...Rochester Institute of Technology | Mountain Man Brewing Company: Bringing the Brand to Light | Advanced Corporate Financial Planning | Professor Testa 1/23/2012 | | | Shaun Levine Ranjan Maitra William Weintraub Taylor Wold Objective Complete a NPV analysis to see if Mountain Man Brewing Company should implement Mountain Man Light to its existing product lines: * SWOT Analysis on Mountain Man Lager * NPV analysis for Mountain Man Lager * NPV analysis for Mountain Man Light * NPV analysis on whole company * Strategic Options Background Guntar Prangel founded the Mountain Man Beer Company (MMBC) in 1925. Mr. Prangel had reformulated an old family brew recipe using a meticulous selection of rare, Bavarian hops and unusual strains of barley, resulting in flavorful, bitter-tasting beer which the Prangel family launched as Mountain Man Lager. By the 1960s, Mountain Man Lager’s reputation as a quality beer was well entrenched throughout the East Coast region of the United States. It was February 20, 2006, in the New River coal region of West Virginia. Chris Prangel, a recent MBA graduate, had returned home a year earlier to manage the marketing operations of the Mountain Man Beer Company, a family owned business he stood to inherit in five years, when...
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...5. Mountain Man Brewing Company identifies itself as a family-owned brewery steeped in the heritage. It prides itself on producing high quality beer that embodies the unique “toughness” culture of West Virginia. Mountain Man brand represents all blue-collar workers across the United States. It symbolizes concepts like honesty, virtue, and hard work. These were the characteristics that enabled the company to hold the top market position among lagers in West Virginia for the past 50 years. The majority of Mountain Man Brewing Company consumers are male, above the age of 45 and typically in the middle-to-lower income brackets. Some small portion of their customers tended to be exceptionally loyal to the Mountain Man brand. This group accounts for a large percentage of company’s sales. Company’s main target market consists of West Virginia and other Eastern regional areas. Furthermore, the main buying location of the target market is off-premise. Despite the high perceived brand image and loyalty, the company experienced a decline in revenue of 2% in 2005. This decline is due to changes in consumers’ drinking preferences, markets, and demographics in the East Central Region, as well as the U.S. in general. Changes in beer drinkers’ preferences could be attributed to increased competition from wine and spirits, health concerns, and new public initiatives advocating moderation of alcohol consumption. As a result, consumers, specially the younger generation have acquired taste for...
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...Mountain Man Brewing Company Case Report Company Overview Mountain Man Beer Company (MMBC) is a family-owned brewing company that is the maker of Mountain Man Lager, or “West Virginia’s beer.” Mountain Man Lager is known for its reputation as a quality beer and is targeted throughout the east central region of the United States. Mountain Man Beer Company is in the second-tier beer industry, and known for its distinctively bitter flavor and slightly high alcohol content. MMBC’s competitive advantage is its brand equity, and value placed on its product. With brand playing a crucial role in the beer-purchasing decision, MMBC has had great success with its brand standing out as a traditional beer with a loyal customer segment, of middle to lower income men over the age 45. Primary Problem The primary problem for Mountain Man Beer Company is if they launch the new product, Mountain Man Lager Light, will they lose their main customer base. Changes in beer drinkers’ preferences have left the company with declining sales for the first time in the company’s history. A strategic plan in response to the declining sales is to launch a new light beer in hope of attracting younger drinkers to the brand. Light beers are growing at an annual rate of 4%, while traditional premium beers have been declining annually. With younger beer drinkers, 21-27 years of age being the main target for light beer, and making up over 27% of total beer consumption, MMBC is considering launching a light beer...
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...Mountain Man Brewing Company | To: | Chris Prangel | From: | 001706975 | CC: | David Nasser | Date: | 3/4/2013 | Re: | Bringing the Brand to Light | Comments: | For the first time in the company’s history, Mountain Man Brewing Company is experiencing declining sales in response to changes in beer drinkers’ preferences. Mr. Prangel’s response to this problem is introducing a “light beer” form of the popular Lager. In the past six years, the “light beer” industry as increased at an annual rate of 4% while sales of traditional beer has been declining annually by 4%. Although this seems like a probable solution, there are two major problems Mr. Prangel is facing: 1.) Mountain Man’s current target market will not approve of this new beer, and 2.) bringing in a light version of the Mountain Man Lager could ruin the brand image and ultimately destroy the company. Mountain Man’s biggest target market currently, and pretty much since it started in 1925, is males ages 45-54. Most of these males are blue-collar, hardworking males. It has been known as “West Virginia’s Beer” known for its authenticity, quality and its toughness. To the younger beer drinkers, the market the light beer appeals to, view Mountain Man beer as too strong and a “working man’s” beer. Not only do the younger beer drinkers have their negative thoughts about Mountain Man developed, but the blue-collar customers account for a huge percentage of sales. The brand loyalty rate for Mountain Man Lager is 53% which...
