i neeed this answer to this question and this question alone i will paypal you 200 dollars if you give it to me in percentage.

2. Under the status quo, what will MM Lager's sales revenues and E.C. premium beer market?

THIS QUESTION ABOVE I NEED THE ANSWER IN PERCENTAGE AND THE WORKED PROBLEM

2069

MAY 28, 2007

HEIDE ABELLI

Mountain Man Brewing Company:

Bringing the Brand to Light

It was February 20, 2006, in the New River coal region of West Virginia. Chris Prangel, a recent

MBA graduate, had returned home a year earlier to manage the marketing operations of the

Mountain Man Beer Company (MMBC), a family-owned business he stood to inherit in five years,

when his father, Oscar Prangel, the president and owner, retired. Mountain Man brewed one beer,

Mountain Man Lager, also known as "West Virginia's beer."

Due to changes in beer drinkers' preferences, the company was now experiencing declining sales

for the first time in the company's history. In response, Chris wanted to launch Mountain Man Light, a

"light beer" formulation of Mountain Man Lager, in the hope of attracting younger drinkers to the

brand. Over the previous six years, light beer sales in the United States had been growing at a

compound annual rate of 4%, while traditional premium beer sales had declined annually by the

same percentage. Earlier that day, Chris met with a regional advertising agency about a marketing

campaign to launch Mountain Man Light. Back in his office, he watched an agency videotape from a

focus group. He observed a half-dozen participants, 21 to 55 years old, showing various reactions to

proposals to extend the Mountain Man brand to a new light beer product.

A man in his fifties leaned into the facilitator and declared, "Mountain Man Light? Come on,

I'm not interested in light beer. Just don't mess with Mountain Man Lager."

A man in his early thirties, dressed in jeans and a camouflage shirt, stared at a mock

advertisement and shouted, "Fancy barbecue parties, with puppies running around.... What

do they have to do with Mountain Man?"

A man, in his mid-twenties and fashionably-dressed, said, "Sounds pretty corporate... I think

the beer is too strong for me anyway. I'll leave it to these guys to drink."

A woman in her early twenties wearing low-rise jeans and a trendy T-shirt commented,

"Mountain Man is kind of 'retro cool.' I like light beer and Miller Lite is so pass. I would

definitely try Mountain Man Light."

________________________________________________________________________________________________________________

Heide Abelli prepared this case solely as a basis for class discussion, and not as an endorsement, a source of primary data, or an illustration of

effective or ineffective management. Heide Abelli is a former consultant with the Monitor Group, a strategy consulting firm based in

Cambridge, MA, where she consulted to a variety of consumer products companies on marketing issues. The author thanks the following

executives from the brewing Industry; their help was indispensable in refining the case: Brent Ryan of Newport Storm, Rob Schimony of

Yuengling & Son, and Charlie Storey of Harpoon Brewery.

This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional

references to actual companies in the narration.

Copyright 2007 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,

write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,

photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

Chris switched off the videotape and glanced up at a photograph of his father with a group of

rugged, middle-aged men from the Coal Miner's Union. Although Chris firmly believed that the

window of opportunity for introducing Mountain Man Light was closing, Oscar had warned, "Look at

what new product lines get you... 90% more products, 90% more chance you'll kill your core brand."

Chris wondered how the men in the photograph would react to a billboard picture of yuppies

consuming Mountain Man Light. Could Mountain Man command as much pride for the brand from

his generation as it had from his father's? Moreover, could he reposition the brand to drive sales of

Mountain Man Light to young people without eroding the core brand equity of Mountain Man Lager?

As Chris prepared to discuss the brand extension with Oscar, he knew that whatever strategy

Mountain Man pursued, it would have dramatic implications for the brand, the company, and his

family.

