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Mountain Man Brewing Company : Bringing the Brand to Light

Case Study

Shrey Pandey 2012H149252P


4/11/2013

Introduction
Mountain Man Brewing Company (MMBC) is a known and well-established brand for its specialty beer, Mountain Man Lager. It was a success in 2005, generating over $50 million and selling over 520,000 barrels primarily to distributors in Illinois, Indiana, Michigan, Ohio, and its native West Virginia. Mountain Man Brewing Companys average consumer is male, above the age of 45 and typically in the middle-to-lower income bracket. With a small number of Mountain Man Brewing Companys consumers making up a large percent of their sales, it is important for the company to appeal to that small number of consumers, and ensure they are satisfaction to their brand loyal. Overall, brand plays a critical role in the beer-purchasing decision; hence, this is considered as a brand-loyalty purchase with considerations such as taste, price, the occasion being celebrated, perceived quality, brand image, tradition, and local authenticity. Mountain Man Beer Company targets blue-collar, middle-to-lower income males over age 45 in the East Central region. This group of consumers purchased 60% of the beer they drink at liquor stores, where 70% of Mountain Man products were sold at. By 2005 Mountain Man Beer Company sold over 520,000 barrels of Mountain Man Lager beer in the East Central region for over $50 million. In its native city, West Virginia, Mountain Man Lager was rated as the bestknown regional beer. Mountain Man Beer Company was not only a recognizable brand, it was also known for its good quality of its product .As discussed previously in the case, Mountain Man Beer Companys success was mostly because of its loyal blue-collar consumers and the good quality of Mountain Man Lager. According to the case, Mountain Man Lager consumers are already favorable for lager beer instead of light beer; however, the general consumer preference has been changing towards light. Chris Prangel, recent MBA graduate looking after marketing operations of MMBC, is convinced that the light beer market is the answer. If Mountain Man can produce a successful light beer, it can ensure future growth. Yet a recent marketing survey he commissioned revealed significant obstacles. Existing customers prefer the taste, and more often, the ethos of Mountain Man lager. Many identify light beer with upper income, yuppie drinkers anathema to multigenerational working class mining families. Chris father, Oscar, rationalizes that if Mountain Man were to produce a light beer, it would both cannibalize Mountain Mans existing market share and alienate its older customer base

Problem Statement
Mountain Man Brewing Company does not want to go another year with revenue lost from Mountain Man Lager. By adding a light beer to the product line it could gain loyalty from a younger crowd and attract more than just the workingman. At the same time Chris does not want to lose the brand equality that has taken years to create. He is also faced with solid monopolies in the beer world that make it hard to keep up. Chris is faced with a hard decision, will taking a chance and changing the image really be the right move for Mountain Man. By introducing a new product line called Mountain Man Light the company would be able to reach a broader audience. They would no longer focus on the workingman; they would appeal to a younger generation of beer drinkers. They would also be able to gain a woman base, women being extremely heath cautious would be more likely to purchase the beer if it came to a light version with fewer calories. By launching a Mountain Man Light it would also play down most peoples perception of the Mountain Man Original being too strong and only a manly mans beer. Mountain Man Brewing Company is a beer for the workingman. It has been around since 1925 and has gained strong loyalty from the baby boomer generation. Mountain Man has strong brand awareness down south and if you asked anyone over the 21 they are more than likely able to recognize the name even if they do not drink it themselves. The brand has been able to stay in the game with strong competitors such as, Anheuser Bush, Miller, and Adolf Coors. The uniqueness of the taste along with the higher than average alcohol content is what makes its loyal customers coming back for more. Chris Prangel is convinced that the light beer market is the answer. If Mountain Man can produce a successful light beer, it can ensure future growth. Yet a recent marketing survey he commissioned revealed significant obstacles.

Case Analysis
The rate at which MMBC was building new consumers was only going to replace a fraction of their current buyers, and as time went on, the percentage of new consumers by age group was getting smaller and smaller. Exhibit 1 tells the tale. Just using current rates of decline, where profit margin was 6.2% in 2005, by 2010 sales are down 10% and profit margin is reduced to 4.7%. This is a rather optimistic projection, as judging by the demographic data, the rate of sales decline will likely accelerate. A light beer alternative is not the only option. The super premium craft beer segment was experiencing fantastic growth, at 9% CAGR for the last six years. It was a smaller segment than light beer or even the premium segment that MMBC currently competed in with MM Lager, but this was a specialized segment without direct competition from the large breweries. Mountain Man was already recognized as a premium beer, attested to by their regional and national awards by beer tasting aficionados. Nonetheless, this might prove to be a difficult market to crack. It would require more specialized brewing methods and result in most likely smaller sales, due to the limited market. Mountain Man could also try to expand their sales territory.

The feasibility for this option doesnt look good. Mountain Mans appeal is not only based on their product, but consumer loyalties to regional brewers. Stepping into another region, that loyalty is lost. MMBC would be the outsider, and instead, they would be trying to compete against other brands that were sold to local drinkers. Strengths: Mountain Man Brewing Company was known as the Best Beer in West Virginia because of its flavor and distinctive bitter taste; additionally, it was selected as Americas Championship Lager at the American Beer Championship in 2005. Also, it had held the top market position in the lager market in West Virginia for almost 50 years. As a result, Mountain Man succeeded at the beer market by earning over $50 million and selling over 520,000 barrels of Mountain Man Lager beer within the West Central region. Mountain Man had high brand awareness, and it was especially recognizable among working-class males in the East Weaknesses: Mountain Man Brewing Company produced only one product, Mountain Man Lager, and distributed to only the West Central region with limited distributions. Moreover, Mountain Man targeted on only one segment for the blue-collar men who are mid-age and above. Although its core consumers love Mountain Man Lager, the market product preference had changed to light beer instead of traditional beer; therefore, Mountain Man Lager was rated very low as a purchasing preference. Opportunity: Mountain Man can consider three possible opportunities, which causes of increasing more potential consumers and gaining their revenues. Firstly, number of younger beer drinkers has been consistently increased and expected to positively influence the growth of the profits. Secondly, If Mountain Man launch light beer category, it may reach younger drinkers who both show positive attitudes towards light beer and brand awareness of Mountain Man itself. The favorableness of younger drinkers toward the light beer will optimistically affect them Mountain Mans revenue. Lastly, by expending product lines, product and distributors may build stronger beneficial relationship with brewers. Threats: One of the threats Mountain Man Brewing company faced was the declining in beer overall consumption per capita by 2.3% since 2001 in United State. According to the case, the declining consumption largely caused by the competition from wine and spirit-based drinks, an increase in federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns. Furthermore, discriminating distributors might also be a threat to this company because they became more cautious about which brands would be carried and ditch away small brands that have low margins and turnover. The increasing number of large breweries has also challenge the company in the market to remain profitable; smaller companies are put on pressure to stay in the beer market

Recommended Action
The launch of a new light beer product is always going to be a risk, but banking on the withering demand for a single offering is surely not going to alter the fortunes of the Mountain Man Beer Company. Light beer is the largest sales opportunity for a reason; it is what the market demands. Light beer is the gateway necessary to attract new consumers, and a stepping stone to introduce them to Mountain Man Lager. Where the product association with Mountain Man Lager may be too strong in terms of flavor, directly attracting affluent light beer drinkers can broaden the identity of Mountain Man Beer Company as a quality brewer within their region.