Mountain Man Brewing Company Case Summary

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Executive Summary:

Mountain Man Brewing Company is a beer manufacturer with its headquarters in West Virginia. Beer sales have been declining for their Mountain Man and they are looking at options to boost their sales. The option at hand is whether to introduce a light beer which will appeal to younger people and women. The challenge is whether this option would cannibalize the sales of the traditional beer.

1) What is the break-even number of barrels of Light that Mountain Man Brewing Company would need to sell to cover the incremental marketing and SG&A investments associated with the launch of the new brand?
MMBC will have to sell 65,012 barrels of Mountain Man Light for them to cover the costs of $900,000 of additional SG&A and the …show more content…
Assumptions + justifications

Table 2. Cannibalism Assumption and Number of Barrels to be sold to cover revenue lost in Mountain Man Lager Assumed Cannibalism % Decline in Sales Quantity Lost Revenue Lost Breakeven 5% 2% 25,480 $ 766,183.60 95,200.30 10% 2% 50,960 $1,532,367.20 125,388.78 15% 2% 76,440 $2,298,550.80 155,577.26 20% 2% 101,920 $3,064,734.40 185,765.74 520,000 Quantity Sold $25.38 Profit per Unit for MM Light
$30.07 Profit per Unit for MM Lager

Table 3. Months to Breakeven
Total Region Sales 18,744,303.00
Increase in Annual Sales 4%
2006 Sales 19,494,075.12
Market Share 0.25%
2006 Actual Sales 48,735.19
Regional Sales Year2 20,273,838.12
Market Share 0.5%
Actual Sales
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