Mountain Man: The Company and the Brand

Guntar Prangel founded the Mountain Man Beer Company (MMBC) in 1925. Mr. Prangel had

reformulated an old family brew recipe using a meticulous selection of rare, Bavarian hops and

unusual strains of barley, resulting in a flavorful, bitter-tasting beer which the Prangel family

launched as Mountain Man Lager. By the 1960s, Mountain Man Lager's reputation as a quality beer was

well entrenched throughout the East Central region of the United States.1

Mountain Man Lager was a legacy brew in a mature business. By 2005 Mountain Man was

generating revenues just over $50 million and selling over 520,000 barrels2 of Mountain Man Lager

beer primarily to distributors in Illinois, Indiana, Michigan, Ohio, and its native West Virginia. (See

Exhibit 1 for MMBC income statement.) It had held the top market position among lagers in West

Virginia for almost 50 years and had respectable market share for an old school, regional brewery in

most of the states where the beer was distributed. To accentuate the beer's dark color, it was

packaged in a brown bottle, with its original 1925 design of a crew of coal miners printed on the front.

Mountain Man Lager was priced similarly to premium domestic brands such as Miller and Budweiser

and below specialty brands such as Sam Adams. Its price was typically $2.25 for a 12-ounce serving

of draft beer in a bar and $4.99 for a six-pack in a local convenience store.

Brand played a critical role in the beer-purchasing decision. When selecting beer, consumers

considered several factors: taste; price; the occasion being celebrated; perceived quality; brand image;

tradition; and local authenticity. MMBC relied on its history and its status as an independent, family owned brewery to establish an aura of authenticity and to position the beer with its core drinkersblue

collar, middle-to-lower income men over age 45. (Exhibit 2 provides profiles of the average Mountain

Man Lager consumer in contrast to average profiles of premium-beer and light-beer drinkers.) In a

recent study in West Virginia, this audience had rated Mountain Man Lager as the best-known

regional beer, with an unaided response rate of 67% from the state's adult population. In 2005,

Mountain Man Lager won "Best Beer in West Virginia" for its eighth year straight (it also won "Best

Beer in Indiana") and was selected as "America's Championship Lager" at the American Beer

Championship.

Brand awareness was one cornerstone of the brand's success with blue-collar consumers. Market

research showed that Mountain Man was as recognizable a brand among working-class males in the

East Central region as Chevrolet and John Deere. The other cornerstones were the perception of

quality in Mountain Man Lager and the brand loyalty it cultivated. There were ranges of subjective

1 The East Central beer region of the United States consisted of seven states: Illinois, Indiana, Kentucky, Michigan, Ohio, West

Virginia, and Wisconsin.

2 One beer barrel = 31 U.S. gallons = 2 "half-barrel" (15.5 gallon) kegs = 13.78 cases (of 24 12-ounce bottles).

2

BRIEFCASES | HARVARD BUSINESS SCHOOL

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

Mountain Man Brewing Company: Bringing the Brand to Light | 2069

attributes that defined the quality of Mountain Man, like its smoothness, percentage of water content,

and "drinkability"but it was Mountain Man Lager's distinctively bitter flavor and slightly higherthan-average alcohol content that uniquely contributed to the company's brand equity. One

participant in the recent focus group seemed to have spoken for many customers: "My dad drank

Mountain Man just like my granddad did. They both felt it was as good a beer as you could get

anywhere."

Over the years, MMBC had invested in a number of branding activities to build "brand equity"

with core consumers. Mountain Man's distributors also handled Anheuser Busch and numerous

specialty beer products. Because these distributors tended to focus on servicing their main customer,

they would not reliably strive to build Mountain Man's brand. MMBC therefore established its own

small sales force, which didn't just help push the brand; it proselytized, focusing on one ultimate

objective: getting off-premise locations (like liquor stores or supermarkets) to embrace Mountain

Man. Blue-collar males purchased 60% of the beer they drank at off-premise locations. Mountain

Man sold 70% of its beer for off-premise (liquor stores) consumption, consistent with average

industry sales through this channel.

Mountain Man's Competition

The competition in the U.S. beer market fell into four categories: Major and second-tier domestic

producers, import beer companies, and specialty brewers.

Major domestic producers consisted of a handful of companies who competed on the basis of

economies of scale in production and advertising. This highly concentrated segment of the market

was dominated by three companies: Anheuser Busch, Miller Brewing Company, and Adolf Coors

Company. Together, these companies accounted for 74% of 2005 beer shipments in Mountain Man's

region.

