mountain man beer company - len musielak
TRANSCRIPT
CASE ANALYSISMOUNTAIN MAN BEER COMPANYLen Musielak
OVERVIEW
Reverse sliding sales and protect the brand. That is what this is all about.
COMPANY
BRAND NAMEConsumer loyalty
Internal sales force
Production capacity
STRENGTHS
OPPORTUNITIES
WEAKNESSES
THREATS
NO DIVERSIFICATIONPopular among aging demographic
Internal management is risk averse
BEER CONSUMPTION: -2.3%Premium market: -4.0%
LIGHT BEER SALES: +4.0%18.3% of U.S. beer sales occur in territory
West Virginia repeals a beer promo law
Four breweries in West Virginia
THREAT OF SUBSTITUTES – HIGHOther premium brands
Light beer
Imports
Craft brews
ENVIRONMENT
Porter’s 5 Forces
BUYER POWER – HIGHLow switching costs
COMPETITION – HIGHMiller
Anheuser Busch
Coors
Heineken
Pabst
RISK OF NEW ENTRANTS – HIGHCurrent competitors
Constantly introducing new products
SUPPLIER POWER – LOWCommodities
OPTIONS
Status Quo
Introduce a Light Beer with a New Brand Name
Introduce a Mountain Man Light Beer
FINANCIAL ANALYSIS ASSUMPTIONS
1. $97/Barrel: Based on 2005 revenues and barrels sold.
2. Net income figures are used in the analyses to ensure additional costs are accounted for.
OPTION 1 – STATUS QUO
2005 2006 2007 2008 2009 2010 -
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
MMBC Net Income After Taxes 2005-2010 (Projected)
Status Quo
OPTION 2 – LIGHT BEER WITH NEW BRAND NAME
2005 2006 2007 2008 2009 2010 -
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
MMBC Net Income After Taxes 2005-2010 (Projected)
Status Quo Other Light Beer
OPTION 3 – MOUNTAIN MAN LIGHT
2005 2006 2007 2008 2009 2010 -
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
MMBC Net Income After Taxes 2005-2010 (Projected)
Status Quo Other Light Beer Mountain Man Light
Mar
ket S
hare
MARKET SHARE INCOME ANALYSIS
2005 2006 2007 2008 2009 2010 -
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
.25%
.1875%
.125%
.0625%
MMBC Net Income After Taxes 2005-2010 (Projected)*
*Assumes 20% cannibalization rate
TRANSITION SLIDEIMPLEMENTATION
IMPLEMENTATION
STEP 1
CHANGE INTERNAL ATTITUDE
Change the focus from what to why.
STEP 2
ACTUALLY BREW AN EXCEPTIONAL BEER
Find rare hops, create a quality product, and gain buy-in.
STEP 3
GET THE BEER OUT THERE WITH EFFECTIVE MARKETING & BRANDING
Use tradition, brand, and loyalty.Focus on grass roots.Cross-promote.
PRODUCT. PRICE. PLACE. PEOPLE. PROMOTION.
QUALITY PLEDGE
When my great grandfather started Mountain Man Beer Company, he had one goal—produce a great tasting beer. Eighty years later, my father and I used that same standard to formulate Mountain Man Light. Mountain Man Light is not just another light beer and it is not just a watered down version of our original Mountain Man Lager. Mountain Man Light was formulated to be a high quality and great tasting beer that is also light. We wouldn’t put our family name on anything but the best and we are proud to put our name on Mountain Man Light.
Chris PrangelChris Prangel
RECAP
With Mountain Man Light, achieve success now and in the long-term.
