Transcript
Mountain Man Beer Company
Group 7AmitajeetChintanPriyakRudranilSaurav
MMBC
•Strong Brand•Top market position in premium segment
in East Central America. Popular for over 50 years
•Popular among Blue collared working men
•Family owned independent image
Issues
•2% decline in revenue•Rising popularity of Light beer among
young people
Projecting Revenues
Year Revenue
2006 $49,431,200 2007 $48,442,576 2008 $47,473,724 2009 $46,524,250
•Assuming 2% drop in revenues every year
Projecting Revenues
2007 2008 2009Net Revenue $48,442,576 $47,473,724 $46,524,250
COGS $33,425,377 $32,756,870 $32,101,732Income after
tax $2,991,320 $2,931,502 $2,872,872
Option 1: Introduce Light beer by Mountain Man brand name•Advantages
▫Increase in revenue▫Low advertising Costs▫Cater to a market growing @ 4% CAGR
•Disadvantages▫Product cannibalization▫Brand erosion▫May not be perceived well
Option 2: Introduce Light beer by some other name•Advantages
▫Expected increase in revenues▫Cater to a market growing @ 4% CAGR▫No brand dilution, no cannibalization
•Disadvantages▫Additional advertising costs▫Cannot leverage strong brand name
Feasibility Analysis of Option 2
Feasibility Analysis (cont.)
•Net Revenue in 2005 : $50,440,000•Barrels sold: 520,000•Therefore, Selling Price per Barrel = $97•Price of Premium Beer = Price of Light
beer•There price of light beer per barrel: $
97/barrel
Feasibility Analysis (cont.)
•Chris’ estimate: To capture 0.25% market share every year.
•Light beer market share in 2005 = 18,744,303 barrels
•At 4% CAGR, in 2007 market size = 20,273,838
•Selling 0.25% of this market @ $97/barrel will generate a revenue of $4,916,405
Feasibility Analysis (cont.)
•Continuing with 4% CAGR and MMBC increasing its market share at 0.25%/year, we get the projected revenue from light beer:
Year Revenue from Light Beer
2005 $4,916,405
2006 $10,226,123
2007 $15,952,753
Projecting new revenues
2007 2008 2009Net Revenue $53,358,952 $57,699,848 $62,477,003
COGS $37,063,518 $40,324,202 $43,906,770Income after
tax $2,669,810 $3,908,543 $4,724,656
Comparing YoYYear 2006 2007 2008 2009
Revenue before $3,040,677 $2,991,320 $2,931,502 $2,872,872
Revenue after $3,040,677 $2,669,810 $3,908,543 $4,724,656
Conclusion
•Significant growth in revenue by introducing light beer with different name
•Caters to a market growing @ 4% CAGR•Caters to a market that does not have a
brand loyalty•May develop brand loyalty over the years
with a segment of this target segment
Food for thought, Option 3,4 etc…•What if, With the same packing, Mountain
Man introduces a light beer named▫Mountain Boy▫Plateau Man
•To save on its advertising expenses by•Leveraging its brand equity
Thank You
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