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...Situation The popularity of light beer among young people was increasing. Mountain Man Brewing Company was considering whether to launch Mountain Man Light to attract more sales. Problem Mountain Man had a 2% decline in revenue each year while light beer was much more demanding. However, launching a new product was costly. Also, if they launch the new product, they don’t know if it should be under the Mountain Man brand name or using some other names. In all, it’s difficult to predict that if the new product is profitable. Analysis The light beer consumption was 50.4% of the total barrels in 2005 with a 4% 6-yr CAGR, which means the market size would be 22.8 million in 2010. The main consumer of light beer spent aged from 21-27, although they represented only 13% of the U.S adult population, they accounted for more than 27% of total beer consumption. And these numbers were still growing. It would be a huge opportunity to launch Mountain Man light beer and take up some market shares. However, there was another question: should this light beer product be introduced under Mountain Man brand name, or by a different name? If the new product was under Mountain Man, the established company image could help reduce advertising cost, but downside is that it might alienate existing customers and erode brand equity. If the product was introduced by some other names, there would be neither brand dilution nor cannibalization, but the company would have to invest more on advertising and...
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...A. Competitive Advantage Mountain Man Beer Company has been true to its core customer base and product quality since the company started in 1925. The company focused their production on Mountain Man Lager beer that mainly attracted blue-collar, middle-to-lower income men ages 45-54. Distinctive bitter flavor and higher than average alcohol content contributed to the company’s brand equity. Mountain Man Lager had a reputation of a quality beer throughout the East Central region of the U.S. and also held the top market position among other lagers in West Virginia. “The sole brand loyalty rate for Mountain Man Lager was 53%, which was higher than the rates of competitive products”(i.e., Budweiser 42% and Bud Light 36%). Mountain Man had mainly relied on grass-roots marketing strategies using the word of mouth to spread its beer quality and taste. They valued local marketing activities that allowed them to experience personal connection with customers. By locally and independently producing quality beer, MMBC was able to create a strong brand for its Lager beer. The company was known as “West Virginia’s Beer” because of its quality, authenticity and “toughness”. B. Market Situation The decline in MMBC’s revenue was mainly due to large competition from wine and spirit drinks, an increase in the federal tax, health concerns and initiatives suggesting moderation and personal responsibility. Consumers have also shifted their tastes toward lighter beer, which had been steadily growing...
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...Background * Chris Prangle…. MBA graduate to manage the mountain man beer company * Guntar Prangle founded Mountain beer 1925. * Family owned business – inherited for 5 years. * Initially was called as West Virginia beer. * In 2005 …generating revenues $ 50 million and selling over 520,000 barrels of mountain man lager. * Price was $ 2.25 for 12-ounces serving and $4.99 for 6 pack in local convenience store. * Was priced similar to premium brands such as Miller and Budweiser. * Chris want to launch “Mountain Man Light” a “Light Beer” formulation of Mountain Man Lager. * Hoping to attract younger drinkers to the brand. * dark brown bottle packaging. * Last 6 years the sales of Light beer has been growing at a annual rate of 4% and traditional beer declining. * Mid 20’s were very supportive of this light beer. * Woman in her early twenties….. I like light beer and passé (outdated) . would like to try Mountain Man Light. * Brand played a critical role in the beer-purchasing decision. * Consumer considered taste, price, the occasion being celebrated, perceived quality, brand image, tradition and local authenticity. * Drink was for blue-collar, middle-to-lower income men over age 45. * Won awards for best beer championship. * Was consumed by working class males in the East central region on Chevrolet and John Deere. * Subjective attributes were – smoothness, % of water content, and drinkability. * Had...
