A detailed case-analysis during an internship under Prof. Sameer Mathur

1. Mountain Man Brewing Company:
Bringing the Brand to Light
Harvard Business School Case Analysis

2. Company Overview
•Mountain ManBrewCompany(MMBC)wasfounded
byGuntar Prangelin1925
•Establishedas a familyowned business
•Reputation grewthroughout EastCentral region ofthe
US
•Quality beer
•Utilizeda set ofunique ingredients to bring a distinct
taste

3. Distribution
•By2005, Mountain Man Beer Company was generating $50 million in revenue and
sellingover52,000 barrels
•MainlyinIllinois,Ohio,Indiana,Michigan,and ofcourse,West Virginia
•Employedalowcost strategy for speciality Beers
•Pricedsimilarlyto domesticbeerssuchasMillerand Budweiser
•Cheaperthan that ofspecialitybeerssuchasSam Adams

4. What are MMBC’S core components..?

5. Current Distinctive Product
• FamilyOwned Brewery
• Mountain ManLagerOriginal- WestVirginia’s
Beer
• 1925designwith acrew ofcoal miners
printed on front
• Distinctivebitter flavorwith higher levelof
alcohol content
Current Distinctive Customers
•Males
•WorkingClass/BlueCollar
•Older Generations
•Baby Boomers
•“TheHardworkingMan”

6. Key Personalities
GunturPrangel-FounderofMMBC
OscarPrangel-Owner&Presidentof MMBC
JohnFader-V.P.of Sales
ChrisPrangel-MBAgraduate,stoodto inherit
MMBCin5 years

7. What are MMBC’S
current Marketing
strategies..?

8. •Workingclasstarget market
•OldFamilyBrew/OldSchool Character
•Grassroots marketing – Differenttact, not “InYourFace”likeother
beer advertising
•Leveragingthe emotional pride ofMountainMan
•SpreadingAwarenessofthe Beer’squality byword ofmouth
•Reachingout to the potential customers locallyor in a personal way

9. STRENGTHS WEAKNESS
• Single revenue product
• Shrinking target customers
• Lack of financial resources.
• Weak presence at on premise
locations.
OPPORTUNITIES
• Brand extension in light beer market
• Tap potential younger age
• Customers Stronger brand image
• Expanding distribution and sales
channels
THREATS
• Ageing target market
• Increase federal taxes
• Deep pocketed competitors
• Changing customer
• preferences and dynamics
• Decline in revenue
SWOT Analysis
• Brand awareness(West Virginia’s
beer)
• Loyal customers
• Authenticity, quality and uniqueness
• Strong presence at off premise
locations

10. • Anheuser-Busch
• Adolf
• Coors
• Miller
Craft
• SamAdam’s
• Sierra
• Nevada
Second tier
• Pabst Brewing
Co.
• Genessee
Import
• Corona
• Molson
• Beck’s
Major Competitors
MajorDomestic

11. Competitive market shares

12. Beer drinker profiles

13. Then, What’s the problem..?

14. Situation in 2005:Declining Beer Sales
Forthe first time, the companywasfacing2%decline in sales
Cause for MMBCDecline
•MMBC’S core customer wasgetting older and not purchasing
enough beer.
•Segment represented 13% of adult population in 2005 but accounted
for 27% of total beer consumption. MMBC Lager was not a preferred
product in this segment.
•Growth in lite beer category accounting for 50.4%ofvolumesalesin
2005
•Increasein FederalExciseTax(upto43%of COGS)
•Increasinghealth concerns of consumers.
•Competitionfrom alternative beverages- wine&spirits

15. Declining Beer Sales: What to do?
Look at what’s trending? BeerDrinker Preferences
Perhaps a LIGHTBeer?
Howcan wetarget market to younger generations?
Perhaps to more females?

16. Authenticity, quality, and a unique West Virginia “toughness”
werecoreattributesofthebrand
Awarenessamongyoungpeoplebutconsidered
asstrongandworkingman’sbeer
Grassrootsmarketingmoreeffective
Bluecollarcustomers wereveryloyal(brand loyaltywas53%)
andaccountedforalargesales percentage
Market Research Findings

17. Consumption by type of Beer

18. Costs

19. Chris’s Analysis

20. AnalysisAnalysis
1 Advertising $7,50,000
2 SG&A Costs $9,00,000
3 Market price of Mountain Man Lager (Per Barrel) $97.00
4 Cost price of Mountain Man Lager (Per Barrel) $66.93
5 Profit earned- Lager $97.00-$66.93= $30.07
6 Market price of New Light Beer (Per Barrel) $97.00
7 Cost price of New Light Beer (Per Barrel) $71.62
8 Profit earned-Light Beer (Revenue per barrel) $97.00-$71.62= $25.38
9 Total Investment $1.65 Million
10 Break-even Volume 1,650,000/25.4= 65012 barrels
*Breakevenvolume=Total cost / Profit earned (Light Beer)

21. From the above analysis, MMBC would receive the same price per barrel for
both the products. Contribution of MM Light ($25.38) would be lower
compared to Lager($30.07). The brand was required to achieve more than
$1,650,000 revenue and target of selling around 65012 barrels of light beer to
start making profits in this segment.

22. Year
ProjectedLightBeer
Sales
(in barrels)
ExpectedNewProduct Sales
(in barrels)
2005 18744303 -
2006 19494075 48,735
2007 20273838 101,369
2008 21084791 158,135
2009 21928183 219,281
2010 22805310 285,066
Expected Market Share

23. Options ?

24. PROS CONS
Nobrand dilution Lightbeer already has astrongpresence
Cater untappedmarket Difficultto build newbrand name
Increase inrevenue Highadvertisingcosts
Option 1
Introduce light beer under Mountain Man brand name

25. PROS CONS
Increaseinrevenue Product cannibalization
Lowadvertisement costs Brand erosion
Cater untappedmarket Lossofcorecustomers
Option 2
Introduce light beer under different brand name

26. Analysis
The product is expected to cover all its
investment costs and become profitable
past 2007.
Conclusion
Chris Prangel should go ahead and
launch Mountain Man Light Beer.

27. Changesinmarketingstrategiesto launch
light beer.

28. PRODUCT
•Attractive product design
•Separate labeling and
demarcation of lager and light
bottles.
•Trendy name and slogan for both
products.
•Maintain same quality as Lager
PRICE
•Use appropriate pricing strategy for
12 ounce beer and 6 packs
considering market price trends
•Same price at all on premise
locations.
•Offer retailers incentives by giving
supplier discounts to increase shelf
space
The appropriate 4P mix to be followed
Marketing Strategy

29. PLACE
PROMOTIONS
•Continue grassroots marketing for
Lager.
•Extensive advertising campaigns
both online and offline.
•Employ youth icons to endorse
Light.
•Use communication channels like
concerts as well as radio/tv.
•Use offers and promotions to
increase customer product trial
•Continue sales of MM lager at off
premise locations.
•Sell MM Light through on premise
locations to reach younger demographic
and women.

30. Conclusion
As0.5%capture ofmarketshareispossible by2007 with the given
market situation consideringcannibalization of shares.
MMBCshould launch the light beer under the different brand name,
to diversifyits portfolio and to ensure continued growth ofits
family-owned brewery.
Heshould deviseaneffectivemarketing strategyusing the 4Pmixto
enhance brand imageand providevalueto newer as wellas core
customers.

32. These slides were created by Abhishek Yadav, MITS
Gwalior, as part of an internship done under the
guidance of Prof. Sameer Mathur, IIM Lucknow.
Disclaimer