MOUNTAIN MAN BREWING COMPANY (MMBC)

A BRIEF HBS CASE STUDY

CHRIS PRANGEL MANAGER (Recent MBA graduate)

OSCAR PRANGEL PRESIDENT AND OWNER

GUNTAR PRANGEL

FOUNDER (1925)

WHAT IS MMBC-Mountain Man Lager?•West Virginia’s Best Beer•Premium Market Leader for almost 50

years•Blue-Collared Consumer’s Favorite Drink•Legacy Brew-Family owned Business

Current SituationHIGH BRAND EQUITY IN PREMUIM SEGMENT

SOLD AT OFF-PREMISE LOCATION

2% DECLINE IN REVENUE

GROWTH IN LIGHT BEER SEGMENT DUE TO YOUTH PREFERENCES

COMPETITIVE MARKET SHARES

Anheuser Bush, Miller Coors and Adolf Coors possess 74% of the market share in the overall brewing of United States

These Companies have 84% share in

the Light Beer Market

These companies do product

diversification and create entry

barriers for other brands to come in the same market

BEER DRINKERS-PROFILE

CONSUMPTION

Market Research•Mountain Man Lager Attributes –

Authenticity, Superior Quality, Toughness etc.

•Awareness amongst people but they considered as a beer for the blue collared

•53% loyalty of Blue Collared Customers towards the brand

OBJECTIVES•Whether to come in Light Beer Market or

not?•If enter Light Beer Market, How to

capture it?•Effect on the core value of Brand , if

entered the Light Market•Investment and Returns on the new Light

Brand

2 OptionsA) Introduce Light Beer under Mountain Man

Brand Name

B) Introduce Light Beer under a different Brand Name

A) Introduce Light Beer under Mountain Man Brand Name

ADVANTAGES DISADVANTAGES

Low advertisement costs Reduction in sales volume and revenue of the core product

Increase in revenue Loss of Blue Collared Core Customers

Come into Light Market Brand might erode like “Schlitz”

B) Introduce Light Beer under a different Brand Name

ADVANTAGES DISADVANTAGES

Mountain Man Lager will not get diluted and remain intact

High advertising costs

Increase in Revenue and Market Share

Difficult to build new brand name when branded Light beer is

already in market

RISKS•New product could get lost•New product could damage the market

share and positive customer based brand equity of the premium Mountain Man Lager

•Some risks also associated with success of advertising campaigns

ANALYSISVariable per Barrel cost for Mountain Man

Lager(as mentioned in case study) : $66.93

Variable per barrel price of Mountain Man Light: $4.69+$66.93=$71.62

Estimated market price (Light Beer) per barrel that they can keep=$100

Gains per barrel=$100-$71.62=$28.38

SG&A costs=$900,0000 (annually)Min. Advertising Costs=$750000 (six

months)Total Investment=$1.65 million

No. of barrels they can produce= $1.65 million/$28.38(per barrel)

=approx 58140

CONCLUSIONNow, if the market share is to grow by

0.25% each year, Mountain Man Light may be able to cover up its investment cost in few years.

So, I think Chris Prangel should take the risk of setting up Mountain Man Light Beer.

THANKYOU

Created by Ramit Khurana, Guru Nanak Dev University, during a Marketing Internship under Prof. Sameer Mathur, IIM Lucknow.