Mountain Man Beer Company – Case Analysis

Case Analysis visual modality macrocosm create from raw material Company Bringing the mark to crystallise kettle of fish homo Brewing Company (MMBC) was founded by Guntar Prangel in 1925. He reformulated an old family brew with quality ingredients, resulting in a flavorful gall preference beer which was launched as the mound adult male L get alongr. The instigator grew to claim a respectable trade shargon for an independent-family-owned-brewery, in whole of the east closely rudimentary United States by 1960. veritable(a) today, after 80 geezerhood, the laager is a legacy brew, awarded as the trump out Beer in West Virginia for more years in a row.MMBC is exempt a individual(a) harvesting caller and generates e actuallyplace $50 million in revenue and trade over 520,000 barrels of masses Man Lager. All has been surface thus removed but now the grocery trends atomic number 18 al courses-ever-ever-changing rapidly. Problem Statement For the rootage time in the 80+ years MMBC has experienced a 2 portion dec grade in revenue, relative to the prior financial year. Is this a one-time occurrence or a signal change in the overall merchandise bottom? Businesses must work in a certain behavior in tack to maximize pay or run the risk of losing their place in the marketplaceplace.Chris Prangel, son of the President and proprietor of MMBC, Oscar Prangel, is to inherit the avocation in hardly five years. With differing steering styles and thoughts on the guardianship the organization should take, this uncertainty could be potentially crippling over time. The question of whether or not MMBC should move ahead with Chriss intend to introduce a cloudless beer fruit is the one that is nearly clever to the overall direction the company pull up stakes take. The perpetually changing selling environment with respect to demographic, socio-cultural, and political cenario allow beguile managements decision on which rail to tak e. SWOT Analysis Strengths Mountain Man Lager has established a target with a strong loyal patrician collar clientele. This high quality lager beer beer beer is cognise for its dark color, distinct acid taste and s scintillati b arely higher alcoholic inebriety content. It boasts an unaided response rate of 67% from the adult population of WV and is cognize to be the best localityal beer. In 2005, Mountain Man Lager won Best Beer in West Virginia for its eighth unbent year. It in any case won Best Beer in Indiana and was selected as Americas Championship Lager at the American Beer Championship.Research has sayn blue-collar males purchase 60% of the beer they drink from off-premise locations. Currently MMBC removes 70% of its beer at off-premise locations which is alleviate consistent with the industry wide gross gross gross revenue. The lager is affordably setd for the middle-to-lower income working man, at $2. 25 for a 12-ounce serving of draft beer in a bar a nd selling for $4. 99 for a hexad-pack in a local convenience store. Market investigate shows, Mountain Mans emplacement as an independent, family owned brewery domiciliates a superstar of authenticity with anti-big-business core drinkers.The set is as recognizable in the East profound region as Chevrolet and John Deere. MMBC has proved to be victorful in weed-root marketing with a sales force which is known to not just push the trade name but influence nodes to embrace Mountain Man and promote the stain by word of mouth. Weaknesses MMBC is well known for their barbed tasting product. This has given them great success in the past, however with the changing market they need to conform to the unused room of doing business if they wish to continue to succeed in the future.Having only one principal(prenominal) beer that is sold in the East central region of the United States ramp ups it hard to deem networks. MMBC has been experiencing a decline in their sales by nearly 2%. MMBC has a in truth fiddling demographic to which the lager appeals to. As such they be losing their influence over the jr. market, as well as the women drinkers. The attractiveness of a bitter tasting lager doesnt quite an win over the younger generation. Studies pass water shown they prefer a get off beer, something MMBC is considering developing. MMBC necessarily to consider the live associated with launching the virgin line.They would sell the MMLight at the equivalent price as the regular beer however it be considerably more to produce. Advertising would also add to the burden of MMLight. Advertising only when would approach over $750K for a six month campaign to reach brand awargonness of 60%. As they illuminanceen would only be able to sell the saucily product at the same price that their competitors are selling theirs, the cost might outweigh the rewards. Opportunities Looking outwardly one can see that MMBC has many possible avenues they could take advantage of, in the changing U.S. demographic and beverage market. MMBC is known for their traditional high quality lager with the potential to expand into several agile development markets such as get away beer and super- allowance beer. By entering a growing market MMBC could gain drinkers from different demographics which they currently lack, for instance women and those in their twenties juvenile to crapulence. By implementing these changes it could offset the market voice loss MMBC lager is currently facing. MMBC could structure how they market their beer, expecting at new avenues.The internet is one possibility, capitalizing on the younger generation and their anti-big-business-sentiment as a marketing tool. MMBC could try to increase sales in on-premise locations. MMBC should also look to expand their dispersion range to acquire more states in the U. S. focusing on their core grass root marketing strategies to grow their market share. Threats The threats portion of a SWOT compendium is best described as an analysis of external environmental threats to the business itself.The followers is a discussion of the most pertinent potential external influencers facing MMBC. everywhere the past four years per capita beer role in the US has declined by 2. 