Craft Brewing Case Study

Started in the year 1925 by Guntar Prangel Mountain Man Brewing Company (MMBC) was a well-entrenched company in the East Central US by 1960. Consecutively the company grew as a legacy brewery, gathering a very strong brand loyalty and positioning. Known for the authenticity, quality and taste the company grew out to be a market leader in the currently matured business. However, off late the company has been witnessing a drop in sales for their core beer product the “Mountain Man Leger” in contrary to the growing beer sales in the US.

| Weaknesses * Many consumers consider the taste to “watered down”. * Challenge of expanding internationally due to the stigma of an American beer.

As the craft beer trend rises, beer festivals are in high demand among Millennials. “Almost half of Millennials (47%) rank beer festivals first among their preferred event choices - that is

Even though it may leave out the younger consumer market, they can still draw interest from those individuals as they get older and become more likely to trying specialty beers. They could also look for ways to market

Before analyzing the five forces of an industry, it is vital to first understand exactly what the industry is. Terre Haute Brewing Company is in the microbrewing industry. The main types of breweries are microbreweries, brewpubs, contract brewing companies, and regional craft breweries. The distinguishing factor between these is the production volume. According to Hop Head, microbreweries can produce no more than 15,000 barrels of beer in a given year. Larger breweries have to follow stricter regulations and have higher tax rates than microbreweries. When analyzing the industry it is important to distinguish between these types.

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Consumers are turning away from beer consumption. Over the past decade, the U.S. beer indus-try lost a 10 percent market share to wine and liquor drinks; and focus by some established indus-try leaders has leaned toward “hard sodas” (Taylor, 2016). Small Town Brewery’s “Not Your Father’s Root Beer” dominated the market, owning 79+ percent of the 2015 market sales (Passy, 2016); to complete with this, Anheuser-Busch InBev (AB InBev) launched the “Best Damn Root Beer” brand in 2015 and MillerCoors (MC) offered “Henry’s Hard Soda” in 2016 (Taylor, 2016).

The craft beer industry is rapidly increasing in size and the beers within it tend to be more expensive, but little academic research exists on the perceived quality of craft versus mainstream beers. Craft beer is widely seen as generally better than mainstream American beers such as Budweiser, Coors, and Miller, but no academic research exists to determine how expectations of differences between craft and mainstream beer based only on being labeled as “craft” can effect perceived quality and flavor.

| For the first time in the company’s history, Mountain Man Brewing Company is experiencing declining sales in response to changes in beer drinkers’ preferences. Mr. Prangel’s response to this problem is introducing a “light beer” form of the popular Lager. In the past six years, the “light beer” industry as increased at an annual rate of 4% while sales of traditional beer has been declining annually by 4%. Although this seems like a probable solution, there are two major problems Mr. Prangel is facing: 1.) Mountain Man’s current target market will not approve of this new

Texas Craft Brewers Guild say that the craft beer industry could generate $5.6 billion in sales statewide and create more than fifty-two thousand new jobs by 2020. This will help Texas’s economy as well as supporting local businesses. The distributors spend millions of dollars on lobbyists each year to keep the laws the same. Brewers argue that if the laws were to change that consumers will continue to purchase their beer at local grocery, convenience and liquor stores. I think that this change would not have such a devastating impact to distributors but they feel they truly serve a meaningful

More Beer, Inc., a 25 million dollar per year microbrewery invests greatly in the direct marketing for its variety of microbrew products. When the internet marketplace boomed, More Beer, Inc., explored new options with two new marketing and direct distributions channels. It was a risky venture and one that swiftly failed. Once the websites went live, the company was plagued with technological problems exacerbated by slow sales. In the end, profits plummeted and management chose to abandon its direct internet marketing plan and respond to the losses with a reduction in the workforce.

With the millennial generation racing to the craft beer industry, it has helped change it into something unique and appealing. The craft beer industry appeals to the millennials adventurous side as well as being made from all natural ingredients. With the vast number of beer options has led to an entirely new experience. Over the last decade craft breweries have made themselves serious contenders in the beer industry. As the number of craft brewery’s increase and the millennial’s taking to the industry, the craft brew market has a great future ahead of

their sales for their other products as consumers only buy the new beer. This would be another

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There is also the consideration of price strategy in the market. Craft beer is known for its higher cost of production and higher purchase price to consumers, but as the trends in micro- and nano-breweries expands the question remains as to if they will take on a similar pricing model to that of the macro-brewers in the United States. Currently, the pricing trends amongst macro-brewers are almost solely based on a single manufacturer, as noted by Robert Uihlein, Chairman of the Schlitz Brewery, ‘a price increase is needed, but it will take Anheuser-Busch to do it,’ (Rojas, p.3). This trend has only slightly manifested itself on the smaller market and realistically has just adhered to a standard model of pricing thus far, with little fluctuation based on demand.