Second-tier domestic producers consisted of medium-sized competitors, such as Pabst Brewing

Company and Genessee which, similar to the major domestic producers, sold their beers nationally to

distributors and retailers. In addition, there were smaller, regional players that produced between

15,000 and two million barrels of beer per year and generally limited distribution to areas

surrounding their plants, selling their beer to regional distributors and retailers. By November 2005,

there were roughly 30 regional breweries in the United States. These companies followed the same

product and marketing strategy as the major domestic producers, but lacked the financial and

marketing resources to defend their brands as aggressively. The second-tier domestic producers

accounted for 12.5% of beer shipments in the East Central region in 2005.

Import beer companies from Germany (Beck's, for example), Holland (Heineken), Canada (Molson),

and Mexico (Corona) traditionally served the needs of sophisticated beer drinkers who desired more

flavorful, bitter-tasting beer products. They operated at a distinct disadvantage relative to domestic

competitors due to higher shipping costs, weaker distribution networks, an inability to control

product freshness, and margin reduction due to weakening of the U.S. dollar. In 2005, import

companies controlled about 12% of the region's market.

The craft beer industry was divided into four markets: brewpubs, microbreweries, contract

breweries, and regional craft breweries. They all brewed beer using traditional malt ingredients,

were independently owned, and by definition produced less than two million barrels annually.

Brewpubs were restaurant/bar establishments with over 25% of their beer products brewed and

consumed on site. In 2005, more than 980 brewpubs operated in the United States, accounting for

10% of the craft brew volume. Microbreweries traditionally operated in limited distribution networks

HARVARD BUSINESS SCHOOL | BRIEFCASES

3

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

and produced less than 15,000 barrels a year. In 2005, the 380 U.S. microbreweries accounted for 12%

of the craft beer volume. Contract breweries, breweries that manufactured beer for client firms,

accounted for 16% of the craft beer volume. Finally, almost 50 U.S. regional craft brewers (such as Sam

Adams, Sierra Nevada, and Harpoon), producing more than 15,000 barrels annually, accounted for

the remaining 62% of the market. In the East Central region, all craft brewers together controlled

1.5% of the total beer market. (See Exhibit 3 for competitive market shares by brewer type in the East

Central region.)

The Situation at Mountain Man in 2005

The United States was the largest beer-consuming market in the world, with over $75 billion in

annual sales in 2005. Since 2001, U.S. per capita beer consumption had declined by 2.3%, largely due

to competition from wine and spirits-based drinks, an increase in the federal excise tax, initiatives

encouraging moderation and personal responsibility, and increasing health concerns.

Of total U.S. beer sales, 18.3% took place in the East Central region. (See Exhibit 4 for East Central

beer consumption overall and by state.) Although imports and craft beers didn't have quite the

stronghold in the "heartland" states (where MMBC sold its beer) as they did in other parts of the

country, even there, both categories were beginning to take hold. Some states in the region, including

West Virginia, had become particularly competitive; the state had recently repealed arcane laws that

had sharply limited the promotion of beer in retail establishments, and as a result, retail stores began

selling beer at deep discounts. Distributors became more discriminating about which smaller brands

they would continue to carry, paying more attention to turnover and margins, and dropping brands

that contributed little to the bottom line. Large national brewers, who maintained economies of scale

in brewing, transportation, and marketing, put great pressure on the smaller, regional breweries like

Mountain Man.

This pressure, combined with a glut of product, led to the closing of many independent breweries

in the East Central region over the past 40 years. Breweries that once reigned supreme across the

region had disappeared, taking with them the loyal allegiance of their communities. MMBC's

survival was in large part due to the fact that it served a large enough market with a very strong

brand, and it therefore could continue to compete against national players with deep pockets such as

Anheuser Busch, the company's most significant competitor. There were only four breweries left in

West Virginia by 2005, and Mountain Man's 2005 revenues were down 2% relative to the prior fiscal

year. Even though the company was still profitable in spite of the sales decline, the prospect of

continued downward pressure on revenue would challenge the company's ability to remain

profitable. Facing an aging demographic in the shrinking premium segment of the beer market, the

company struggled to maintain a steady share of its market segment against the large domestic

brewers, which were spending heavily to maintain their own sales levels in the premium segment.