APPENDIX2005 2006 2007 2008 2009 2010
Status Quo 3,114,670.00 2,911,396.80 2,712,189.06 2,516,965.48 2,325,646.37 2,138,153.65 Other Light Beer 3,114,670.00 1,041,715.96 1,564,695.47 1,620,623.86 1,697,934.85 1,797,617.02 Mountain Man Light 3,114,670.00 1,973,040.63 3,160,240.32 3,930,579.91 4,775,517.36 5,699,225.71
2005 2006 2007 2008 2009 2010Mountain Man Light (.25% MS) 3,114,670.00 1,973,040.63 3,160,240.32 3,930,579.91 4,775,517.36 5,699,225.71 Mountain Man Light 3/4 Projected 3,114,670.00 1,774,182.79 2,746,616.01 3,285,325.99 3,880,765.25 4,536,047.97 Mountain Man Light 1/2 Projected 3,114,670.00 1,575,324.95 2,332,991.70 2,640,072.06 2,986,013.14 3,372,870.23 Mountain Man Light 1/4 Projected 3,114,670.00 1,376,467.11 1,919,367.39 1,994,818.14 2,091,261.03 2,209,692.48
Mountain Man Light Break EvenFirst Year Break Even Units 65,711First Year Break Even Revenue $6.374M
Second Year Break Even Units 35,842Second Year Break Even Revenue $3.477M
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0 0 0 0 0Light Barrels Sold - - - - - - Lager Barrels Sold 520,000.00 509,600.00 499,408.00 489,419.84 479,631.44 470,038.81 Cannibalization Rate 0
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 49,431,200.00 48,442,576.00 47,473,724.48 46,524,249.99 45,593,764.99 Light Revenue - - - - - - Total Revenue 50,440,000.00 49,431,200.00 48,442,576.00 47,473,724.48 46,524,249.99 45,593,764.99
Lager COGS (66.93/Barrel) 34,803,600.00 34,107,528.00 33,425,377.44 32,756,869.89 32,101,732.49 31,459,697.84 Light COGS (71.89/Barrel) - - - - - - Total COGS 34,803,600.00 34,107,528.00 33,425,377.44 32,756,869.89 32,101,732.49 31,459,697.84
Lager Gross Margin 15,636,400.00 15,323,672.00 15,017,198.56 14,716,854.59 14,422,517.50 14,134,067.15 Light Gross Margin - - - - - - Gross Margin 15,636,400.00 15,323,672.00 15,017,198.56 14,716,854.59 14,422,517.50 14,134,067.15
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&ATotal SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 4,327,752.00 4,021,278.56 3,720,934.59 3,426,597.50 3,138,147.15
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 4,479,072.00 4,172,598.56 3,872,254.59 3,577,917.50 3,289,467.15
Provision for Income Taxes 1,677,130.00 1,567,675.20 1,460,409.50 1,355,289.11 1,252,271.12 1,151,313.50 Net Income After Taxes 3,114,670.00 2,911,396.80 2,712,189.06 2,516,965.48 2,325,646.37 2,138,153.65
MMBC Income Status Quo
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0.000625 0.00125 0.001875 0.0025 0.003125Light Barrels Sold - 12,183.80 25,342.30 39,533.98 54,820.46 71,266.60 Lager Barrels Sold 520,000.00 458,640.00 449,467.20 440,477.86 431,668.30 423,034.93 Attrition Rate 0.1 Attrition Revenue 4,448,808.00 Attrition Barrels 45,864.00
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 44,488,080.00 43,598,318.40 42,726,352.03 41,871,824.99 41,034,388.49 Light Revenue - 1,181,828.30 2,458,202.87 3,834,796.48 5,317,584.45 6,912,859.79 Total Revenue 50,440,000.00 45,669,908.30 46,056,521.27 46,561,148.51 47,189,409.45 47,947,248.28
Lager COGS (66.93/Barrel) 34,803,600.00 30,696,775.20 30,082,839.70 29,481,182.90 28,891,559.24 28,313,728.06 Light COGS (71.89/Barrel) - 875,893.16 1,821,857.78 2,842,098.13 3,941,042.75 5,123,355.57 Total COGS 34,803,600.00 31,572,668.36 31,904,697.47 32,323,281.04 32,832,601.99 33,437,083.63
Lager Gross Margin 15,636,400.00 13,791,304.80 13,515,478.70 13,245,169.13 12,980,265.75 12,720,660.43 Light Gross Margin - 305,935.14 636,345.09 992,698.35 1,376,541.71 1,789,504.22 Gross Margin 15,636,400.00 14,097,239.94 14,151,823.80 14,237,867.48 14,356,807.45 14,510,164.65
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&A 1,650,000.00 900,000.00 900,000.00 900,000.00 900,000.00 Total SG&A 9,583,600.00 11,233,600.00 10,483,600.00 10,483,600.00 10,483,600.00 10,483,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 1,451,319.94 2,255,903.80 2,341,947.48 2,460,887.45 2,614,244.65
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 1,602,639.94 2,407,223.80 2,493,267.48 2,612,207.45 2,765,564.65
