Abhishek kumarTarun sharmaAnjumAdtya bhatiya

WHAT IS THE ALCOHOL INDUSTRY?

• The alcohol industry can be defined in different ways, with no agreed settled definition. The term is most commonly used to refer to corporations engaged in the production of alcoholic beverages. However, broader definitions also exist. The World Health Organization.

• Example, refers to “developers, producers, distributors, marketers and sellers of alcoholic beverages”.

• Alcohol researchers have observed that:• The alcoholic beverage industry includes producers, wholesalers and distributors, point-of-

sale operators (whether licensed or not) and hospitality providers such as hotels or cafés that serve alcohol.

• Its production and distribution arms are allied closely with agriculture, trucking, capital goods manufacturing and packaging industries.

Who are the major participants in the alcohol industry

• Raw materials suppliers: Primarily farmers, who grow ingredients such as barley, hops, apples, grapes and sugar

• Producers: Companies that manufacture alcohol, managing processes such as brewing, distillation, and bottling

• Distributors & Wholesalers: Intermediaries who connect producers and vendors, typically storing and transporting the product

• Vendors: Sellers of alcohol – both on-licence (where drinks are bought and consumed on the premises e.g. pubs, club and restaurants) and off-licence (where the drinks are bought and then taken away to be consumed e.g. supermarkets)

• Input Suppliers/Contractors: Companies that supply products and services to any of the above e.g. providing farm machinery, distillation equipment, freight services, marketing, consultancy, lobbying etc.

LEADING GLOBAL ALCOHOL PRODUCER

Ref:- institute of alcohol studies- UK

ALCOHOL CONSUMPTION LEVELS IN UNITS BY SEX

Drinker type Units per week

Men Women

Moderate Less than 21 Less than 14

Hazardous 21-50 14-35

Harmful 50+ 35+

Share of global beer production & global spirit volume market share

Ref:- institute of alcohol studies- UK

TOP 10 BEST SELLING ALCOHOL BRANDS

Ref:- institute of alcohol studies- UK

COMPANY ANALYSIS

• Founded in 1925 by Guntar Prangel.

• Mountain Man brewed one beer,Mountain Man Lager,also called “West Virginia’s beer”.

• By the 1960s,Mountain Man Lager was well established as a quality brew in the East Central region of

the United States.

• The beer 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 similar to premium domestic brands and below specialty brands.

• The primary customer base of the brand included blue-collar,middle to lower income men aged over 45.

WHAT DOES BRAND STAND FOR

Mountain Man has relied on its history and status as an independent, family-owned brewery to create an aura of authenticity and to position the beer with its core drinkers.

• CORE ATTRIBUTES OF THE BRAND • Authenticity • Quality • Unique west virginia “toughness”

MARKETING FINDING

• By 2005,the company was generating revenues of over $50 million and selling over 520,000 barrels of the

lager beer.

• The mountain Man Lager won the “Best beer in West Virginia” for the eighth straight year in 2005 and was

selected as America’s Championship Lager.

• The Brand awareness , equity and the loyalty it cultivated were the cornerstones of its success.

• The sole brand loyalty rate for Mountain Man Lager was 53%,higher than any other competitive product.

ABOUT MMBC

• A family-owned business which brewing bitter-tasting beer Brewed one beer – Mountain Man

Lager, also known as West Virginia’s beer Mountain Man Lager's brand equity is a key Popular

among blue-collar workers

• Strong brand

• Top market position in premium segments

• Popular among blue collar working man

ABOUT THE CASE

• Chris Prangel has returned home to manage the marketing operations of Mountain Man Brewing

Company (MMBC) Experiencing

• Declining sales for the first time in its history due to changes in beer drinkers' taste preferences

• Want to launch Mountain Man Light, a"light beer” attracting younger drinkers

TIMELINE

1925-Founded by Guntar Prangel

1960s-MM Lager’s entrenched throughout East Central US

2005-Selling over 520,000barrelsGenerating revenues over $50 million–down 2%Top market position Best Beer in West Virginia; for its 8 year straight Best Beer in Indiana Winner of America’s Championship Lager

2006-Oscar Prangel retired Taken over by Chris Prangel wanted to launch MountainMan Light

PORTER FIVE FORCE MODEL

Rivalry Competition

Threat of new

Entrants

Buyer Power

Threat of Substitutes

Supplier Power

Local Beer & craft beer Lots of big & famous competitor Customer loyalty of product competitor

Local & Import Beer

WineSpirits

Price Sensitivity Product Undifferentiated

Lots of supplier (raw material) Low switching cost

“THE BEER MARKET IS MATURED, THE REVENUE IS DYNAMIC” PERCEPTUAL MAPSThe Occasions being celebrated vs Quality among competitors• The occasion being celebrated

