Mountain Man Brewing Company Case

Situation Analysis

Industry:

There are several firms in the industry found in the East Central Region divided into the following four categories: major domestic producers, second-tier producers, import beer companies, and the craft beer industry. Anheuser Busch, Miller Brewing Company, and Adolf Coors Company are the three firms that make-up the major domestic producers and also account for 74% of beer sale in the region in 2005, see appendix 2 for regional competition. There are approximately thirty regional brewers and two national brewers that make-up the second-tier producers and account for 12.5% of sales. There are numerous import beers sold in the region that account for 12% of the sales that normally go to beer drinkers that desire a more distinct, flavorful taste. The craft beer industry controls 1.5% of the industry, but there are different types of firms that divide this percentage into four categories. Brewpubs are restaurant/ bar establishments that make a quarter of their total sales on site and account for a total of 10% of craft beer sales. Microbreweries operate in small networks that limit the amount of barrels sold causing them to only account for 12% of craft beer volume while contract breweries make beer for certain clients and account for 16% of volume. The remaining 62% of the market belongs to the near fifty U.S. regional craft brewers. According to Harvard Business Publishing, the United States has over 75 billion dollars in annual beer sales in 2005 making it the country with the largest market for beer in the world. Unfortunately, this is a 2.3% decrease from 2001. Another noticeable trend from 2001 to 2005 is that “light” beer sales has been growing annually at the rate of 4% causing it to increase significantly from 29.8% to 50.4% volume sales making up half of the market for the East Central Region in 2005. While light beer has been increasing at this rate, premium beer sales have done the opposite declining by 4% sales volume each year.

Company:

Mountain Man Brewing Company generates a revenue of $50,440,000 and sells over 520,000 barrels of their signature lager annually. Net income after taxes ends up being $3,114,670 making it 6.2% of total revenue. For the first time in the company’s history there has been a decline in sales due to a change in customer preferences. MMBC has competition from many other beer companies in the region despite their 53% sole brand loyalty rate, but one of its top competitors is Anheuser Busch controlling 42% of the market in the East Central Region dwarfing MMBC’s 520,000 barrel count with 15.6 million barrels sold. Miller Brewing Company is the second largest competitor controlling 23% of the market and Adolf Coors in third holding 9% of the total market for the region.

Trends:

Light beer is a relatively new category