Provision for Income Taxes 1,677,130.00 560,923.98 842,528.33 872,643.62 914,272.61 967,947.63 Net Income After Taxes 3,114,670.00 1,041,715.96 1,564,695.47 1,620,623.86 1,697,934.85 1,797,617.02
MMBC Income - Other Light Beer
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0.0025 0.005 0.0075 0.01 0.0125Light Barrels Sold - 130,271.19 182,905.19 239,671.94 300,817.83 366,602.38 Lager Barrels Sold 520,000.00 407,680.00 399,526.40 391,535.87 383,705.15 376,031.05 Cannibalization Rate 0.2 Cannabalized Revenue 7,908,992.00$ Cann Barrels 81,536.00
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 39,544,960.00 38,754,060.80 37,978,979.58 37,219,399.99 36,475,011.99 Light Revenue - 12,636,305.22 17,741,803.49 23,248,177.93 29,179,329.82 35,560,431.16 Total Revenue 50,440,000.00 52,181,265.22 56,495,864.29 61,227,157.51 66,398,729.81 72,035,443.15
Lager COGS (66.93/Barrel) 34,803,600.00 27,286,022.40 26,740,301.95 26,205,495.91 25,681,385.99 25,167,758.27 Light COGS (71.89/Barrel) - 9,365,195.69 13,149,054.15 17,230,015.58 21,625,794.03 26,355,045.32 Total COGS 34,803,600.00 36,651,218.09 39,889,356.11 43,435,511.49 47,307,180.02 51,522,803.60
Lager Gross Margin 15,636,400.00 12,258,937.60 12,013,758.85 11,773,483.67 11,538,014.00 11,307,253.72 Light Gross Margin - 3,271,109.53 4,592,749.34 6,018,162.35 7,553,535.79 9,205,385.84 Gross Margin 15,636,400.00 15,530,047.13 16,606,508.18 17,791,646.02 19,091,549.79 20,512,639.56
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&A 1,650,000.00 900,000.00 900,000.00 900,000.00 900,000.00 Total SG&A 9,583,600.00 11,233,600.00 10,483,600.00 10,483,600.00 10,483,600.00 10,483,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 2,884,127.13 4,710,588.18 5,895,726.02 7,195,629.79 8,616,719.56
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 3,035,447.13 4,861,908.18 6,047,046.02 7,346,949.79 8,768,039.56
Provision for Income Taxes 1,677,130.00 1,062,406.49 1,701,667.86 2,116,466.11 2,571,432.43 3,068,813.85 Net Income After Taxes 3,114,670.00 1,973,040.63 3,160,240.32 3,930,579.91 4,775,517.36 5,699,225.71
MMBC Income - Mountain Man Light .25% Market Share
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0.001875 0.00375 0.005625 0.0075 0.009375Light Barrels Sold - 118,087.39 157,562.89 200,137.95 245,997.37 295,335.79 Lager Barrels Sold 520,000.00 407,680.00 399,526.40 391,535.87 383,705.15 376,031.05 Cannibalization Rate 0.2 Cannabalized Revenue 7,908,992.00 Cann Barrels 81,536.00
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 39,544,960.00 38,754,060.80 37,978,979.58 37,219,399.99 36,475,011.99 Light Revenue - 11,454,476.91 15,283,600.62 19,413,381.44 23,861,745.36 28,647,571.37 Total Revenue 50,440,000.00 50,999,436.91 54,037,661.42 57,392,361.03 61,081,145.35 65,122,583.36
Lager COGS (66.93/Barrel) 34,803,600.00 27,286,022.40 26,740,301.95 26,205,495.91 25,681,385.99 25,167,758.27 Light COGS (71.89/Barrel) - 8,489,302.53 11,327,196.38 14,387,917.44 17,684,751.28 21,231,689.75 Total COGS 34,803,600.00 35,775,324.93 38,067,498.33 40,593,413.36 43,366,137.27 46,399,448.03
Lager Gross Margin 15,636,400.00 12,258,937.60 12,013,758.85 11,773,483.67 11,538,014.00 11,307,253.72 Light Gross Margin - 2,965,174.38 3,956,404.24 5,025,464.00 6,176,994.08 7,415,881.62 Gross Margin 15,636,400.00 15,224,111.98 15,970,163.09 16,798,947.67 17,715,008.08 18,723,135.34
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&A 1,650,000.00 900,000.00 900,000.00 900,000.00 900,000.00 Total SG&A 9,583,600.00 11,233,600.00 10,483,600.00 10,483,600.00 10,483,600.00 10,483,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 2,578,191.98 4,074,243.09 4,903,027.67 5,819,088.08 6,827,215.34
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 2,729,511.98 4,225,563.09 5,054,347.67 5,970,408.08 6,978,535.34
Provision for Income Taxes 1,677,130.00 955,329.19 1,478,947.08 1,769,021.69 2,089,642.83 2,442,487.37 Net Income After Taxes 3,114,670.00 1,774,182.79 2,746,616.01 3,285,325.99 3,880,765.25 4,536,047.97
MMBC Income - Mountain Man Light .25% 75% Projected MS
