Competition categories –

1. Major
 Few in numbers
 Economies of scale in production and advertising
 3 companies (Anheuser Busch, Miller Brewing Company and Adolf Coors Company) accounter
for 74% of beer shipments in Mountain Man’s region in 2005
 Nation-wide supply to distributors and retailers

2. Second-tier Domestic producers

 Medium sized companies
 Some companies (like Pabst Brewing Company and Genessee) sold nationally, while small
companies sold to regional distributors and retailers.
 Around 30 regional breweries in 2005 in US
 Regional players lacked financial and marketing resources to defend their brands
 Second tier domestic producers accounter for 12.5% of beer shipments in east central region in
2005
3. Import beer companies
 Germany (Beck’s), Holland (Heineken), Canada (Molson), Mexico (Corona)
 More flavorful, bitter-tasting beer
 Higher shipping cost, weaker distribution networks, an inability to control product
freshness and margin reduction due to weakening of US dollar
 In 2005, import companies controlled 12% of the region’s market

4. Specialty Brewers
1. Brew Pubs, Microbreweries, contract breweries and regional craft breweries
2. Traditional malt ingredients, independently owned and produced less than 2 million
barrels annually
3. Brew Pubs – restaurants /bar with over 25% of their beer products brewed and consumed
on site
4. In 2005, more than 980 brewpubs in US and accounting for 10% of the craft brew volume
5. Microbreweries – limited distribution networks and produced less than 15,000 barrels a
year
6. In 2005, 380 microbreweries accounted for 12% of the craft beer volume
7. Contract breweries accounted for 16% of the craft beer volume
8. 50 regional craft breweries – producing more than 15,000 barrels annually accounted for
the remaining 62% of the market
9. In east central region, all craft breweries together controlled 1.5% of the total beer
market.
Situation at Mountain Man in 2005

 US largest beer consuming market

 In 2005, $75 billion annual sales
 Reasons for decline in per capita beer consumption by 2.3% since 2001 in US :
 Competition from wine and spirit based drinks
 Increase in federal excise tax
 Initiatives encouraging moderation
 Personal responsibility
 Increasing health concerns

 18.3% US beer sales took place in east central region (7 states)

 In MMBC’s area, import and craft beers were increasing hold
 Recently in some states where promotion of beer in retail establishments was limited,
distributors started to sell beer at deep discounts. This led them to discriminate among smaller
brands on the basis of margins and turnover. This helped large national brewers to exert
pressure on small regional breweries like MMBC
 This pressure and glut of product, led to the closing of many independent breweries
 MMBC survive because –
 It served a large enough market with a very strong brand
 Anheuser Busch was most significant competitor of MMBC

 Revenues of MMBC in 2005 were down by 2% compared to 2004

 Faced aging demographic in the shrinking premium segment of the beer market
 Beer was not subject to sharp fluctuations in demand during economic downturns
 Decline was due to changes in consumer segments
 Young drinkers
 21-27 yrs of age
 This was key consumer segment of beer
 First time drinker demographic
 No loyalty was established to any brand
 Represented about 13% of the adult population in 2005
 Accounted for more than 27% of total beer consumption and was growing
 Spent 2 times per capita on alcohol than consumers over 35 yrs of age. Forecasted
to grow by 4 million by 2010
 Light beer category
 Steadily gaining market share
 Accounted for 50.4% of sales volume in 2005
 Preferred by younger consumers over other categories
 Young tended to buy mainstream brands

 Though awareness of Mountain Man among youngers was high, Mountain Man Lager faced very
low purchasing preference
 As per industry observers, new products set beer drinker’s loyalty to the brand
 Mountain man was the only brand that had not extended its product line beyond its flagship
lager product

 Opinion of market research firms :

1. Younger beer drinkers considered Mountain Man Lager as strong and working man’s beer
and consumer by swing and baby boomer generations
2. Mountain Man relied on grass-roots marketing and it was not as effective as lifestyle
adverstiements adopted by national beer brands
3. Small percentage of MMBC’s blue collar customers accounted for large percentage of sales.
Sole brand loyalty rate was 53% and Non-loyal mountain man lager customers occasionally spread
their consumption across up to 5 other beer brands