Beer was not subject to sharp fluctuations in demand during economic downturns. Changes in

volume were driven primarily by changes in consumer segments. Most industry observers agreed

that the key consumer segment for beer companies was younger drinkers, 21-27 years of age. This

group represented the "first-time drinker demographic" that had not yet established loyalty to any

particular brand of beer. The segment represented about 13% of the adult population in 2005, but

accounted for more than 27% of total beer consumption and was growing. In addition, this age

group spent twice as much per capita on alcoholic beverages than consumers over 35 years of age

and was forecasted to grow by nearly four million by the year 2010.

Another significant trend was growth in the "light" beer category which had been steadily

gaining in market share and accounted for 50.4% of volume sales in 2005, compared with 29.8% in

4

BRIEFCASES | HARVARD BUSINESS SCHOOL

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

Mountain Man Brewing Company: Bringing the Brand to Light | 2069

2001. (See Exhibit 5 for a breakdown of the East Central regional market by type of beer, and

Exhibit 6 for light beer market shares in the region.) In fact, younger consumers preferred light beer

to other categories. They also typically consumed in quantity. However, they tended to buy

mainstream brands. A consumer study revealed that while Mountain Man rated high in terms of

awareness with the younger, light-beer drinking segment of the market, Mountain Man Lager tracked

very low as a purchasing preferenceas did other lagers and fuller-flavor brews.

Industry observers believed new products introduced beer drinkers to both styles of beer while

simultaneously keeping them in the "brand" family. Product line extensions leveraging the core

brand name often helped brewers obtain greater shelf space for products and created greater product

focus among distributors and retailers. Mountain Man was now alone among the major and regional

beer companies in not having expanded its product line beyond its flagship lager product.

In light of these developments, Mountain Man engaged a market research firm to evaluate its

single-brand product strategy and brand extension opportunities. The study yielded three

interesting findings:

1.

Mountain Man Lager was known as "West Virginia's Beer." Authenticity, quality, and a

unique West Virginia "toughness" were core attributes of the brand. Younger beer drinkers

were well aware of the brand, yet perceived the beer as "strong" and a "working man's" beer

largely consumed by the "swing" and baby boomer generations. Because younger beer

drinkers held "anti-big-business" values, they did show some appreciation for the brand's

association with an independent brewery.

2.

Traditional advertising was not as effective as grass-roots marketing3 in building beer brand

awareness in certain states in the East Central region, such as West Virginia and Kentucky.

Mountain Man had always relied on grass-roots marketing to spread its beer quality message

by word of mouth. In contrast, national beer brands used lifestyle advertisements to reach

young drinkers. Broadcast spending for beer ads topped $700 million annually, representing

over 70% of total advertising expenditures on alcohol. (See Exhibit 7 for U.S. advertising

spending on beer.)

3.

A small percentage of MMBC's blue-collar customers accounted for a large percentage of

sales, and those customers tended to be very loyal to Mountain Man Lager. In fact, the sole

brand loyalty rate4 for Mountain Man Lager was 53%, which was higher than the rates of

competitive product (i.e., 42% for Budweiser and 36% for Bud Light.) The non-loyal Mountain

Man Lager customers occasionally spread their consumption across up to five other beer

brands.

The Challenges Ahead at Mountain Man

Chris Prangel pondered the findings of the study. To him it was clear that product preferences in

the beer market were changing, and that a light beer product was strategically important to MMBC's

future. First, light beer was a newer, fast-growing product category and the only beer category

demonstrating consistent growth. Moreover, a light beer would help MMBC gain share in onpremise locations: restaurants and bars. Light beers appealed to younger drinkers overall, and to

women, both groups that frequented these locations. Market research indicated that Mountain Man's

3 Grass-roots marketing campaigns typically involve local marketing activities that concentrate on getting as close and

personally relevant to individual customers as possible.

4 The sole brand loyalty rate refers to the percentage of brand users who are loyal to a particular brand and not interested in

experimenting with other brands / products.

HARVARD BUSINESS SCHOOL | BRIEFCASES

5

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

core customers did not state a brand preference in restaurants and bars. Chris believed Mountain

Man's brand recognition could translate into a meaningful share of the local light beer market and

hoped that in turn, Mountain Man Light's popularity could boost the sales of Mountain Man Lager.

