East
Region
2% decrease in Revenue
Seen as low income blue
collar beer

High brand awareness and

local recognition
High brand loyalty
Authenticity, Quality and a
Unique 'West Virginia
Toughness'
Top position in Premium
Sector
Significant Blue Collar
Customers

STRENGTH
S

SWOT
ANALYSI
S
Changing Consumer
Taste Preference
Stable Market
Entry of Light Beer
Female Target Customer

OPPORTUN
ITY

Light Beer steadily growing

Market share
Increased Health Concerns
Hard to compete national as a
smaller scale
Brand Dilution
Aging and Shrinking Customer
base

Off-premise locations, such as liquor stores and super markets, is

Mountain Man main sales channel as it sells 70% of its production at
these locations.
The main reason for this result is that 60% of blue-collar workers
buy their beer through the off premise locations

THREATS

PRESSING QUESTIONS FACING THE FUTURE AND

SUSTAINABILITY OF MMBC:
QUESTIONS

Can profitability be sustained with Mountain Man Lager?

Whether Mountain Man should launch the new brand in the market?
If Mountain Man Light is launched, will it cannibalize the existing
brand?
Does the new brand affect the sales of existing brand i.e. Mountain
Man Lager?
Will Mountain Man be able to retain its loyal customers?
ISSUES
Mountain Man`s revenue declined by 2% in 2005 and this slope will
challenge the companys ability to remain profitable
First time drinker segment represented 13% of the adult population in
2005,but accounted for more than 27% of total beer consumption and
was growing
Light beer category has been gaining market share and accounted for
50.4% of volume sales in 2005, compared to 29.8% in 2001
Regional revenue growth of the light beer product is expected to be 4%
annually
Mountain Man steadily growing its share of the regional light beer
market by a quarter of a percent each year off of a 2006 base market
share of 0.25%
Impact of Mountain Man Light on sales of Mountain Man Lager and
concern that launching Mountain Man Light might alienate the core
customer base

MARKETING STRATEGY:
THE THREE TRACKS FOR MMBC:

Continuing with the original product LAGER in spite of the

declining revenues and profits. There is no threat of
cannibalization and has higher margins, however the graph
shows the Profit after tax for MMBC lager starting from year
2005. And it will lead to wastage of capacity of production each
year and restrict target market which is at a risk of depletion.
There is also a potential risk of losing market share in long run.
Graph gives a fair idea that the product is not sustainable and is
at its maturity stage because of the steep fall in profits, thus it is
not a viable option.

PAT
4,000,000.00
PAT

3,000,000.00
2,000,000.00
1,000,000.00
1

INTRODUCING LIGHT AND REMOVING LAGER: Initially there

are losses but according to the expected growth rate it is evident
from the graph that Light profits are multiplying over years
giving an unprecedented growth of almost 100% per year.
However if we remove lager from the market, the company wont
be able to sustain at all and will collapse since there are losses.
Thus considering lager+light as an option becomes more feasible
and logical.

PAT
4,000,000
3,000,000

PAT

2,000,000
1,000,000
0
-1,000,000

Calculation of Break Even Point:

Selling Cost of 1 Barrel
Variable cost (Manufacturing) of 1 Barrel
Profit Margin
Fixed Cost incurred (SGA Cost & Advertising

$97.00
$71.62
$24.53

Cost)
Break Even Point of No of Barrels Needed to

$1,650,000.00

be sold

64428.00 Barrels

o From the Analysis, it is possible to attain BEP sales within 2 years

as projected sales of Mountain man light is around 15000 barrels.
o Growth of market share of Mountain man light rises by only
0.25%. So, Advertising costs could be increased and profit
margin can be leveraged upon.
o The core product, mountain man lager should not be sidelined.
o The retailers should be given higher margins in order to gain
more shelf space.
o In the long run, it would be advisable to extend the product line.
o In the conclusion, we used the breakeven analysis to realize that
in the first year expected light beer sales falls short of the
breakeven and there is loss for Mountain Man Lights first year.
However, as sales increase, and startup fixed costs decrease,
Mountain Man Light will prove to a profitable investment decision
for the company.

INTRODUCING LIGHT AND CONTINUING WITH LAGER:

Initially the brand LAGER will experience a cannibalization of
12.5% which will decline over the years since the company will
be able to define the segments more efficiently and reduce the
cannibalization through thorough marketing efforts. From the
graph one can conclude that due to the introduction of new
product and cannibalization the profits decline initially but
doesnt lead to losses. And over the years, the profits increase
and the company will be able to cope with the initial jerks and
stabilize its performance over the years. Also another option is
removing Lager from the line of products after 6-8 years once the
profit making product is well in place.

PAT
5000000
4000000

PAT

3000000
2000000
1000000
0
1

CONCLUSION and SUGGESTIONS:

By BEP analysis and projecting the expected revenue and profits in next few
years, we observe that the best marketing strategy for Mountain Man
Brewing Company is introducing the new product that is Mountain Man
Light and continuing with Mountain main Lager along with it. However
another name can be used to protect the brand image of being a tough

mans drink. Also steps should be taken in future to segment the two
products properly so as to reduce cannibalization and retain the Lager
market. Also it is highly unlikely that the market share of Light will double
every year, thus Chris should start looking at other options and also try to
control its high spending on the Lager. Also given the brand equity the
company should try to tie up with restaurant chains and increase its reach in
different areas of market.