Brand awareness vs Price among competitors

• Brand Awareness

Import beer Specialty Brewers Major Domestic

producers

MMBCQuality

Second-tier domestic producers

Major Domestic producers Import beer

Specialty Brewers Second-tier domestic producers

MMBC

CONT…

Taste vs Local Authenticity among Competitors

MMBC Specialty Brewers

Import beer Major domestic producers

Second tier domestic producersLocal Authenticity

COMPETITION

SWOT ANALYSIS

•Ageing target market•Declining per capita beer consumption

•Profit orientation distributors and retailors

•Changing demographics•Competitors financial resources

• Growing light beer market• New potential target market• Brand recognition among youths• Expanding sales channel

• Single revenue driver• Narrow target market with

relatively small customer lifetime value

• Limited financial resources

• Brand awareness• Loyal customers• High perceived quality• Strong market presence

strength weakness

threatopportunities

MARKETING MIX

Trendy nameClear bottle

product Differentiated labeling

Launch the beer under the name of

mountain man to

leverage on it

CONT…

price

Same price should be applied on

every premise location

CONT…

Larger will be continue to be sold at off-premises

Light beer will be distributed

at on-premises

PLACE

CONT…

PROMOTION

Separate promotion

for light and dark beer

SITUATION IN 2005

• Since 2001,U.S. per capita beer consumption declined by 2.3%.West Virginia repealed arcane laws,

thereby resulting in large discounts being given and smaller brands being neglected.

• Change in beer drinker preferences. The light beer category was steadily gaining market share

accounting for more than 50% in 2005

• Younger consumers preferred light beer and they constituted the key consumer segment for beer

companies.

• Mountain man’s 2005 revenues were down 2% relative to the prior fiscal year.

DECISIONS TO BE MADE

• Try to revive the company’s

fortunes through the lager brand.

• Introduce a lighter version of the

lager brand under a new name.

• Introduce the brand extension as

Mountain Man Light.

Current ImageWest Virginia’s

BeerWorking Man’s

BeerToughness

Independent Brewery

New Target Segment

ActiveAdventurous

Hard-WorkingHealth Conscious New Image

Quality “Working Man’s Beer”Independent

BreweryActive

AdventurousHealth Conscious

OBJECTIVES, MARKETING & ADVERTISING• To find out whether it is economically feasible and sustainable to launch Mountain Man Light. • To market new products efficiently in order to compensate for losses in core product sector. • To develop with changing preferences without affecting its loyal customer base. • Grass Root Focus

– More effective for region– Event promotion(Light Product)

• Expand On-Premise location to add light products and additional larger sales• EMERSON campaign

– Brand Centric– Underscores image/values

• Viral ads(Heavy Focus)• Radio ads• Print ads

STATUS QUO STRATEGY

• Single Product Centric. No risk of cannibalization.

• However, not feasible to attract new customers and increase brand loyalty.

• Consumer base degrading in this already shrinking beer industry.

• Steady loss in revenues by 2% every year.

• Strong competition.

• Therefore ,maintaining status quo is not a viable option, it is like a time bomb which will eventually

render the company out of business.

CHALLENGES AHEAD

• Was important to change to lighter beer.

• Light beer was a newer, fast-growing product category.

• Oscar Prangel was concerned that launching Mountain Man Light would affect the previous brand

positioning

• Mountain Man Light might cannibalize the sales of Mountain Man Lager as retailers would prefer

other big brands for placing product on shelves.

• Presence of high competition.

• Capital Intensive competitor has large distribution channels and surviving capabilities in market.

CHRIS DECISION

• Chris examined the financial projections which showed revenue growth of the light beer product at 4% annually.

• Reason being:– Target audience is of age: 21-27 years (27% of total beer consumers, which constitute 13% of adult

population & the number was constantly growing) – The Demographic was considered as “The first time drinker”– Youngsters were not loyal to brand– Spend twice as much per capita on alcoholic beverages than older consumers – They preferred light beer, which increases the number of beer consumed– While purchasing consider they consider factor like: taste, price, occasions, received quality,

brand image, tradition, local authenticity

CHRIS DECISION CONT’D…

• Mountain Man will capture younger generation of drinkers who constitute 27% of total beer

consumers

• As these customers are not loyal to any brand yet, Mountain Man can turn them into company’s

loyal ones

• As the brand awareness increases, more distributors will be interested to carry Mountain Man brand

• Having a substantial regional position, Mountain Man will have a capacity to compete in the

national market

• Expanding market share will bring company growing market share, high competitive market

position, and constantly increasing revenue

CONCLUSION

• MMBC’s target segment is maturing without expanding.• Light beer market is getting more and more important.• The company should launch a light beer with differentiated marketmix to increase its sales and

profit.