Others on the MMBC management team did not share Chris's enthusiasm for launching Mountain

Man Light. Stretching the brand to target younger drinkers who consumed light beer had dramatic

branding implications, not to mention competitive ones. Younger drinkers mirrored the target

market for the large national and regional brands. In addition, Oscar Prangel was concerned that

launching Mountain Man Light would alienate the core customer base and ultimately erode and dilute

the Mountain Man brand equity. He was also worried that Mountain Man Light might cannibalize the

sales of Mountain Man Lager because of a fear that retailers would not grant Mountain Man

incremental shelf space and therefore would substitute cases of light product for the lager product.

In his last lecture, Oscar had said, "Chris, value is achieved by focusing on what you do best, not

by attaching your brand to every conceivable version of a product. Another product line will just

add to our cost structuremore inventory, more packaging, more SG&A. We won't sell more

barrels; we'll just reduce our profit. Then there's the real risk that Mountain Man Light might just end

up hurting the sales of Mountain Man Lager; I reckon we could count on at least 5% but it might be

20% or higher. Look at how many light beers there are, with millions of dollars invested by their

brands. Have they increased the total sales of beer?" To address his father's concerns, sales of

Mountain Man Light would have to compensate for this potential loss of lager product revenue.

However, while Chris understood his father's concerns, he believed that there was a chance that the

launch of Mountain Man Light might just give Mountain Man Lager a lift. He had replied to his father,

"This is our chance to play in the light beer sandbox but stay true to the Mountain Man brand by

playing on the strengths of our core product."

Chris also wondered if MMBC could afford to launch Mountain Man Light. Although the launch

of Mountain Man Light would not require capital expenditures in plant and equipment in the short

term due to existing excess capacity in Mountain Man's facility, launching a new product was an

expensive endeavor for a lean company not used to making these kinds of investments. While this

was not the launch of a new national beer brand, which Chris knew cost between $10 million and $20

million in TV advertising alone, it wasn't cheap to launch a new product on a regional basis either.

The advertising agency estimated that creating a brand awareness level of 60% for Mountain Man

Light in the East Central region would cost at least $750,000 in an intensive six-month advertising

campaign. This would be on top of the $900,000 in annual, incremental SG&A costs that Chris

projected the new product would require, based on the need for a Mountain Man Light product

manager, an addition to the sales staff, and ongoing marketing expenditures. Although MMBC's

variable cost per barrel of its lager beer was $66.93, it would cost $4.69 more per barrel to produce

Mountain Man Light. Because Mountain Man would receive the same price per barrel for both

products, the contribution margin for Mountain Man Light would be lower than the contribution

margin of Mountain Man Lager. Chris knew that, given Mountain Man's CFO's conservative stance

regarding investment, he would have to convince the senior management team that the Mountain

Man Light product would generate a profit within two years, selling enough barrels to cover both the

associated launch marketing and incremental SG&A expenses and make up for the negative impact

on overall profitability resulting from potential lost Mountain Man Lager sales. His estimates

regarding barrel sales would need to make sense in terms of market share in the very competitive

light beer segment. Chris recalled the risks expressed by John Fader, the vice president of sales:

"Mountain Man Light will never achieve the volume of larger light beer brands like Miller Lite or

Coors Light; those brewers sustain distribution and support advertising in ways we can't. What's

more, the big companies are constantly throwing new products bearing the established brand name

6

BRIEFCASES | HARVARD BUSINESS SCHOOL

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

Mountain Man Brewing Company: Bringing the Brand to Light | 2069

into the marketplace. Mountain Man Light would get lost in that sea of new-product introductions.

You'd be doing well if you grabbed a quarter point of market share. We won't get our retailers to give

us more facings,5 so Mountain Man Light would just replace facings we have earned for Mountain Man

Lager. The light beer would only draw time, resources, and attention away from our lagerour

bread and butter. Boosting sales of our core brand even slightly means more than what we will get in

the light beer segment. It's a pipedream, Chris."

