The central managerial question of this case is to how to revive the sales of MMBC in saturated market.

1. Mountain Man Brewing
Company: Bringing the Brand
to Light
HARVARD SCHOOL BUSINESS CASE

2. QUIZ!!
• Q1.What is revenue of MMBC in 2005?
• Q2.What is the contribution margin of MMBC?
• Q3.What is annual change in MMBC revenue?
• Q4.What is the size of light beer market in east central
region?
• Q5.What is expected growth rate of light beer market?
• Q6.How many barrels of beer MMBC sold annually?
• Q7.What is average cost of MM beer per barrel?
• Q8.What will be incremental cost of MM light beer?

3. CASE FACTS
Questionaire Answers Source
Revenues from MM Beer in 2005 $50440000 exhibit `1
Contribution Margin 31% exhibit 1
Annual Change in MM Beer Revenues -2% case fact page6
East Central Light Beer Market in 2005 18744303 exhibit 5
Annual Change East Central Light Beer
Market
4% exhibit 5
# Barrels of MM Beer 520000
Variable Cost per Barrel MM Beer $66.93 case fact page6
Increase in Cost of MM Light Beer (If
launched)
$4 case fact page6

4. WHAT
IS
MOUNTAIN MAN BREWING
COMPANY
?

5. A family-owned business which brews bitter-
tasting beer.
Brewed one beer–Mountain Man Lager, also
known as West Virginia’s beer.
Mountain Man Lager's brand equity is a key.
Popular among blue-collar workers.

6. WHO
IS
CHRIS PRANGEL
?

7. Chris Prangel has returned home to manage the marketing
operations of Mountain Man Brewing Company
(MMBC)Experiencing
declining sales
for the first time in its history
due to changes in beer drinkers' taste preferences
Want to launch Mountain Man Light, a"light beer” Attracting
younger drinkers

8. SITUATION ANALYSIS
High brand equity in premium segment
Mostly sold at off-premise location
2% decline in revenue
4% growth in light beer segment due to
youth preference

9. OBJECTIVE OF THIS CASE
• How to capture light beer market segment
• Its effect on brand value and current product
• Investment and returns on the new product

10. CENTRAL MANAGERIAL QUESTION
• WHETHER MMBC SHOULD LAUNCH LIGHT BREW
OR NOT??
• In response due to declining on sales, MMBC’s
• options: whether or not to launch the new
product
• •
• Mountain Man Light– “light beer” formulation of
• Mountain Man Lager

11. COMPETETION
Major Domestic Producers Second Tier Domestic Producers
Importer Beer Companies Craft Beer Industry
42%
23%
9% MMB
1.4%
12.5%
12%
1.5%

12. EXHIBIT

13. MARKET RESEARCH FINDINGS
• Authenticity, quality, and a unique West
Virginia “toughness” were core attributes of
the brand
• Awareness among young people but
considered as strong and working man’s beer
• Grass roots marketing more effective
• Blue collar customers were very loyal (brand
loyalty was 53%)and accounted for a large
sales percentage

14. Consumption by type of Beer

15. COSTS

16. CHRIS’S ESTIMATE
• SG&A costs : $900,000 annually
• Advertising : $750,000 for intensive six month
advertising
• Variable cost per barrel of Mountain Man Lager
: $66.93
• Variable cost per barrel of new light beer
• $66.93 + $4.69 = $71.62
• Market price per barrel of new light beer : $97

17. BREAK EVEN ANALYSIS
• Market price per barrel of new light beer : $97
• Revenue per barrel : $97 - $ 71.62 = $25.38
• Total investment : $1.65 million
• Break even volume = 1,650,000/25.38 = 65,012
barrels

18. EXPECTED MARKET SHARE
YEAR
Projected Light Beer Sales
(in barrels)
Expected New
Product Sales
(in barrels)
2005 18744303
2006 19494075 48,735
2007 20273838 101,369
2008 21084791 158,135
2009 21928183 219,281
BREAK EVEN VOLUME IS: 65,012 barrels
Light beer market share in 2005:18,744,303 With 4% CAGR:

19. 2005 2006 2007
2% DECLINING
SALES
$50,440,000 $49,431,200 LOSS $48,442,576 LOSS
5%
CANNABALISATIO
N
$46,959,640 $2,471,560 $46,020,447 $2,422,128
10%
CANNABALISATIO
N
$44,488,080 $4,943,120 $43,598,318 $4,844,257
20%
CANNABALISATIO
N
$39,544,960 $9,886,240 $38,754,060 $9,688,515
REVENUE FROM LIGHT BEER $4,272,295 $9,832,793
MMBC Revenue from light beer 2006:48,735x97
=$ 4,727,295
MMBC Revenue from light beer 2007:101,369 x97
=$ 9,832,793
REVENUE ANALYSIS

20. OPTIONS
• Option 1
Introduce light beer under Mountain Man brand
name
PROS
 Increase in revenue
 Cater untapped market
 No brand dilution
CONS
 High advertising costs
 Difficult to build new
brand name
 Light beer already has
a strong presence

21. • Option 2
Introduce light beer under different brand name
PROS
 Increase in revenue
 Low advertisement
costs
 Cater untapped
market
CONS
 Product
cannibalization
 Brand erosion
 Loss of core customers

22. WHETHER MMBC SHOULD LAUNCH LIGHT
BREW OR NOT??
CHRIS PRANGEL SHOULD GO AHEAD WITH LAUNCH OF
HIS NEW PRODUCT,WHICH WILL BECOME PROFITABLE
AFTER 2 YEARS IF THE EXPECTED MARKET SHARE OF
0.25% IS NOT OVERLY AMBITIOUS.

24. DISCLAIMER
These slides were created by Tushar Baghel, HBTI ,
Kanpur as part of an internship done under the
guidance of Prof. Sameer Mathur , IIM Lucknow.