Harvard Business School Case Study on 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 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

7. Competitive market shares

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

9. Beer drinker profiles

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. Option 1
Introduce light beer under Mountain Man brand
name
Pros
• Increase in revenue
• Low advertisement costs
• Cater untapped market
Cons
• Product cannibalization
• Brand erosion
• Loss of core customers

14. 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

15. Chris’ Estimate

16. 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

17. 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

18. 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

19. 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

20. 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

21. Conclusion
Chris Prangel should go ahead and launch
Mountain Man Light

23. These slides were created by Sharang Agarwal, IIT Kharagpur as part
of an internship done under the guidance of Prof. Sameer Mathur,
IIM Lucknow (www.IIMInternship.com)
Disclaimer