Download - Mountain Man Beer Company
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Mountain Man Beer Company
Group 7AmitajeetChintanPriyakRudranilSaurav
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MMBC
•Strong Brand•Top market position in premium segment
in East Central America. Popular for over 50 years
•Popular among Blue collared working men
•Family owned independent image
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Issues
•2% decline in revenue•Rising popularity of Light beer among
young people
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Projecting Revenues
Year Revenue
2006 $49,431,200 2007 $48,442,576 2008 $47,473,724 2009 $46,524,250
•Assuming 2% drop in revenues every year
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Projecting Revenues
2007 2008 2009Net Revenue $48,442,576 $47,473,724 $46,524,250
COGS $33,425,377 $32,756,870 $32,101,732Income after
tax $2,991,320 $2,931,502 $2,872,872
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Option 1: Introduce Light beer by Mountain Man brand name•Advantages
▫Increase in revenue▫Low advertising Costs▫Cater to a market growing @ 4% CAGR
•Disadvantages▫Product cannibalization▫Brand erosion▫May not be perceived well
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Option 2: Introduce Light beer by some other name•Advantages
▫Expected increase in revenues▫Cater to a market growing @ 4% CAGR▫No brand dilution, no cannibalization
•Disadvantages▫Additional advertising costs▫Cannot leverage strong brand name
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Feasibility Analysis of Option 2
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Feasibility Analysis (cont.)
•Net Revenue in 2005 : $50,440,000•Barrels sold: 520,000•Therefore, Selling Price per Barrel = $97•Price of Premium Beer = Price of Light
beer•There price of light beer per barrel: $
97/barrel
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Feasibility Analysis (cont.)
•Chris’ estimate: To capture 0.25% market share every year.
•Light beer market share in 2005 = 18,744,303 barrels
•At 4% CAGR, in 2007 market size = 20,273,838
•Selling 0.25% of this market @ $97/barrel will generate a revenue of $4,916,405
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Feasibility Analysis (cont.)
•Continuing with 4% CAGR and MMBC increasing its market share at 0.25%/year, we get the projected revenue from light beer:
Year Revenue from Light Beer
2005 $4,916,405
2006 $10,226,123
2007 $15,952,753
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Projecting new revenues
2007 2008 2009Net Revenue $53,358,952 $57,699,848 $62,477,003
COGS $37,063,518 $40,324,202 $43,906,770Income after
tax $2,669,810 $3,908,543 $4,724,656
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Comparing YoYYear 2006 2007 2008 2009
Revenue before $3,040,677 $2,991,320 $2,931,502 $2,872,872
Revenue after $3,040,677 $2,669,810 $3,908,543 $4,724,656
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Conclusion
•Significant growth in revenue by introducing light beer with different name
•Caters to a market growing @ 4% CAGR•Caters to a market that does not have a
brand loyalty•May develop brand loyalty over the years
with a segment of this target segment
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Food for thought, Option 3,4 etc…•What if, With the same packing, Mountain
Man introduces a light beer named▫Mountain Boy▫Plateau Man
•To save on its advertising expenses by•Leveraging its brand equity
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Thank You