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Mountain man brewing company
- 1. Case study on Mountain man beer company
- 2. Harvard Business School Case Mountain Man Brewing Company : Bringing the Brand to Light
- 3. What is Mountain Man Beer Company (MMBC) ? Who is Chris Prangel ?
- 4. Chris Prangel Legacy brew with a strong brand Premium segment market leader in West Virginia for almost 50 years Known as West Virginia’s beer Family owned business Popular among blue collar working men MMBC Recent MBA graduate stood to inherit MMBC as a legacy in 5 years
- 5. Present situation High brand equity in premium segment Mostly sold at off-premise location 2% decline in revenue 4% growth in light beer segment due to youth preference
- 6. Anheuser Bush, Miller brewing Co. and Adolf Coors possessing 74% market share of the overall brewing market These companies have 84% market share in the light beer market They rely heavily on broadcasting market as well product diversification to create barriers of entry for other brands Competition
- 8. Market research study findings Authenticity, quality, and a unique West Virginia “toughness” were core attributes of the brand Awareness among young people but considered as strong and working man’s beer Grass roots marketing more effective Blue collar customers were very loyal (brand loyalty was 53%)and accounted for a large sales percentage
- 10. Consumption by type of Beer
- 11. Objectives of study How to capture light beer market segment Its effect on brand value and current product Investment and returns on the new product
- 12. What to do?
- 13. LOOKING AT ALTERNATIVES DON’T LAUNCH LIGHT BEER LAUNCH LIGHT BEER UNDER BRAND NAME LAUNCH LIGHT BEER UNDER NEW BRAND NAME
- 14. Option 1 Introduce light beer under Mountain Man brand name Pros • Increase in revenue • Cater untapped market Cons • Product cannibalization • Brand erosion
- 15. Option 2 Introduce light beer under different brand name Pros • Increase in revenue • Cater untapped market • No brand dilution Cons • High advertising costs • Difficult to build new brand name • Light beer already has a strong presence
- 16. Option 3 Don’t introduce light beer Pros • No risk • No brand dilution Cons • Steady decrease in profit • Brand name may go into anonymity
- 17. Chris’ Estimate
- 18. Costs SG&A costs : $900,000 annually Advertising : $750,000 for intensive six month advertising Variable cost per barrel of Mountain Man Lager : $66.93 Variable cost per barrel of new light beer : $66.93 + $4.69 = $71.62 Market price per barrel of new light beer : $97
- 19. Revenue Market price per barrel of new light beer : $97 Revenue per barrel : $97 - $ 71.62 = $25.38 Total investment : $1.65 million Break even volume = 1,650,000/25.38 = 65,012 barrels
- 20. Capture 0.25% market share every year Year Projected Light Beer Sales (in barrels) Expected New Product 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
- 21. New product can get lost in the sea of new product introductions by big companies The projections may be overly optimistic Advertising cannot be as aggressive as big companies
- 22. Analysis The product is expected to cover all its investment costs and become profitable past 2007 Launching Mountain Man Light can also increase awareness and uplift the brand value
- 23. Conclusion Chris Prangel should go ahead and launch Mountain Man Light
- 25. These slides were created by Pulkit Sachan, RGIPT Raebareli as part of an internship done under the guidance of Prof. Sameer Mathur, IIM Lucknow Disclaimer