Mountain Man Brewing Company Essay
Mountain Man Brewing Company
SITUATION:
Mountain Man lager has been a long standing premium beer distributed in the central east since 1925. The company has built a brand image around its blue-collared, middle-aged workers by relying on the authenticity of their family owned business to position themselves with their core customers. Recent changes in beer drinker preferences have resulted in a decrease in sales for the first time in the company’s long history. Chris Prangel has returned from earning his MBA and is in line to inherit the family business. With the aid from his father and other key members in the organization, he must decide the best direction for the future of the company based on the current market conditions.
DECISION TO BE MADE:
With the …show more content…
This growth is reasonable, as the premium beer brand makes up roughly 7% of the east region’s premium beer sales. At a growth rate of 0.25%, it would take 20+ years to reach the same market share in the light beer industry, more than enough time to establish a new brand awareness with a younger consumer. The loss of sales of premium beer to the new light beer market can vary between 5% and 20%. For the purposes of this analysis, the best and worst case (5% and 20%) is used. The key to the entire analysis revolves around the projected sales and eventual growth in the light beer market. The risk associated with introducing a new product is very high, and to meet the projected growth, additional advertising costs may be incurred. By producing a quality product associated with a strong brand name, these risks can be avoided. Based on the aforementioned market variables and projections, the net present value and breakeven analysis for first and second year of production was calculated for two scenarios: 1) 5% loss of premium beer sales 2) 20% loss of premium beer
SITUATION:
Mountain Man lager has been a long standing premium beer distributed in the central east since 1925. The company has built a brand image around its blue-collared, middle-aged workers by relying on the authenticity of their family owned business to position themselves with their core customers. Recent changes in beer drinker preferences have resulted in a decrease in sales for the first time in the company’s long history. Chris Prangel has returned from earning his MBA and is in line to inherit the family business. With the aid from his father and other key members in the organization, he must decide the best direction for the future of the company based on the current market conditions.
DECISION TO BE MADE:
With the …show more content…
This growth is reasonable, as the premium beer brand makes up roughly 7% of the east region’s premium beer sales. At a growth rate of 0.25%, it would take 20+ years to reach the same market share in the light beer industry, more than enough time to establish a new brand awareness with a younger consumer. The loss of sales of premium beer to the new light beer market can vary between 5% and 20%. For the purposes of this analysis, the best and worst case (5% and 20%) is used. The key to the entire analysis revolves around the projected sales and eventual growth in the light beer market. The risk associated with introducing a new product is very high, and to meet the projected growth, additional advertising costs may be incurred. By producing a quality product associated with a strong brand name, these risks can be avoided. Based on the aforementioned market variables and projections, the net present value and breakeven analysis for first and second year of production was calculated for two scenarios: 1) 5% loss of premium beer sales 2) 20% loss of premium beer