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...MOUNTIAN MAN BREWING COMPANY 1. PROBLEM STATEMENT Due to the changes in customer preferences, the company has experienced a decline in annual sales of 2% from 2004-2005 and is struggling to maintain its market share in the premium segment of the beer market, where other companies have disappeared. Chris is concerned if he could reposition the brand to drive sales of Mountain Man Light to young people without eroding the core brand equity of Mountain Man Lager (MM). 2. SITUATION ANALYSIS Company * Independent family business in West Virginia, with 1.4% market share and a well established reputation throughout the East Central region of the United States. * MM beer is recognized as a traditional high quality beer in the region, with high brand loyalty. * MM had not expended its product line beyond its flagship lager product. * Invested in a number of branding activities to build “brand equity” with core customers. * MM sold 70% of its production in off-premise locations through its small sale force. * Although MM is a brand with high awareness, it is not appealing to everyone. Customers * The core consumers are Blue-collar, middle to lower income men over the age of 45 in the East Central Region. * They have high brand awareness and 60% of them purchase their beer in off-promises locations. * They are in strong aging demographic tendency and spend less on alcohol than younger drinkers, between 21 -27 years of age Competition...
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...| | | Study of Mountain Man Brewing Case | Student Name Institution Name Date By the year 2005, the barrels that mountain man lager sold were well over 520,000 barrels. This translates to the brand receiving revenue of slightly above $50 million. The beer also holds a respectable market share and a top market position in West Virginia for a period of 50 years and also the states it is distributed in. the revenues recorded however were 2% less than the revenues that had been received in the previous year. But despite this decrement, the company still managed to register profits. The company is also experiencing trouble trying to maintain its own sales in the premium beers segment due to increased competition from the larger companies. But due to the increasing changes in the demographics of the drinkers’ alcohol consumption. The young drinkers who are between the ages of 21 – 27 years are spending twice as much on alcohol that those aged over 35 years. The company’s profitability in the next five years may increase. This is because the young consumers are the working class division and they are the target consumers for the beer. So by 2010, the drink may have regained its status in the market share and hence an increase in the profits. MMBC has used its brand supremacy to influence consumer buying traits. Their brand has played the most significant part in the decisions they make while purchasing beer. Some of the deliberations that customers make when selecting their...
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...the break-even point at 154,685 barrels. Based on 18,744,303 barrels of light beer sold in 2005 in the East Central Region, a market share of 0.37% is needed to break even in 2006 and 0.45% in 2007, which seems in line with the projected 0.25% first year market share and subsequent 0.25% growth. This is reflected in Exhibit 6A, where in 2006 MMBC is not projected that market share and is showing a projected loss, but by 2007, MMBC should have 0.50% of the market and meet the above breakeven unit calculation. The loss of sales of premium beer to the new light beer market is estimated between 5 and 20%. The analysis shown in Exhibit 6B shows possible cannibalization in a best (5%) and worst (20%) case scenario. In both scenarios, the Mountain Man Light product proves to be a favorable addition to MMBC’s declining income statement. With MMBC selling 70% of its product to off premise locations, there is a certain risk that these suppliers would buy the same volume from MMBC, just distributed differently, leading to self-cannibalization. It is also possible that cannibalization could be minimal because often this type of product line expansion helps secure additional shelf-space. The cannibalization rate is dependent on the execution of the light beer positioning and campaign execution. If a 5% cannibalization rate was realized, MMBC might not have to obtain the 60% brand awareness with the initial advertising campaign necessary to realize a net profit in two years. Although there...
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...Case Analysis Mountain Man Brewing Company Case Analysis Mountain Man Brewing Company Executive Summary Started in the year 1925 by Guntar Prangel Mountain Man Brewing Company (MMBC) was a well-entrenched company in the East Central US by 1960. Consecutively the company grew as a legacy brewery, gathering a very strong brand loyalty and positioning. Known for the authenticity, quality and taste the company grew out to be a market leader in the currently matured business. However, off late the company has been witnessing a drop in sales for their core beer product the “Mountain Man Leger” in contrary to the growing beer sales in the US. The following document encapsulates a detailed analysis of the different problems the company started to face, the strategic objectives available and the most viable option that the Protagonist Chris Prangel’s (son of founder Guntar Prangel) should be taking. Further the Document also discusses the competitive challenges that the company phases The document also addresses the dilemma Chris faces whether to making reforms in business strategies or to continue with the existing sale and product line model and explains the tradeoffs that lie therein. Q2. Start by summarizing the chief protagonist’s decision tree. What are the key strategic issues that the firm faces? What are the options in terms of actions and what outcomes need to be enabled? Decision Tree: Chris has a conundrum to address, basically the growth strategy...
