Mountain Man Brewing

Company
 Company Background
● Founded by Guntar Prangel
● Located in New River coal region in West Virginia
●
Mountain Man Lager is a reformulated family recipe
o Bavarian Hops, unusual strains of Barley
●
By the 1960s’s, Mountain Man Lager was well respected and known throughout East
Central Region
● By 2005, Mountain Man Beer Company was generating $50 million in revenue and
selling over 520,000 barrels
o Mainly in Illinois,Ohio, Michigan and West Virginia
● Popular among blue collar workers
PROBLEMS
● US per capita beer consumption declined by 2.3% since 2001
● Increase in Federal Excise Tax
● Increasing awareness of healthy lifestyle
● Increasing competition from large domestic brewers
● Aging demographic
● Company experiencing decline in sales
Revenue Forecast of Mountain Man Light for 2005-2009
YEAR 2005 2006 2007 2008 2009

Light beer consumption in 18,744,303 19,494,075 20,273,838 21,084,792 21,928,184

barrels(East Central
region)

CAGR 4% 4% 4% 4%

Estimated growth year on 0.25 0.50 0.75 1

year at 0.25% of base
market share

Mountain Man Light 48,735 101,369 158,136 219,282

estimated sales in barrels

Mountain Man Light $4,727,295 $9,832,793 $15,339,192 $21,270,338

estimated revenue
@$97/barrel
Break-even Analysis for Mountain Man Light (2006-2007)
Without cannibalization

Price per barrel $97

Advertising Cost $750,000
Variable Cost for $66.93
Mountain Man Lager
Annual SG&A Cost $900,000
(2006)
Additional Cost $4.69
Annual SG&A Cost $900,000
Variable Cost for $71.62
(2007)
Mountain Man Light
Total Fixed Cost $2,550,000
Profit Margin $97-
$71.62=$25
.38

Total break-even volume = total fixed cost/profit margin = 100,743 barrels

Total break-even revenue = total breakeven volume*price per barrel = $9,745,881
Break-even Analysis for Mountain Man Light (2006-2007)
With 20% cannibalization and 2% annual lost revenue base

Advertising Cost $750,000

Price per barrel $97
Annual SG&A Cost (2006) $900,000
Variable Cost for $66.93
Annual SG&A Cost (2007) $900,000 Mountain Man Lager

Cannibalization Cost (2006) $437,226 Additional Cost $4.69

(22% from 2005 net revenues)
Variable Cost for $71.62
Cannibalization Cost (2007) $314,036 Mountain Man Light
(22% from 2006 net revenues)
Profit Margin $97-
Total Fixed Cost $3,328,262 $71.62=$25.
38

Total break-even volume = total fixed cost/profit margin = 131,137 barrels

Total break-even revenue = total breakeven volume*price per barrel = $12,720,308
Total revenue at the end of 2007 = $4,727,295+$9,832,793 = $14,560,088
Cons of launching Mountain Man Light
Though Mountain Man Light is projected to break-even within 2 years of launch by
2007, however there are some severe cons of launching it.

● Brand Dilution and core product erosion

● Core product cannibalization
● Loss of core customers
● Less possibility of product line extension in future
CONSUMER PROFILE
1. Dale
a. Age: 24
b. Occupation: Associate at Law firm
c. Income Level: Moderate
d. Beer Consumption: Relatively High
2. Anne
a. Age: 35
b. Occupation: Accountant
c. Income Level: Middle- High
d. Beer Consumption: Occasional drinker
e. Marital Status: Single
3. Ben
a. Age: 21
b. Occupation: College student
c. Income Level: Low
d. Beer Consumption: First time drinker
Highlyf- MMBC product
Attracting the larger consumer base

● Selling Highlyf at on-premise locations to reach younger demographic and

women.
● Extensive advertising campaigns through online and modern
communication channels.
● Providing offers and promotions for college-goers to boost product sale.

Brand Survival

● Prevent brand erosion and cannibalization.

● Increase the combined market sale with the core Lager and the new
product
Thank
You