harvard business case study on mountain man brewing company

CASE STUDY

HARVARD BUSINESS SCHOOL CASE

MOUNTAIN MAN BREWING COMPANY:

BRINGING THE BRAND TO LIGHT

MOUNTAIN MAN:

THE COMPANY AND THE BRAND

•Founded by Guntar Prangel in 1925.

•Flavorful, bitter-tasting beer.

•Mountain Man LAGER.

KEY

PLAYERS ?

•OSCAR PRANGEL – President & Owner, MMBC.

•CHRIS PRANGEL – a recent MBA graduate, stood to inherit MMBC in 5 years.

PRESENT

SITUATION ?

•Mountain Man LAGER – Best Known regional beer

•Won“Best Beer in West Virginia”

•Americas’Championship Lager

• 2% decline in revenues for 1st time.

• Growing light beer market.

• Key consumer segment – young drinkers, 21-27 years of age.

So What Is

MOUNTAIN MAN

“Missing” Out On ?

YOUNG DRINKERS

FEMALE DRINKERS

MOUNTAIN MAN’S COMPETITION

OBJECTIVES

How To

SURVIVE

In This Very Competitive

Beer Market ??

• Younger beer drinkers well aware of the brand, showed appreciation.

• Mountain Man relied on grass-roots marketing.

• 53% Sole brand loyalty rate, higher than competitors.

CHRIS’S

PROJECTIONS

• 2% annual revenue base loss of Mountain Man Lager.

• 4% annual regional revenue growth of light beer.

• 0.25% increase in market share of regional light beer.

• 0.25% base market share in 2006.

FINANCIAL IMPLICATIONS• Cost / Barrel of Mountain Man Lager = $66.93

• Cost / Barrel of Mountain Man Light = ($66.93 + $4.69) = $71.62

• Market Price / Barrel = $97 ( Exhibit 1 )

• Advertising Costs = $750,000 ( 6-months advertising )

• Incremental SG&A Costs = $900,000 annual

FINANCIAL IMPLICATIONS

FINANCIAL IMPLICATIONS• Break Even barrels to cover Advertising and SG&A costs = ( $750,000 + $900,000 ) / ( $97 - $71.62 ) = 65,012 barrels ( for the 1st year)

• Break Even barrels to cover negative impact on MML sales = 61,609 barrels (@10% cannibalization)

• Total Break Even barrels = ( 65,012 + 61,609 ) = 126,621 barrels

FINANCIAL IMPLICATIONS4% Light Beer consumption growth per year &0.25% market share growth per year for MMB:

FINANCIAL IMPLICATIONS

• Total break Even Barrels = 126,621 barrels

• Total barrels sold in 2 years, i.e. 2006 & 2007 = ( 48,735 + 101,369) = 150,104 barrels

REVENUES RISE THEREAFTER !!

CONCLUSION

LAUNCH

MOUNTAIN MAN

LIGHT

THANK YOU

DISCLAIMERCreated by Sankalp Agarwal during an internship in

Marketing Management under Prof. Sameer Mathur, IIM Lucknow.