3% due in some weaken to competition from wine and spirit ground drinks but also due to changing cultural mores encour senescent moderation and ain responsibility. If this trend continues MMBC will be competing for an ever shrink piece of the market. The potential scotch and marketing response from the major brewery competitors is intimidate to a company the size of Mountain Man.With economies of scale in brewing, transportation and marketing, the Budweisers of the world are formidable rivals to say the least. They could respond in such a way as to call for doing business very difficult moving forward. Governmental contact in the beer industry is another come out at hand. The Federal Gov ernment has already raised the excise tax and with laws changing how beer can be promoted in a retail setting newly passed in WV could other states in the East Central region be too removed behind? The biggest potential threat is the shift in beer consumers taste to illumine beer and aside from the premium beers overall.Light beer sales account for over 50% of all beer sales and are growing at a enhance rate of 4% per year. One of the most troubling aspects of the surge in enlighten beers popularity is the demographic that is driving it. Young, first time, beer buyers / drinkers are at the crux of the demographic and marketers infer that if you can capture a customer young enough you incur them as a customer for life. Financials A look at the market analysis show alarming trends. In 2005 MMBCs revenue was down relative to the prior fiscal year.Changes in beer consumption are beingness driven by changing consumer segments. Light beer sales are increasing date Premium beer sa les are change magnitude in the east central region as seen in Exhibit 5 in the MMBC case. Super-premium beer sales increased the most by well over 9% in the past 6 years. This shows beer drinkers tastes are shifting authoritatively causing sales to reflect this trend. Exhibit 5 shows light beer has a much greater account book than premium beer signifying even small market penetration can mean significant volumes.Looking at Exhibit 6 voice A, the other brands have 14% of the light beer market beating out Coors glide slope in at 11%. This could entail that the light beer market is easily penetrated by a new product. Exhibit 2 examines the beer drinker demographics in 2005, MMLager has 19% of the effeminate demographic which is only a small portion, while domestic light beer boasts of 42% of the female beer drinking demographic. MMLager is the preferred beer of only 2% people in the 21-24 yr age bracket. In the 25-34 yr age group, 15% people prefer the lager and in 19% prefer t he lager in the 35-44 yr age bracket.These total are significantly less than those drinking domestic light beer and domestic premium beer. MMLager is losing the younger generation hands down. A large segment of the light beer drinkers (24%) make over $100 thousand dollars a year, so introducing a newer light beer at a slightly higher cost will hit a new income demographic that is not as mad about pricing. Recommendations 1. Do nothing MMBC customers base drinking lager is a shrinking market. The rate at which MMBC can make new customers can only set back a fraction of lively ones.Assuming the 2% annual sales decline, by 2010, sales would have declined by 10%, the profit margin would be drastically shrunk, and with firm costs remaining the same the company might be out of business in a matter of years. safekeeping in mind the demographics, there is pacify a possibility that the rate of declining sales might accelerate due to the aging customer base. The senior management at MM BC is reluctant to launch the new product and site the examples of over 40 breweries those have closed down. But this does not, in anyway, provide any solid evidence that MMBC will fall in those same footsteps if they are to launch the new line.According to research, product line extensions helped brewers obtain greater shelf remoteness of products and created greater product focus among distributers and retailers. Suggesting that MMBC do nothing would be a very short-sighted decision and classic mistake of marketing myopia. MMBC should do something soon in order to keep up with the changing market. 2. Launching Mountain Man light The research suggests that where the brand equity drives the sales of lager the same scheme would not work for light beer as the experience of stronger, bitter flavor is not firing to capture the light beer segment.MMBC needs to distance itself from the blue-collar beer image in order to attract the younger generation. 3. Launching light beer with a new name entropy suggests that light beer should not be marketed to the existing customer base, as they are entirely loyal to the original lager. As such, they should still incorporate the Mountain Man brand but name it something like Mountain Light. Having an affiliation with the brand will allow the same grass-root marketing strategy to be applied for marketing the light beer to the younger segment. Exhibits pic pic pic