Mountain Man Brewing Company

Group 10

1. Viswas Handa  200103182
2. Arnav Yadav     200103041
3. Preeti Jain        200103115
4. Abhijith U        200101002
5. Jebin James     200101073
 ABOUT THE CASE
• Mountain Man Brewing Company (MMBC) has
produced a high-quality, great tasting premium lager
for the people of East Central region of America since
Guntar Prangel brewed his first batch of beer using a
family recipe in 1925.
• MMBC’s average customer is a blue collar, middle to
lower income male over 45 years of age, while 70% of
their beer is sold to off premise locations, such as
supermarkets and liquor stores.
• By 2005, MMBC was generating over 50 million in
revenue and was selling over 520,000 barrels. 
 Problem
• Recently, MMBC has experienced a 2% decline in
revenue in the company's history for the first time
due to the aging demographics of their drinkers and
the increase in light beer sales. Chris Prangel,
Guntar’s grandson and future head of MMBC, is
planning to introduce new product line of light beer
of Mountain Man.
• Gunter Prangal, the founder of the company feels
that the company should not introduce a new line as
it will hamper the brand equity and company may
end up shutting down.
Pros of launching Mountain Man Light
• The Light beer category is a growing
category with 50% volume sale in 2005
as compared to 29% in 2001
• The target segment is the age group 21-
27  who spend twice per capita on
alcoholic beverage and is a growing
segment
• Can help Mountain Man to gain market
share on premise, i.e restaurants and
bars
• The core customers of the original
Mountain Man Langer are mostly
blue- collar customers who doesn't
prefer restaurants and bars
Cons of launching Mountain Man Light
• Can Cause dilution of brand especially for its core
customers who value it's for its authenticity and
specific taste.
• If Mountain Man Light is launched to off premises it
would lead to less Shelf Space for the Original
Mountain Man Langer thus causing cannibalization.
• More cost due to increased inventory and
Packaging.
• High Cost of advertising the new product.
• The light beer category is a highly competitive
category with many competitors, and it won't be
easy to gain market share.
• Resource and attention needs to be moved away
from Mountain Man Langer 
 Financial Analysis launching Mountain Man Light

Two scenarios
• To a new customer base, thus ensuring no
cannibalization
• To the general beer drinker, with worst possible
cannibalization rate at 20%
Revenue forecast
 Without Cannibalization

Variable cost for mountain man lager = $66.93

Variable cost of mountain man light    = $71.62 
Price per barrel = $97 ($5,04,40,000/ 5,20,000)

In 2005, 
• Sales Revenue  = $5,04,40,000
• Sales Volume    = 5,20,000
• Net profit Margin = $25.38 ($97-$71.62)
Break Even Analysis for Mountain Man Light 

Optimistic view:
Fixed Cost calculations Without
cannibalization

Initial Advertisement Cost=$750000

Annual Increment SG&A(2006)= $900000
Annual Increment SG&A(2007)=$900000
Total Fixed Cost Without
cannibalization=$2550000
Break Even Analysis for Mountain Man Light 

Optimistic view:
To breakeven without cannibalization
Total breakeven volume = fixed cost/net profit
margin
                                            =$2,550,000/$25.38
                                            =100,473 barrels
Total breakeven Revenue = total breakeven
volume*price per barrel
                                             = 100,473*97
                                             =$9,745,881
Break Even Analysis for Mountain Man Light 

Pessimistic view:
Fixed cost calculation with cannibalization rate
at 22% and 2% revenue lost annually
• Ad campaign = $7,50,000
• SG&A cost (2006) = $9,00,000
• SG&A cost (2007) = $9,00,000
• Cannibalized loss (2006) = $4,37,226
• Cannibalized loss (2007) = $3,14,036
• Total fixed cost = $33,28,262
Break Even Analysis for Mountain Man Light 

Pessimistic view:
To breakeven with 22% cannibalization and 2% loss
of revenue base annually

Total breakeven volume=fixed cost/net profit

margin=332862/$25.38
      =131137 barrels
Total Breakeven Revenue=Total breakeven
volume*  price per barrel
      =13137 *97
      =$12720308
Break Even Analysis for Mountain Man Light 
Optimistic revenue required:  $97,45,881
Pessimistic revenue required: $1,27,20,308

2006 Revenue = $47,27,295

2007 Revenue = $98,32,793
Total revenue = $1,45,60,088

Loss in 2006, breakeven in 2007

Pessimistic profit (2007) = $ 18,39,880

Optimistic profit (2007)  = $ 48,14,207
Solution Analysis
• From the previous calculations, MMBC should launch
Mountain Man Light to attract younger consumers as it will
start generating profits from the 2nd year of its inception. 
• Through rebranding, MMBC will be able to attract non-
customers who drink premium, domestic beer in order to
increase sales and secure the company’s future.
• Through the analysis of our target market for Mountain
Lager, it was uncovered that our core customers are aging
and market research indicates that the quantity of
consumption for beer decreases after 54 years
•  It is unlikely that we can get our core customers to
consume the same amount of beer after 54 years due to
the concerns of age-related health problems 
• Younger consumers will not replace our loyal MM
customers because they prefer to drink light beer and they
find MM lager too bitter and strong hence launching
Mountain Man Light is a viable option
Way Ahead with launching Mountain Man
Light
TARGET AUDIENCE
• The key consumer segment will be younger audiences
between 21-27 years old that consumes in quantity and are
a growing segment
• MMBC should target men and women in college and young
professionals just entering the workforce as this is when
consumption of beer is the highest
• Their parents taught them “The American Way” and they
are very patriotic. 
• This segment has not acquired a taste for full flavoured beer
or has not established loyalty to one particular brand.
• They prefer to consume light beer hence they form the best
target audience for Mountain Man Light
 Four Marketing P's while launching Mountain Man Light
PRODUCT
• The product will be made with the same care, quality and
authenticity as MM lager with lighter alcohol content
• Packaging will have symbolism related to America (rebranding)
PRICE
• Light Beer is fairly-priced and competitive to other domestic products
• The price will be the same as MM lager, $4.99 for a 6-pack and $2.25
for a 12-ounce serving of draft beer
•  Quality, authenticity and patriotism will form the strong factors to
influence purchase
PLACEMENT
• Sold heavily in convenience stores, independent alcohol stores and
grocery stores closer to college campuses and  white-collar work
companies
• It will also be available in local bars and restaurants closer to college
campuses and white-collar work companies.
PROMOTION
• Appeal to our customer base by offering premium 
discounts such as 28 beers for the price of 24 for a two-
month period after launch
• Other premium merchandizes will include beer koozies,
caps and t-shirts with the brand's logo
• Appeal to our customers by holding sampling events at
local bars near college campuses to induce trial
• Bars will serve the beer in a chilled MM glass that will
have the new brand logo (rebranding)
• T.V advertisements will display families spending
quality time together, parents drinking MM Lager and
the young adults drinking MM Light. The parents will
reminisce about their past and cheers their children for
their accomplishments
• Advertising expenditures will complete with the
tagline, “Proudly American, Family Owned since 1925.”