MMBC Group6

Topics: Revenue, Brand, Marketing Pages: 9 (856 words) Published: April 20, 2015
Mountain Man Brewing Company (MMBC)

Mountain Man Brewing Company
Case Study

Group 6
Luengthong Wararad
Sulaiman Bangura
Xiaozhu Yang  
Rodney K Amematekpor      
Amit Augustine


MMBC CASE ANALYSIS

GROUP 6

!1

Mountain Man Brewing Company (MMBC)

Problem Summary
• Mountain Man Brewing Company (MMBC) facing declining sales of 2% per year. • All revenues generated by a single product ‘Mountain Man Lager’ • Average consumer is male, above the age of 45 and typically in the middle-to-lower income bracket.

• 70% of current revenues generated off-site, with 30% of revenues generated in restaurants/bars.

• Pressure of competing with local, regional and national brewers causing revenue decline

• MMBC’s current market segment is shrinking, affecting brands not having product lines.

Final Conclusion:

Introduce a new Light Beer product under different brand.

MMBC CASE ANALYSIS

GROUP 6

!2

Mountain Man Brewing Company (MMBC)

List of Recommendations:
1. Continue selling Only Mountain Man Lager

Pros:
• No dilution of the core brand.
• No diversion of advertising expenses to other products.
• MMBC’s core demographic having intense loyalty and goodwill maintained. • All resources optimized to support one product.

Cons:
• Continued revenue decline (2% annually) for MMBC while Light beer market increases.
• 50.4% of the beer drinking market (light beer) left untouched. • MMBC’s poor market share for ages below 45 remains. Future customers not being pulled to MMBC brand.
• Less product lines means less display/shelf space given for MMBC by distributors • One product issue can decimate MMBC’s entire revenue stream.

MMBC CASE ANALYSIS

GROUP 6

!3

Mountain Man Brewing Company (MMBC)

2. Introduce a new product Mountain Man Light under the MMBC brand. Pros:
• 4% compound annual growth rate of light beer sales over the past 6 years • Light beer market is the only non-super-premium domestic type of beer market that is increasing.
• Potential to expand the market base of MMBC and capture missing market share. • Increased on-site sales in restaurants and bars
• Lower advertisement costs as MMBC brand is well known

Cons:
• Brand Equity of main Lager beer might be diluted (Brand erosion) • Alienate existing Mountain Man loyal customers
• Might be difficult to get more shelf space, causing diminished MMBC shelf space • Might drastically diminish existing product revenues (Cannibalization) • Company resources divided amongst the beer offerings

MMBC CASE ANALYSIS

GROUP 6

!4

Mountain Man Brewing Company (MMBC)

3. Introduce a new product under different brand name.
Pros:
• Expected increase in revenue
• Cater to growing market at 4% CAGR
• No Brand dilution, and No brand cannibalization

Cons:
• Cannot leverage existing MMBC brand name and presence.
• Additional advertisement overheads

MMBC CASE ANALYSIS

GROUP 6

!5

Mountain Man Brewing Company (MMBC)

Analysis
Current MMBC Lager Forecast:

Chris' Projections (assuming a 2% decrease in sales)

Exhibit 1, 2005 Income Statement

2006
Barrels sold

520,000

2007

509,600

499,408

2009

489,420

2010

479,631

470,039

Net Revenues

$50,440,000

CGS

34,803,600

69.0%

34,107,528

33,425,377

32,756,870

32,125,714

31,459,698

Gross Margin

15,636,400

31.0%

15,323,672

15,017,199

14,716,855

14,398,536

14,134,067

SG&A

9,583,600

19.0%

9,583,600

9,583,600

9,583,600

9,583,600

9,583,600

Other Op Exp

1,412,320

2.8%

1,412,320

1,412,320

1,412,320

1,412,320

1,412,320

Operating margin

4,640,480

9.2%

4,327,752

4,021,279

3,720,935

3,402,616

3,138,147

151,320

0.3%

151,320

151,320

151,320

151,320

151,320

Net Income before Taxes

4,791,800

9.5%

4,479,072

4,172,599

3,872,255

3,553,936

3,289,467

Provision for Taxes...
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