Mountain Man Beer Company

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