Chris's Decision

Chris looked at some revenue and net profit projections he had developed to 2010 assuming that

Mountain Man Lager lost 2% of its revenue base annually. He felt a knot in his stomach as he

pondered the "status quo" strategy. He then examined the financial projections he had done a few

weeks prior for the Mountain Man Light launch, which showed regional revenue growth of the light

beer product at 4% annually and Mountain Man steadily growing its share of the regional light beer

market by a quarter of a percent each year off of a 2006 base market share of 0.25%.6

However, before presenting a formal plan to launch Mountain Man Light to his father, Chris

needed to think further, strategically and tactically, about marketing and distribution to a new

customer segment. How would he address his father's concern that targeting this segment would

alienate existing Mountain Man customers and erode core brand equity? What about his father's

belief that the Mountain Man brand would never capture the same loyalty among younger beer

drinkers that it had from blue-collar workers? Since MMBC did not have the resources to match the

marketing efforts of the large, national, light beer brewers, Chris wondered how he would argue that

Mountain Man could compete against deep-pocketed competitors for the segment. Was he overly

optimistic in his projections of the percentage of the light beer market that Mountain Man Light could

capture?

Chris thought back on what his father had recently said to him, "Chris, I try to keep in mind all

the other regional breweries that have vanished over the past 30 or 40 yearsNeuweiler, Horlacher,

dozens and dozens of themall gone. I've watched the giants in this business taken down by fatal

decisions made at the top that irreversibly damaged the brand. In the '50s, Schlitz sold more barrels

than any other brewer. You can't buy a Schlitz beer today. Mountain Man is still standing because

we manufacture an exceptional beer with a great brand name, we've never lost sight of our core

customer, and we've never been seduced by the other guy's market." Chris valued his father's words

and he did not want to be the one to lead Mountain Man down the path to oblivion; however,

Mountain Man's revenues were down, and Chris needed to help his father secure the company's

future. He wondered if he was missing something or maybe if there were other options he needed to

consider. The knot in his stomach tightened again. This was West Virginia's beer. It was the Prangel

family beer. It was Chris's legacy staring him in the face.

5 Facings are spaces on the retail shelf, typically in coolers with glass doors.

6 For purposes of financial analysis in this case, assume Mountain Man's discount rate for evaluating investment projects was

12%.

HARVARD BUSINESS SCHOOL | BRIEFCASES

7

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

Exhibit 1 Mountain Man 2005 Income Statement

$50,440,000

34,803,600

100.0%

69.0%

15,636,400

9,583,600

1,412,320

31.0%

19.0%

2.8%

Operating Margin

Other Income

4,640,480

151,320

9.2%

0.3%

Net Income Before Taxes

Provision for Income Taxes

4,791,800

1,677,130

9.5%

3.3%

$ 3,114,670

6.2%

Net Revenues

COGS

Gross Margin

SG&Aa

Other Operating Expenses

Net Income After Taxes

aAdvertising expenses were $1.35 million annually or 2.7% of total revenues.

Advertising expenses included radio, print, and outdoor advertising, sponsorships, as

well as costs to produce these media.

Exhibit 2 Profile of Beer Drinkers by Beer Type by Key Demographics, 2005

Domestic

Light Beer

Domestic

Premium Beer

Mountain

Man Lager

Gender

Male

Female

58%

42%

68%

32%

81%

19%

Age

21-24

25-34

35-44

45-54

55-64

65+

9%

20%

24%

22%

14%

12%

8%

20%

23%

23%

14%

12%

2%

15%

19%

32%

19%

13%

Household Income

under $25k

$25k-49.9k

$50k-74.9k

$75k-99.9k

$100k+

14%

25%

21%

16%

24%

16%

24%

21%

15%

23%

20%

27%

25%

15%

13%

Source: First two columns of data extracted from Mintel/Simmons NCS 2005 report, figure 67

8

BRIEFCASES | HARVARD BUSINESS SCHOOL

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

Mountain Man Brewing Company: Bringing the Brand to Light | 2069

Exhibit 3 Competitive Market Shares in Barrels by Brewer

East Central Region

Anheuser-Busch

15,620,252

42.0%

Miller

8,553,948

23.0%

Coors

3,347,197

9.0%

Other 2nd tier Premium & Popular Brewers

4,648,885

12.5%

557,866

1.5%

4,462,929

12.0%

37,191,077

100%

Craft/Specialty Brewers

Imports

Total

Note: Sales in barrels of wholesale shipments.

