Mountain Man Brewing Company: Bringing the Brand to Light

This case deals with the launch of a new Light Beer from Mountain Man Beer Company (MMBC)
which is known for its Strong Beer variant namely Mountain Man Lager. The Light Beer was expected
to cater to the young people of Age 21-35 who have a liking towards Light Beers. Now, Chris has a
dilemma on whether to launch the light beer model or not as it can damage the brand name created
by MM Lager Beer.

BREAK EVEN ANALYSIS

Estimated Revenue calculation

Price per barrel ($) 97

Year 2005 2006 2007 2008
Light Beer Consumption 18744303 19494075 20273838 21084792
MML Estimated Growth (0.25%
every Year) 0.25% 0.50% 0.75%
Expected Sales of MM Light beer 48735 101369 158136
Estimated Revenue of MML 4727313 9832811 15339186

Breakeven analysis (No Cannibalization)

Fixed cost $
Advertising 750000
SG&A (2006-07) 1800000
Total fixed cost 2550000

Variable cost/barrel
Variable cost 66.93
Additional VC 4.699
Total variable cost/barrel 71.629

price/barrel 97
Breakeven (no. of light barrels) TFC/(SP-TVC) 100508

As sales for 2006-08 combined (48735+101369+158136) is greater than the Breakeven Barrels
(100508), the Light beer will recover the fixed costs within two-three years. Hence, it is advisable to
launch the Light Beer Variant. However, following aspects needs to be taken care to reduce the
damage on already existing brand of MMBC.

Recommendations

Price to be maintained same as that of lager Beer. On-premise locations can be targeted to sell light
beers like Pubs and bars which is frequented by youth. The Mountain Light Brand Name should be
retained and should leverage on the same by adopting a new tagline for the old brand which attracts
youth and by trying different packaging options such as light coloured bottles and differentiated
labelling.