Mountain Man Brewing Company is facing revenue decline due to change in beer drinker’s preference, change in consumer dynamics and competition from larger national brands. Nationally, lighter beer sales are increasing at the same rate as the decline of the traditional beer sales and MMBC needs to decide how to secure the company’s future with changing customer preference. It is difficult to compete in that market with only one product, so MMBC needs to decide whether to launch a lighter version of Mountain Man beer and should it be launched under the Mountain Man brand or create a new brand. My recommendation is to launch Mountain Man Light Beer under the name “Mountain Man Light” to capitalize on the well-established Mountain Man brand.
Data shows that the MMBC Lager drinking demographics are on the decline and the consumption of the light beer are on the increase. With only one revenue product, and that revenue declining 2% annually with no scenario for an upswing in sight could force the company out of business. Introducing light beer in another brand name will incur higher advertising cost and will be difficult to get recognized and established in a market with a plethora light beer selections. Introduction of the light version of the beer within the MMBC brand can leverage the brand equity. Light beer will gain a larger customer base including women and “first-time drinkers” and could potentially create lifetime brand loyalty among next generation. Light beer under MMBC brand might have the downside of brand dilution, alienating the core customers and cannibalizing the lager sales. The forecasting model shows that with the target of 0.25% market share, even with 20% cannibalization and 2% reduction in annual revenue, the introduction of MMBC Light under the same brand name will be profitable by the third year.
The product should maintain the same quality as the lager. Along with the grassroots marketing, to capture the new younger customer base, “Mountain Man Light” marketing needs to be expanded to online and social media. Obtain endorsements by youth icons to promote the light beer. Since the MMBC brand is very popular in the eastern region and won awards for best beer, the marketing campaign should leverage that status and lean more towards a “local angle” like including “Local Pride”, “Drink Local” to differentiate from the national brands and encourage consume local brands. In addition to selling through off-premise locations, need to expand to on premise selling at bars and pubs to reach the new target demographics. Keep the pricing same as the lager. Give supplier discounts for retailers to ensure additional shelf space and give offers and discounts for product trials.