Group 7 (SectionB)

MOUNTAIN MAN BREWING COMPANY: Brune

Charline
Rohan

BRINGING THE BRAND TO LIGHT Saurabh

Shashank
Shaswata
 COMPANY OVERVIEW
 Founded by Guntar Prangel in 1925
 Located in the New River Coal region of West
Virginia
 Launched Mountain Man Lager by reformulating an
old family brew recipe
 Brand product – Mountain Man Lager Original –
popularly known as ‘West Virginia’s Beer’
 Held top market position among lagers in West
Virginia for almost 50 years
 High brand awareness among blue-collar consumers
MOUNTAIN MAN’S COMPETITION
Major Domestic
Producers
Anhueuser Busch, Miller,
Adolf Coors

Accounted for 74% in

MMBC region
Import Beer Second Tier
Companies Domestic Producers
Beck’s,Heineken,Molson,
Pabst Brewing
Corona
Company,Genessee
Accounted for 12%
Craft Beer Industry Accounted for 12.5%
• Brewpubs,
Microbreweries
,Contract Breweries
• Regional Craft
Breweries – Sam
Adams,Sierra Nevada

Accounted for 1.5%

 CURRENT SITUATION(2005)
US per capita beer consumption had declined by 2.3%
Great pressure on the smaller regional breweries like Mountain Man
In West Virginia only four breweries were left and MMBC revenue was
down by 2%
Tremendous growth in light beer category – accounted for 50.4% of volume
sales
13% of adult population(21-27 years) accounted for 27% of total beer
consumption
MMBC – only company among major & regional beer companies which did
not expand it’s product line
 MARKET RESEARCH FINDINGS
Mountain Man Lager was known as “West Virginia’s Beer”
Core Attributes – Authenticity, Quality & a unique West Virginia “toughness”

Traditional Advertising was not as effective as grass-roots marketing

Mountain Man – Spread it’s beer quality message by word of mouth
National Beer Brands – Used lifestyle advertisement to reach young drinkers

Small percentage of MMBC’s blue collar customers accounted for

large percentage of sales
Brand Loyalty– Loyalty rate for Mountain Man Lager was 53%,higher than it’s competitive product
 HOW BIG IS THE PROBLEM?
2006 2010 Difference
Company would lose four million
Price/Barrel $97 $97
Quantity(Barrels) 509,600 470,039 39561 dollars in annual revenue by
2010
Revenue $49,431,200 $45,593,765 $3,837,435
TVC
Gross Margin
$34,107,528
$15,323,672
$31,459,698
$14,134,067
What has changed?
• The removal of laws allowed large brewers to
Fixed Costs $9,645,920 $9,645,920
attract non-loyal customers by offering deep
Total Advertising $1,350,000 $1,350,000 discounts.
Operating Margin $4,372,752 $3,138,147 • Non-loyal MM lager customers spread their
Other income $151,320 $151,320 consumption across up to five other beer brands
• Due to less customer demand for MM lager,
Net Income After $2,714,680 $1,941,437 $773,243
Taxes (35%) Mountain Man small sales force did not sell as
much product to retailers and distributors.
FUTURE STRATEGY

Launch Mountain Man Light

We are following diversification strategy in order
to target young customer segment who prefer
lighter beer
 FORECAST FOR MOUNTAIN MAN LIGHT BEER
Year 2005 2006E 2007E
Light Beer Consumption in East 18,744,303 19,494,075 20,273,838
Central Region (in Barrels)
Mountain Man Light Beer per unit values
Mountain Man Light- Market 0% 0.25% 0.50%
share Sales Price = $97 (Revenue for 2005/ Barrels
Projected Sales of Mountain 48,735 101,369 sold in 2005)
Man Light Beer (in Barrels) Variable cost = $71.62 (Cost of Lager beer +
Additional cost)
Projected Revenue of Mountain $4,727,295 $9,832,793 Contribution Margin = $25.38 (Price – Variable Cost)
Man Light Beer (in $)

Contribution Margin from $1,236,894 $2,572,745

Mountain Man Light Beer (in $)
Net Present Value = $964,657
Cost of Advertisement $750,000 (Future Cashflows discounted at 12%)
Campaign at Launch
Annual Incremental SG&A $900,000 $900,000
costs
Accretion to Net Profit (Loss) ($413,106) $1,672,745
Year 2005 2006E 2007E
Light Beer Consumption in 18,744,303 19,494,075 20,273,838
East Central Region (in
Barrels) Mountain Man Light Beer per unit values
Mountain Man Light- Market 0% 0.25% 0.50%
share Sales Price = $97 (Revenue for 2005/ Barrels
sold in 2005)
Projected Sales of Mountain 48,735 101,369
Variable cost = $71.62 (Cost of Lager beer +
Man Light Beer (in Barrels)
Additional cost)
Projected Revenue of $4,727,295 $9,832,793 Contribution Margin = $25.38 (Price – Variable Cost)
Mountain Man Light Beer (in $)
Contribution Margin from $1,236,894 $2,572,745
Mountain Man Light Beer (in $)
Net Present Value = ($318,016)
Cost of Advertisement $750,000
Campaign at Launch
(Future Cashflows discounted at 12%)

Annual Incremental SG&A $900,000 $900,000

costs
Loss of Mountain Man Lager $766,184 $750,860
(@5% of Gross Margin)
Accretion to Net Profit (Loss) ($1,179,290) $921,885
 PROMOTION STRATEGY
Product Place
1. New bottle labelling to depict light 1. Distributors
beer 2. Retailers
2. Beer would exhibit core attributes of 3. Restaurants & Bar
brand like – authenticity, quality &
smoothness

Price Promotion
Price/Barrel had to be kept the same 1. Grass root marketing by
despite the reduced contribution margin participating in beer festivals and
owing to increased competition from free tasting events
national brands 2. Restaurants and bars with more
younger people
DISTRIBUTION STRATEGY
Current Distribution Strategy:

• Distributors:
Also serviced National Brands, focused mainly on them
• Retailers:
Sold beer at deep discounts
• Restaurants/Bars:
Younger drinkers and women frequented these places

Recommended Distribution Strategy:

• Continue with existing distribution channels

• In addition, setup mechanisms for direct selling to
customers
• Customers in close proximity have brand loyalty to MMBC
THANK YOU