Mountain Man Beer Company

(MMBC)

Who are its key people?

• Guntar Prangel

founder of MMBC ( 1995)

• Oscar Prangel

Owner/president of MMBC

• Chris Prangel

Marketing Operations Head of MMBC

What is Company’s Present Situation?

Declining sales due to change in beer drinker’s preference

Traditional beer less preferred by young drinkers.

Light beer sale to lure young drinkers to the brand

Why study this

case?

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.

Pricing Policy of MMBC

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.

MMBC’S Income Statement

Net RevenuesCOGS

$50,440,00034,803,600

100%69%

Gross MarginSG&AOther operating expenses

15,636,4009,583,6009,583,600

31%19%2.8%

Operating MarginOther income

4,640,480151,320

9.2%0.3%

Net income before taxesProvision for income taxes

4, 791800

1,677,130

9.2%

3.3%

Net income after taxes

$3,114,670 6.2%

Mountain Man Beer Company

Best Known Regional Beer

Best Beer in West Virgina

Best Beer in Indiana

Average MMBC’S consumers than profiles of premium beer

drinkers

Domesticlight beer

Domestic premium beer

Mountain man lager

Gender

MaleFemale

58%42%

68%32%

81%19%

Age21-2425-3435-4445-5455-6465+

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%

MMBC’S competition in US Beer Market

Major domestic Product

Second Tier Domestic Product

Import Beer Companies

Craft Beer Industry

Advantage of MMBCover its competitors

• Brand awareness

• Brand Loyalty among the blue collars

• Quality and Smoothness

• Distinctive bitter flavor

• Higher average alcohol content

Why declining Sales for Beer Companies?

• Competition from wine and spirit based drinks.

• Federal excise tax

• Health concerns

• Initiatives encouraging moderation

Growth in Light Beer Category

• 2001 : 29.8% of volume sales

• 2005 : 50.4% of volume sales

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%

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%

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%

Division of Consumer Segment

Consumption by type of beer

East Central Region % Total

6-yearCAGR

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%

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%

Finding About MMBC

Not famous with young beer drinkers

No appreciation for brand’s association with independentbrewery

Relied on mouth publicity and not lifestyle advertisements to reach young drinkers

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

What can MMBC do to attain growth and profit in the long run?

Light beer strategically

important• Newer

• Fast growing

• Consistent

• Preferred by both men and women

• Growth in bars and restaurants

“ This is our chance to play in light beer sandbox but stay true to Mountain Man Brand

by playing on strengths of our products. ”

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

Final Decision

By Chris Prangel

• To retain the core business and its core customers with independent brewery.