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Mountain Man Brewing Company : Harvard Case Analysis
- 2. Who are its key people?
- 3. • Guntar Prangel founder of MMBC ( 1995) • Oscar Prangel Owner/president of MMBC • Chris Prangel Marketing Operations Head of MMBC
- 4. What is Company’s Present Situation?
- 5. Declining sales due to change in beer drinker’s preference Traditional beer less preferred by young drinkers.
- 6. Light beer sale to lure young drinkers to the brand
- 8. To see if the company can reposition the brand to drive sale of its light beer, Mountain Man Light to young people without eroding the core brand equity of Mountain Man Larger.
- 9. Pricing Policy of MMBC
- 10. Similar to premium domestic brands $2.25 for a 12-ounce serving of draft beer in a bar $4.49 for a sin pack in a local convenience store.
- 12. Net Revenues COGS $50,440,000 34,803,600 100% 69% Gross Margin SG&A Other operating expenses 15,636,400 9,583,600 9,583,600 31% 19% 2.8% Operating Margin Other income 4,640,480 151,320 9.2% 0.3% Net income before taxes Provision for income taxes 4, 791800 1,677,130 9.2% 3.3% Net income after taxes $3,114,670 6.2%
- 13. Mountain Man Beer Company Best Known Regional Beer Best Beer in West Virgina Best Beer in Indiana
- 14. Average MMBC’S consumers than profiles of premium beer drinkers
- 15. Domestic light beer Domestic premium beer Mountain man lager Gender Male Female 58% 42% 68% 32% 81% 19% Age 21-24 25-34 35-44 45-54 55-64 65+ 9% 20% 24% 22% 14% 12% 8% 20% 23% 23% 14% 12% 2% 15% 19% 32% 19% 13% Household income Under 25k $25k-49.9k $50k-74.9k $75k-99.9k $100+ 14% 25% 21% 16% 24% 16% 24% 21% 15% 23% 20% 27% 25% 15% 13%
- 16. MMBC’S competition in US Beer Market Major domestic Product Second Tier Domestic Product Import Beer Companies Craft Beer Industry
- 17. Advantage of MMBC over its competitors • Brand awareness • Brand Loyalty among the blue collars • Quality and Smoothness • Distinctive bitter flavor • Higher average alcohol content
- 18. Why declining Sales for Beer Companies? • Competition from wine and spirit based drinks. • Federal excise tax • Health concerns • Initiatives encouraging moderation
- 19. Growth in Light Beer Category • 2001 : 29.8% of volume sales • 2005 : 50.4% of volume sales
- 20. Light Beer Competitive Market Shares East Central Region 2005 Market Share Anheuser-Busch 49% Miller 24% Coors 11% Other brands 14% Imports 2% Total Light Beer 100%
- 21. Leading Domestic Light Beer Brands East Central Region 2005 Market Share Bud Light 32.9% Miller lite 17.8% Natural Light 9.8% Coors light 14.7% Busch light 6.4% Michelob Ultra 5.6% Milwaukee’s Best Light 3.4% Other domestic brands 9.4% TOTAL 100%
- 22. Leading Imported Light Beer Brands Brand 2005 Market Share Corona Light 57% Amstel Light 26% Labatt Blue Light 15% Other Imported Brands 2% TOTAL 100%
- 24. Consumption by type of beer East Central Region % Total 6-year CAGR Light Beer 18,744,303 50.4% +4% Premium Beer 7,326,642 19.7% (4%) Popular 4,351,356 11.7% (5%) Imported Premium 4,462,929 12.0% +6% Superpremium 2,305,847 6.2% +9%
- 25. Consumption By Origin East Central Region % Total Imported 4,462,929 12% Domestic-Packaged 29,618,974 79.6% Domestic-Draught 3,109,174 8.4% TOTAL BARRELS 37,191,077 100%
- 26. Finding About MMBC Not famous with young beer drinkers No appreciation for brand’s association with independent brewery Relied on mouth publicity and not lifestyle advertisements to reach young drinkers
- 27. Advertising Expenditure in U.S Beer Market Medium 2005 Network television $382.3 Cable television 72.1 Spot television 144.3 Spot Radio 22.4 Network Radio 1.2 TOTAL BROADCAST $627.8
- 28. What can MMBC do to attain growth and profit in the long run?
- 29. Light beer strategically important • Newer • Fast growing • Consistent • Preferred by both men and women • Growth in bars and restaurants
- 30. “ This is our chance to play in light beer sandbox but stay true to Mountain Man Brand by playing on strengths of our products. ”
- 31. Problems Associated • Adding to cost structure • More inventory • More packaging cost • Losing the core value and brand loyalty • Higher variable cost • Huge expenditure on advertising to create brand awareness
- 32. Final Decision By Chris Prangel
- 33. • To retain the core business and its core customers with independent brewery.