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...Mountain Man Brewing Company (MMBC) is a single product brewing and local distribution company based in West Virginia. It was founded by Guntar Prangel who reformulated an old family brew recipe, resulting in a flavorful bitter tasting beer that was launched as Mountain Man Lager or West Virginia Beer. This signature product went on to claim a reputable market share for an independent family owned brewery, in the East Central region of United State by 1960s.The company developed a brand image and reputation among its core drinkers; the blue collars and middle to low income men over 45, while upholding the unique and authentic family business model based on quality. In 2005, MMBC was generating revenues of over $50 million and selling over 520,000...
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...Mountain Man Brewing Company’s Positioning in the East Central Market According to Alvin J. Silk, a positioning statement is designed to define who are a company’s customers, what set of needs does the product fulfill, and why is the product the best one to fill those needs (2006, p. 90). I found this question challenging because a positioning statement should define “the place the firm wishes to occupy in its’ target customers’ minds” (Silk, 2006, p. 90). In the case of MMBC, the definition of the target customer was under discussion. For purposes of the first question, I developed the following positioning statement based on what I believe was the historical perspective of MMBC. Mountain Man Brewing Company produces Mountain Man Lager; the most authentic regional beer for working class East Central Americans, among all premium domestic beers, because of its distinctive quality, bitter flavor, slightly higher than average alcohol content and competitive price (Abelli, 2007, pp. 2-3). This positioning statement would help MMBC to target its product toward the blue collar worker in the East Central region. While not specifically stated in the case, I believe Mountain Man Lager met the following needs of this target audience: a need to feel toughness, pride in an East Central quality product, and an affordable price. MMBC’s strategic focus on this target audience helped it to be successful in the highly competitive market for premium beers, even when other local brewers...
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...Analysis Calculations 11 Exhibit 4 – MM Lager Cannibalization Calculations 12 Exhibit 5 – MM Light Marketing Strategy 15 What is the current situation? Mountain Man Brewing Company (MMBC) is a family business founded in West Virginia in 1925 by Guntar Prangel. The company is now operated by Guntar’s grandson, Oscar. Oscar’s son, Chris, is slated to inherit the business in five years when his father retires. Mountain Man (MM) Lager is the flagship product and the only beer currently produced by the company. The recipe for the lager was based on a refined family recipe and is known for its flavorful, bitter taste. By the 1960s, the lager had established itself as a legacy beer with a rich history, and the company continues to maintain its independent, family-owned status which appeals to its core drinkers. By 2005, the popularity of MM Lager in the East Central region of the U.S. had grown to generate revenues of just over $50 million, and the beer held the top market position among lagers in West Virginia. MM Lager won “Best Beer in West Virginia” in 2005 for the eighth year in a row. What has made MMBC successful & distinguishes it? MMBC has enjoyed success because of several factors. Although it is a regional brewer, it has superb name recognition. A recent study showed that Mountain Man Lager was considered by many to be West...
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...Mountain Man Brewing Company Case Analaysis Recommendation: Mountain Man Brewing should create a new market strategy and introduce a line extension of Light Beer to expand their portfolio and create new sales among non-existing customers. This line extension will target the younger drinkers and women in the East Central Region and will increase sales and create profit within 2 years. Rationale: 1. Light beer sales will be profitable within 2 years. The first year MMBC will lose $486,374. However, in 2007, the second year, MMBC will gain $1,520,341 in profit. See Appendices 6 and 7. 2. Currently, MMBC can afford the line extension. If MMBC were to wait a few years, there might not be any profit to pay for a line extension. 3. Light beer sales are growing at a 4% CAGR. In 2001, light beer accounted for 29.8% of beer sales. In 2005, light beer now accounts for 50.4% of beer sales. See Appendix 3. 4. Women are included in the target market for Light Beer making up 42% of sales. In the East Central Region, women consume 21% of the barrels sold and 27% of the Light Beer Barrels sold. See Appendix 9. 5. The young drinkers (age 21-27) consist of 13% of the population and 27% of beer sales. This age group mainly consumes light beer and has not established any brand loyalty. Ages 21-35 also consume 20% of the barrels sold in the East Central Region. See Appendix 9. 6. MMBC sales are declining by 2% annually. Introducing a light beer would increase revenue...
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