The Market For Beer Of The United States

The relevance of demand and supply in economics cannot be overstated given that the two are considered some of economics' most fundamental concepts. In this text, I explain both the demand and supply for Anheuser-Busch's products. Further, I identify some of the substitute and/or complementary goods for Anheuser-Busch's products.

This case was created in order to come to a decision on Chris Prangel’s dilemma involving the Mountain Man Brewing Company and its declining profit margins. Located in the Analysis section is the current situation of MMBC’s product and the different kind of consumers their brand serves. Along with the distinctions of their product and customers is a definition of what a brand is and how brand equity is created and impacted. The analysis was conducted by having a firm understanding of the case and Prangel’s current situation. This report recommends that Prangel should consider his financial and marketing situation of both choices before making his choice. Finally, it was decided that to make it in the tough industry, MMBC should take the harder and more rewarding path of risking creating a new lite version of their Mountain Man Lager.

Chris is considering the production of a light beer for Mountain Man Brewing Company as a way to compensate for the recent decline in sales and increase in the market for light beer sales. How can the production of a light beer appeal to a younger demographic. What about their light beer will be different from competitors. How much is this new product going to cost and how will he go about launching the new product. How long is it going to take before the company begins to break even and then make a profit?

2. MMBC is ignoring the shift in the consumer segment for beer companies. 21-27 year olds are spending more on liquor and most have not yet developed brand preference.

     In this paper I will be talking about the U.S. beer industry and in short an overview of the brewing industry worldwide. I will talk about the barriers to entry, economies of scale, government intervention, pricing, current market trends, product differentiation, and imports. The focus being mainly on the U.S. brewing industry oligopoly. The U.S. brewing industry has three major players: Anheuser-Busch, SAB Miller, and Coors/Molson. Anheuser-Busch is currently the largest brewer in the world, producing over 100 million barrels a year. Anheuser-Busch currently owns over 50% of the market in the United States, with Miller trailing behind at 20% and Coors at about 11% with the rest of the market occupied by imports and craft breweries. When analyzing any industry, how easy it is for newcomers to enter the market is a great importance. If there are high barriers to entry

In a world where large, corporate breweries rule the market, craft beer is created to please an audience that applauds the styles, techniques and flavors. Though craft beer can be purchased through several different outlets, the best place to thoroughly enjoy the entire experience of the specially made beer is in the brewery where it was made. The article titled, “In Lean Times, a Stout Dream” in The Wall Street Journal1 states that, despite the hard economic times and consequent consumer cutbacks, sales of craft beer, the industry 's fastest-growing segment, rose

We’re told that craft beer’s share of the market rose 17.6% last year, accounting for 11% of beer volume and $19.6 billion of the beer industry’s $101.5 billion in sales. However, it’s also a market in which the sale of imported beers rose 6.9% in 2014 and where, according to Nielsen, the amount of Mexican beer alone sold in grocery stores within the last year is equal to the amount of all craft beer sold from supermarket and convenience store beer shelves. It’s also a market where, despite advances by both craft and imported beers, one of every five beers sold is a Bud Light. In fact, the 38 million barrels of Bud Light sold last year would not only make it the No. 3 brewer in the U.S. if it split off from Anheuser-Busch InBev BUD, -0.51%

As of June 2015, there are eight breweries in Huntsville, soon to be nine. This smallish southern city, population 180,000, has undergone a total transformation as far as its craft brewing industry is concerned. Like so many other American cities, beer has come into the vogue, but few if any can claim to have experienced such as a rapid, radical, city-defining seismic shift. In just five years, “old veteran” brewing presences have been established and a younger generation has come along to reap the rewards of a clientele that continues to refine its taste. It’s still very much a work in progress, but to compare the “before” and “after” statistics is shocking. Thanks to a timely repeal of some antiquated laws that held the brewing industry back-a home brewing ban, an ABV cap, a ban on large-format bottles-craft beer is now free to thrive.

Identifying a new market can be a challenging task. However, when examining the preferred alcoholic beverage of three major age groups, one in particular stands out. Of the three age groups, fifty and older consumers are the age group with the smallest preference for beer. Figure 2 on the following page compares the alcoholic beverage preference for three major age groups.

Most industry observers agreed that the key consumer segment for beer companies was younger drinkers, 21-27 years of age. This group represented the “ first time drinker demographic”, that had not yet established loyalty to any particular brand of bear. The adult population in 2005 but accounted for more than 27% of total beer consumption and was growing. In addition, this age group spent twice as much per capita on alcoholic beverages than consumers over 35 years of age.

In 1925, the Mountain Man Brewing Company created a new taste of beer. The company specializes in producing Mountain Man Lager that is a family owned recipe that has a unique bitter award-winning taste. Mountain Man Brewing Company holds a strong brand name in the premium beer segment of the beer industry. MMBC Lager Beer has won several awards and has high brand recognition in the region that it operates. Since 1960, MMBC has distributed lager beer primarily in the Midwest distributing products in Illinois, Indiana, Michigan, Ohio, and West Virginia. MMBC Lager is a strong hoppy beer that is preferred by customers in the working class that are between 55 and 60 years. Over 70% of MMBC sales are generated out of liquor stores. Mountain Man Brewing Company Lager is MMBC only product. In 2005, MMBC Lager sold 520,000 barrels and generated $50 million in revenue. By identifying the facts of the Mountain Man Brewing Company’s case and the problems and why they exists it will be possible to determine solutions for MMBC 's situation to define the direction the company will need to take to ensure future success.

Despite the strong brand and strategic position that MMBC created, the company experienced a decline in revenue of 2% in 2005 (Abelli, 2007, p. 4). The decline is due to changes in beer drinking patterns, markets, and demographics in the region as well as the U.S. in general. The change in beer drinking in 2005 included a decrease in intake of beer in general. This was due to competition from wine and spirits as well as new national health recommendations to decrease alcohol consumption for improved health (Abelli, 2007, p. 4). Premium beer consumption was down 4%, but light beer use was up 4% (Abelli, 2007, p. 10). This movement of consumer purchasing practice, makes adding a light beer product attractive. Overall beer consumption was down in the U.S., and this trend was true in MMBC’s region as well. See Figure 1. This graph shows beer consumption in West Virginia, MMBC’s home state,

Mountain Man Lagers main customer is an older generation, blue-collar worker, which make up a larger percentage of the sales. In 2005 sales have dropped 2% relative to the prior fiscal year. The cause is from a stiffening competition, a market that is maturing and new products. All of these factors are stealing the customers from the Mountain Man Brewing Company (MMBC). The light beer market is starting to attract younger consumers and along with the female beer drinker. Chris Prangel, with some skepticism, thinks the light beer market is the answer to not losing anymore of the market share that MMBC has now, but he is worried because of his

Mountain Man Lager is currently offered by MMBC and is considered a premium beer product. Lager beer is generally seen to be in the mature stage of the product life cycle, and this carries implications for MMBC in terms of proposing appropriate measures to address the declining sales of its

|After seeing a reduction in gross profit in 2008 Grupo Modelo recovered and increased their gross profit 10.6% in 2009. However, Grupo |