Mountain Man Brewing Co. is a family-owned business that brews only one beer, the Mountain Man Lager. Also tagged as the "West Virginia's beer," it is a favorite of blue-collar workers. When Chirs Prangel graduated from his MBA, he went back to West Virginia to take charge of the marketing operations of the company. Due to the changes in the beer drinkers' preferences, the company experiences sales loss. As the person in charge of the marketing operations of the company, Mr. Prangel seeks to attract young drinkers by launching a "light beer" to be called the Mountain Man Light. This case study examines the feasibility of Mountain Man Light’s launch.
Heide Abelli
Harvard Business Review (2069-PDF-ENG)
May 28, 2007
Case questions answered:
- What industry/consumer factors have caused Mountain Man Brewing Co. to lose sales despite having a strong brand?
- Imagine that the Mountain Man brand is a person. What kind of brand personality does the Mountain Man brand have?
- Use the Young & Rubicam’s (BAV Group’s) Brand Asset Valuator model (please refer to the branding video) to evaluate the brand equity of the “Mountain Man” brand for two segments: (a) the existing core segment (blue-collar, middle-aged men) and (b) the new target segment (younger, white-collar drinkers who prefer light beer). How would you rate the Mountain Man brand (for these two segments) on the four dimensions of the Brand Asset Valuator scale?
- What are the advantages and disadvantages of launching the (Mountain Man) Light beer using the “Mountain Man” brand name?
- Chris believes (on page 6, paragraph 3) that the launch of Mountain Man Light may boost the sales of Mountain Man Lager. Do you agree or disagree? Why?
- Do you expect that the Mountain Man Light launch will lead to cannibalization of sales of Mountain Man Lager? What different factors may cause cannibalization?
- Examine the feasibility of Mountain Man Light’s launch. Please perform a (five-year) discounted cash-flow analysis and calculate NPV for FOUR scenarios:
a) Mountain Man Light launch with a cannibalization effect of 20% (i.e., 20% revenue loss of Mountain Man Lager sales)
b) Mountain Man Light launch with a cannibalization effect of 5% (i.e., 5% revenue loss of Mountain Man Lager sales)
c) No cannibalization effect (i.e., 0% revenue loss of Mountain Man Lager sales)
d) Mountain Man Light launch with a positive effect of 5% (i.e., 5% revenue increase of Mountain Man Lager sales)
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Mountain Man Brewing Co.: Bringing the Brand to Light Case Answers
This case solution includes an Excel file with calculations.
1. What industry/consumer factors have caused Mountain Man Brewing Co. to lose sales despite having a strong brand?
Industry Factors Responsible for Declining Sales of Mountain Man Brewing Co.
Change in Consumer Behavior
- Despite a strong brand awareness, MMBC has failed to attract young consumers (millennials), who account for 50.4% of the total volume share. They perceive MMBC as a retro brand suited for baby boomers and are more prone towards consuming light-beers from a national/mainstream brand that resonates with their personality and lifestyle.
- Consumers are getting more aware and conscious about their health and opting to drink in moderation.
- “First-Time Drinkers” aged between 21 and 27 years account for more than 27% of total beer consumption, but they prefer to drink light beers instead of dark beers offered by MMBC.
Aging Consumer Segment
Mountain Man Brewing Co.’s target consumer segment consists of blue-collar workers in the middle to lower-income category with an average age of over 45. This aging consumer group is shrinking in terms of population as well as beer purchases.
Fierce Competition
Large domestic brewers are successfully utilizing economies of scale by keeping the cost low while spending extensively on SG&A to maintain their sales level in the premium segment. Major domestic producers (e.g., Anheuser Busch, Miller Brewing Company, Adolf Coors) and second-tier domestic producers combined account for 86.5% of beer shipment in the East Central Region.
Such dominance of mainstream beer producers, coupled with the rise of import beer companies and craft brewers, has put significant pressure on smaller, regional breweries like Mountain Man.
Declining Sales Trend in the Overall US Market
As the US premium beer products have entered into the maturity stage of the product life cycle, premium beers have been going through a gradual decline of 4% per year in terms of beer sales. In contrast, light beer sales have increased at the same percentage over the last six years.
Rise of Substitute Goods and Increased Excise Tax
US per capita beer consumption has plummeted by 2.6% since 2013, primarily due to the intense competition from wine and spirit-based drinks and an increased excise tax.
2. Imagine that the Mountain Man brand is a person. What kind of brand personality does the Mountain Man brand have?
Brand Personality of Mountain Man
If I have to personify Mountain Man as a human, I imagine he would be a middle-aged American male dressed in an old brown suit that his predecessors have traditionally worn.
Some of the key characteristics of that person would be:
- Tough and Strong
- Rugged
- Family Oriented
- Blue-Collar Worker
- Patriotic
- Traditionalist
- Values stability and traditions over innovation
- Prefers familiarity over change
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