Mountain Man Brewing Company Case – Executive Summary

In 2006, Chris Prangel came home to manage the mountain man marketing operations

Mountain man was his family business and is now being run by his father Oscar Prangel who plans to retire by 2011

Beer drinkers’ preference seems to have changed from the blue collar Larger drinkers to the more subtle lite beer

Half a dozen participants all aged between 21 – 55 years in a survey. Man in 50s didn’t want them to mess with the larger brand, woman in early twenties says she would try mountain man lite

Gunter Prangel the founder of Mountain man Beer company (MMBC) founded mountain man in 1925. It was known as a high-quality beer all throughout the East Central region of the United States

By 2005, mountain man was generating revenues of just over $50M and selling over 520,000m 2Bbls

It was the most reputable brewed beer in the region for almost 50 years

Its price was $2.25 for a 12-ouncee serving of draft and $4.99 for a six-pack in the local convenience store

Mountain man beer won the best beer in West Virginia for 8 years straight. Also won the best beer in Indiana and was selected as America’s best beer at the America Beer championship

Bitter flabour and higher than average alcohol content contributed to the company’s brand reputation

Mountain man sold 70% of its beer at off-premises (liquor stores) and this was where 60% of blue-collar males purchased their beer.

Anhauser Busch, Miller Brewing Company, and Adolf Coors company all accounted for 74% of the 2005% beer shipments in Mountain man’s region. They were a major competition for the brand and competed, based on economies of scale in production and advertising

Large national brewers who maintained economics of scale in brewing, transportation and Marketing put pressure on smaller brewers and put a lot of them out of business

Mountain man’s 2005 revenues were down 2% when compared to 2004

The key consumer segment for beer companies was the younger drinkers 21-27 yrs years of age known as the first-time drinkers. They represented 27% of the total beer consumption and 14% of the adult population

Light beer was 29.8% of the beer market share in 2001 and accounted for 50.4% of sales volume by 2005

Although it rated high in terms of the brand among younger drinkers, mountain man larger tracked very low as a purchasing preference as did other larger brands

Mountain man was the only beer brewer among all the national brands that have refused to expand its products beyond its flagship product

Traditional advertising did not work as well as grassroots word of mouth advert

Brand loyalty was majorly around the blue-collar workers and the brand loyalty rate was 53% and higher than those of Budweiser (42%) and Bud Light (36%)

Light beer was a newer, fast-growing product category and the only beer category demonstrating consistent growth

Oscar Prangel was scared that launching mountain man light might erode the sales of the normal larger as distributors will not give them more shelve space but only rep[lace the brands on shelves

Brand Awareness of 60% in the East Central Region would cost at least $750,000 on an intensive 6 month advertising campaign

There would also be an annual increase of $900,000 Selling, general and administrative (SG&A) expense

Variable cost per barrel of Mountain man larger was $66.93. It will cost $71.62 per barrel to produce mountain man light

Chris would have to convince the senior management team that the Mountain Man Light product would generate a profit within two years, selling enough barrels to cover both the associated launch, marketing and incremental SG&A expenses and make up for the negative impact on overall profitability resulting from potential lost Mountain Man Lager sales.