Mountain Man Brewing Company: Bringing the Brand to Light Case Solution

1. What has made MMBC successful? What distinguishes MMBC from its competitors?

Mountain Man Brewing Company, since its launch in 1925, has been known for its quality and taste of beer. The first and foremost element that played a key role in making MMBC successful is its branding. As apparent from the case study, consumers while buying a beer highly consider the brand image, tradition, and local authenticity of the beer. Over the years, MMBC has managed to stand out by developing a distinct brand image and focusing on key customers only. Mountain Man Lager is considered a strong, high quality beer targeted, particularly for middle to lower income men of over 45 years of age. In East Central Region of United States, Mountain Man Lager is known as the best regional beer and beer drinkers have a high awareness of the brand. MMBC has managed to earn a high brand loyalty and brand equity because of its strong branding activity and distribution network. A widespread distribution network that provides reach to every corner of the region has made it possible for the brand to achieve its core target market. In addition, sales force team has also contributed towards pushing the brand at off-premise locations.

The competition for MMBC is diverse and involves dozens of players. Though, some companies are of national and international level and have deep pockets for carrying out extensive marketing and branding activities, but MMBC has given these competitors a tough time at the regional level because of its high brand equity and awareness. Local people associate Mountain Man brand with the strong image, which has allowed the company to earn respectable profits, over the decades. Despite being only a regional player, Mountain Man Lager has managed to keep its pricing range at the premium level similar to popular domestic brands like Miller and Budweiser. The long heritage of the company has distinguished the brand from all of its direct and indirect competitors, in the market.

2. What has caused MMBC to decline even though it has a strong brand?

Over the years, consumers’ preferences, local laws, and market dynamics have changed considerably resulting in declining revenue for not only Mountain Man Lager, but for many other local and regional brands. West Virginia State has enforced new laws that limits promotion of beers; therefore, companies and distributors are forced to provide heavy in-store discounts to consumers so as to promote their products. Heavy in-store discounts means lower margin rates for manufacturers, which means that the companies will have to either increase their market size or reduce cost. The scenario got worse when national level companies started providing heavy margins to distributors and preferred economies of scale; thus, driving the majority of small brewing companies out of the market. Second major concern is the increasing health concern of the local population, which has resulted in decreasing use of strong beer.

Young drinkers who account for 13% of the total adult drinking population consume approximately 27% of the total beer and spend nearly twice than people over 35 years of age. These young drinkers have developed a taste for light beer, which has resulted in increasing consumption volume of the light beer. In 2005, 50.4% of the total beer consumed was a light beer, which shows the changing preference of the industry; despite the fact that these young drinkers are aware of Mountain Man Lager brand and the company’s rich heritage, but because of the unavailability of any light beer, the brand has failed to attract this particular segment of the market. In addition to this, another major problem faced by the company is the increasing age of the core target market. The company has always promoted its brand for blue collar medium to low income workers and because of the shrinking population of this segment, the brand is facing a tough time, in terms of decreasing revenue.

3. What are the pros and cons for MMBC to consider concerning the introduction of a light beer? Should MMBC launch Mountain Man Light? What is required for this brand, to break even in two years?

i. Advantages of Launching Mountain Man light Beer

First of all, the company will be able to target young drinkers who account for nearly 13% of the total adult drinking population and consume 27% of the total beer. In addition, young drinkers also spend nearly twice that of customers over 35 years of age. Moreover, the total consumption volume of light beer was 50.4% of the total beer consumed, in 2005. So by launching a light beer product, company will open doors to young drinkers, as well. Secondly, if MMBC extends its product line, then it will be able to leverage its core brand name in obtaining increasing shelf space. In addition, distributors and retailers will get more focused towards the product and brand.

ii. Concerns of Launching Mountain Man Light Beer

Major concerns of launching a light beer include a threat of alienating core customers of the company because Mountain Man Lager has always stood for a strong beer. Playing with the brand image would mean diluting the brand equity. In the past, many small regional companies have made the mistake of pleasing everyone by entering all market segments, and now these companies have become extinct. Secondly, successfully launching a light beer would require considerable investment for product marketing. The company would need to invest at least $750,000 during a six months period and another $900,000 for SG&A so as to effectively compete, in the market. Last, producing Mountain Man light would cost additional $4 per barrel, which would mean reduced profit margin for the company as it would not be able to squeeze the distributor’s margin; otherwise, they would reduce the shelf space for Mountain Man Lager.

Launching a lighter version of beer would be a strategic decision and would directly affect the long term profitability of the company; therefore, it is necessary to consider all pros and cons mentioned above. Launching a light beer would certainly affect the brand image, but if the company uses it right then it will be able to utilize its brand equity for obtaining increased shelf space and target market, which is much required at the moment for the brand to increase its revenue.