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0.00125 0.0025 0.00375 0.005 0.00625Light Barrels Sold - 105,903.59 132,220.60 160,603.97 191,176.92 224,069.19 Lager Barrels Sold 520,000.00 407,680.00 399,526.40 391,535.87 383,705.15 376,031.05 Cannibalization Rate 0.2 Cannabalized Revenue 7,908,992.00 Cann Barrels 81,536.00
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 39,544,960.00 38,754,060.80 37,978,979.58 37,219,399.99 36,475,011.99 Light Revenue - 10,272,648.61 12,825,397.75 15,578,584.96 18,544,160.91 21,734,711.58 Total Revenue 50,440,000.00 49,817,608.61 51,579,458.55 53,557,564.55 55,763,560.90 58,209,723.57
Lager COGS (66.93/Barrel) 34,803,600.00 27,286,022.40 26,740,301.95 26,205,495.91 25,681,385.99 25,167,758.27 Light COGS (71.89/Barrel) - 7,613,409.37 9,505,338.60 11,545,819.31 13,743,708.53 16,108,334.18 Total COGS 34,803,600.00 34,899,431.77 36,245,640.55 37,751,315.22 39,425,094.53 41,276,092.46
Lager Gross Margin 15,636,400.00 12,258,937.60 12,013,758.85 11,773,483.67 11,538,014.00 11,307,253.72 Light Gross Margin - 2,659,239.24 3,320,059.15 4,032,765.65 4,800,452.38 5,626,377.40 Gross Margin 15,636,400.00 14,918,176.84 15,333,818.00 15,806,249.32 16,338,466.37 16,933,631.12
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&A 1,650,000.00 900,000.00 900,000.00 900,000.00 900,000.00 Total SG&A 9,583,600.00 11,233,600.00 10,483,600.00 10,483,600.00 10,483,600.00 10,483,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 2,272,256.84 3,437,898.00 3,910,329.32 4,442,546.37 5,037,711.12
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 2,423,576.84 3,589,218.00 4,061,649.32 4,593,866.37 5,189,031.12
Provision for Income Taxes 1,677,130.00 848,251.89 1,256,226.30 1,421,577.26 1,607,853.23 1,816,160.89 Net Income After Taxes 3,114,670.00 1,575,324.95 2,332,991.70 2,640,072.06 2,986,013.14 3,372,870.23
MMBC Income - Mountain Man Light .25% 50% Projected MS
APPENDIX2005 2006 2007 2008 2009 2010
Sales Light Beer East Central Region 18,744,303.00 19,494,075.12 20,273,838.12 21,084,791.65 21,928,183.32 22,805,310.65 Light Market share 0.000625 0.00125 0.001875 0.0025 0.003125Light Barrels Sold - 93,719.80 106,878.30 121,069.98 136,356.46 152,802.60 Lager Barrels Sold 520,000.00 407,680.00 399,526.40 391,535.87 383,705.15 376,031.05 Cannibalization Rate 0.2 Cannabalized Revenue 7,908,992.00 Cann Barrels 81,536.00
2005 2006 2007 2008 2009 2010Lager Revenue 50,440,000.00 39,544,960.00 38,754,060.80 37,978,979.58 37,219,399.99 36,475,011.99 Light Revenue - 9,090,820.30 10,367,194.87 11,743,788.48 13,226,576.45 14,821,851.79 Total Revenue 50,440,000.00 48,635,780.30 49,121,255.67 49,722,768.07 50,445,976.45 51,296,863.78
Lager COGS (66.93/Barrel) 34,803,600.00 27,286,022.40 26,740,301.95 26,205,495.91 25,681,385.99 25,167,758.27 Light COGS (71.89/Barrel) - 6,737,516.20 7,683,480.82 8,703,721.17 9,802,665.79 10,984,978.61 Total COGS 34,803,600.00 34,023,538.60 34,423,782.77 34,909,217.09 35,484,051.78 36,152,736.89
Lager Gross Margin 15,636,400.00 12,258,937.60 12,013,758.85 11,773,483.67 11,538,014.00 11,307,253.72 Light Gross Margin - 2,353,304.10 2,683,714.05 3,040,067.31 3,423,910.67 3,836,873.18 Gross Margin 15,636,400.00 14,612,241.70 14,697,472.90 14,813,550.98 14,961,924.67 15,144,126.90
Lager SG&A 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 9,583,600.00 Light SG&A 1,650,000.00 900,000.00 900,000.00 900,000.00 900,000.00 Total SG&A 9,583,600.00 11,233,600.00 10,483,600.00 10,483,600.00 10,483,600.00 10,483,600.00
Other Operating Expenses 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00 1,412,320.00
Operating Margin 4,640,480.00 1,966,321.70 2,801,552.90 2,917,630.98 3,066,004.67 3,248,206.90
Other Income 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00 151,320.00
Net Income Before Taxes 4,791,800.00 2,117,641.70 2,952,872.90 3,068,950.98 3,217,324.67 3,399,526.90
Provision for Income Taxes 1,677,130.00 741,174.60 1,033,505.52 1,074,132.84 1,126,063.63 1,189,834.41 Net Income After Taxes 3,114,670.00 1,376,467.11 1,919,367.39 1,994,818.14 2,091,261.03 2,209,692.48
MMBC Income - Mountain Man Light .25% 25% Projected MS