Mountain Man Brewing Company
Introduction/Background: In 2006 Chris Prangel, a recent MBA program graduate, stood to take over his family’s business, Mountain Man Brewing Company (MMBC), in roughly five years when his father retired. Mountain Man Brewing Company was well known for the one beer product (Mountain Man Lager) it sold throughout the North Central United States from its brewery in West Virginia and in 2005, Mountain Man had generated revenue over $50 million and was selling over 520,000 barrels of Mountain Man Lager. Despite the fact that for the past 6 years beer sales in US had been growing at a compound annual rate of 4%, sales were beginning to drop though as the desire for light beers steadily grew throughout the United States as sales for traditional premium beers dropped at roughly the same rate. It was for this reason that Chris had the desire to launch Mountain Man Light. In order to gain some insight in to what potential customers thought of the new product, Chris had a focus group videotaped on their opinion of Mountain Man Light after they drank it.
Problem: The problem faced by Chris Prangel and Mountain Man Brewing Company was the uncertainty of whether launching a new product would help or hurt the company. Sales were down but based off the reactions from core customers in the focus group video, middle aged blue collar males to older generation males, there wasn’t a strong desire to see Mountain Man Light hit the shelves anytime soon. So Chris was faced with the issue of whether to go ahead with the introduction of Mountain Man Light into the product line in order to gain new customers, primarily in younger generations who had shown a preference for light beers, and to compete against the well-known larger companies (Anheuser-Busch, Miller, Coors, etc.) who already had a light beer product in their product lines or to keep Mountain Man Brewing Company solely focused on the sale and production of Mountain Man Lager.
Analysis: Mountain Man Brewing Company had declined in 2005 by 2% because of the shift in customer’s taste for more light beers and less darker lagers. This was challenging the company’s ability to remain profitable if they were not able to continue their share of the beer market or to even increase sales by drawing in the younger crowd. Large domestic brewers such as Miller, Anheuser-Busch, and Coors also presented a threat to the company as they had progressively pushed out or put pressure on regional brewers and in some cases had forced regional brewers such as Neuweiler or Horlacher to close their breweries. Anheuser-Busch, Miller, and Coors have 84% market share in the light beer market which presents Mountain Man Brewing Company with a definite challenge if they were to launch Mountain Man Light against the well-known products such as Coors Light. Busch Lite, and Miller Lite which are already well known and established. The reverse to this is that the younger crowd typically displayed a dislike to the brands they consider “corporate” as well as that market research showed that core customers did not state a brand preference in bars and restaurants. The significance of this is that Mountain Man Brewing Company main sales channel is at off-premise locations (liquor stores, super markets, etc.) as it sells 70% of its product at these locations and does not show a lot of focus on targeting on premise locations where Mountain Man Light could stand a chance at being competitive with large domestic brands since there is generally a lack of brand preference. Mountain Man Brewing Company’s main target market is on blue collar male workers which neglects the female market segment. By launching Mountain Man Light, MMBC could potentially draw in large numbers of female customers since the female market segment represents 42% of domestic light beer drinkers and only 32% of domestic premium beer drinkers. Another marketing segment that Mountain Man Brewing Company has so far neglected is white collar workers or other niches who