Exhibit 4 Beer Consumption by State, 2000 to 2005 (shipments in barrels)

STATE

2000

2001

2002

2003

2004

2005

Illinois

Indiana

Kentucky

Michigan

Ohio

West Virginia

Wisconsin

East Central

Region

9,038,323

3,954,209

2,517,894

6,761,561

8,493,144

1,274,626

4,741,019

9,165,381

3,947,446

2,486,731

6,695,665

8,601,604

1,311,838

4,784,791

9,268,188

4,021,685

2,564,013

6,854,064

8,682,331

1,360,589

4,890,122

9,108,157

3,905,265

2,490,928

6,774,702

8,760,272

1,348,527

4,855,313

9,032,851

3,993,643

2,591,949

6,746,578

8,702,382

1,373,205

4,877,662

9,063,267

3,998,855

2,555,739

6,700,174

8,584,283

1,359,231

4,929,529

36,780,776

36,993,456

37,640,992

37,243,163

37,318,269

37,191,077

TOTAL U.S.

197,609,645

200,146,800

202,605,792

202,586,016

204,318,220

203,515,148

Source: Beer Institute data.

HARVARD BUSINESS SCHOOL | BRIEFCASES

9

2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

Exhibit 5 Consumption by Type of Beer and by Origin/Packaging, 2005

A. Consumption by Type of Beer

Light Beer

Premium Beer

Popular

Imported Premium

Superpremium (craft and

high-end domestics)

Total Barrels

EAST CENTRAL

REGION

18,744,303

7,326,642

4,351,356

4,462,929

% Total

50.4%

19.7%

11.7%

12.0%

2,305,847

6.2%

37,191,077

100.0%

6-year

CAGR

+4%

(4%)

(5%)

+6%

+9%

B. Consumption by Origin/Packaging

EAST CENTRAL

REGION

% Total

Imported

Domestic - Packaged

Domestic - Draught

4,462,929

29,618,974

3,109,174

12.0%

79.6%

8.4%

Total Barrels

37,191,077

100.0%

10

BRIEFCASES | HARVARD BUSINESS SCHOOL

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

Mountain Man Brewing Company: Bringing the Brand to Light | 2069

Exhibit 6 Light Beer Market Shares and Dominant Brands

A.

Light Beer Competitive Market Shares

East Central Region

2005 Market Share

Anheuser-Busch

Miller

Coors

Other brands

Imports

49%

24%

11%

14%

2%

Total Light Beer

100%

B.

Leading Domestic Light Beer Brands

East Central Region

2005 Market Share

Bud Light

Miller Lite

Coors Light

Natural Light

Busch Light

Michelob Ultra

Milwaukee's Best Light

Other domestic brands

32.9%

17.8%

14.7%

9.8%

6.4%

5.6%

3.4%

9.4%

Total

100%

C.

Leading Imported Light Beer Brands

Brand

2005 Market Share

Corona Light

Amstel Light

Labatt Blue Light

Other imported brands

Total

57%

26%

15%

2%

100%

Note: Market share calculations based on wholesale barrel sales.

HARVARD BUSINESS SCHOOL | BRIEFCASES

11

This document is authorized for use only by Mimi Guercio in BADM 7100 - Marketing Administration - Summer 2020-1 taught by DAN RICE, Louisiana State University from May 2020 to Jul

2020.

For the exclusive use of M. Guercio, 2020.

2069 | Mountain Man Brewing Company: Bringing the Brand to Light

Exhibit 7 U.S. Beer Advertising Expenditures

by Medium (in millions of dollars), 2005

Medium

Network television

Cable television

Spot television

Syndicated television

Spot radio

Network radio

Total Broadcast

Magazines

Newspapers

Newspaper supplements

Outdoor

Total Print

TOTAL

12

2005

$382.3

72.1

144.3

5.5

22.4

1.2

$627.8

23.2

6.6

-

51.5

$81.3

$709.1

BRIEFCASES | HARVARD BUSINESS SCHOOL