The beer industry is one where people either care deeply about the brand they consume or don’t care at all. For the folks who do care, there’s a set of criteria they typically use to decide which beer to purchase: quality, taste, price, brand image, tradition, and authenticity. For Mountain Man Lager, it was clear that they absolutely nailed every one of those factors. For nearly a century, Mountain Man never once deviated from its core identity as a family-owned quality beer brand with a consistently strong, bitter recipe and a local bond to East Coast consumers.
So when Mountain Man Lager suddenly started to consistently lose 2% of its revenue every year, Chris Prangel, the next inheritor of the family-owned brand, began to panic. For over 75 years, Mountain Man never once saw a decline in sales - so there was clearly a reason to be concerned. But what exactly happened?
Mountain Man’s Stumble
As it turns out, it wasn’t an internal issue but rather an industry issue: customer preferences were beginning to change. Mountain Man’s target segment hasn’t changed since their start in 1925 - their bitter-tasting beer is and always was meant for middle-low income, blue-collar men over the age of 45. However, as we all know, it’s not uncommon for industry trends to change over time.
In 2006, it was becoming more and more clear that the beer industry in particular was undergoing drastic changes. US light beer sales were growing at the same rate (4%) traditional premium beer sales were declining annually. The reason was no mystery. Younger drinkers simply no longer favored that same strong, bitter taste of alcohol that had held Mountain Man’s older segment in a chokehold for so long.
This presented Chris with a challenging dilemma. Should he take the lead in pushing Mountain Man toward the segment that is clearly growing by launching a Mountain Man Light? Or should he step back and focus on the core brand that had consistently worked for them all these years? One thing’s for sure - it’s not an easy decision.
Let’s take a look at the many things Chris had to consider before making the final call.
The Dilemma: To Pivot…Or Not to Pivot?
Between 2001 and 2005, beer consumption had dropped by over 2% in the US, making it much harder to sell. West Virginia (Mountain Man’s native state) in particular began to allow retailers to sell beer at much more deeply discounted prices to account for an excess in supply. Consequently, stores also became significantly more picky about what brands of beer they sold, getting rid of any and all that couldn’t meet the margins and demand that larger national beer companies had.
Unfortunately, it was primarily the regional breweries on the East Coast that ended up closing shop, with more and more brands unable to sustain themselves as time went on. Mountain Man, however, was lucky enough to stay afloat, despite being a regional brewery much smaller than national competitors. And who did they have to thank? It was their incredibly loyal fanbase of customers that was large enough to keep Mountain Man profitable during difficult times like these. With a brand loyalty rate of 53%, they had higher customer loyalty than even their strongest competitors Budweiser and Bud Light.
If it was Mountain Man’s loyal fan base that pulled them through this time, it’s not surprising that Chris was reluctant to risk upsetting these customers all for the sake of reaching a new segment. More specifically, Chris feared that launching Mountain Man Light would upset the core Mountain Man Lager customer base and ruin the brand image they had worked so hard to build up. Especially since retailers would have to split up the shelf space between Mountain Man’s Light and Lager products, Chris had to worry about cannibalization as well, which would further alienate Mountain Man Lager fans.
But it wasn’t just upsetting a new segment that Chris was worried about. First off, the younger customer segment was not necessarily in Mountain Man’s wheelhouse. While the brand was highly ranked among older respondents in a survey, most of the respondents in the younger age category had hardly heard of the brand before. This meant they would have to start from scratch if they wanted to launch Mountain Man Light, which is not easy nor cheap. SG&A costs alone were estimated to be $900k, not to mention the immense advertising costs were estimated to reach $750k over the course of just 6 months.
What should Chris have done to both launch the new product line successfully and account for these concerns?
Letting Data and Segmentation Drive Success
The challenge for Mountain Man was that they didn’t necessarily have data on every customer that bought from them, unlike online vendors. They had to rely on a mix of industry data and metrics from their various retailers. But this doesn’t mean that the data was useless. Not only was Mountain Man losing revenue slowly but surely, but the “light” beer segment had doubled in market share of the beer industry over the course of just 4 years. That in itself should be a sign that a pivot of some sort was necessary.
What this also means is that accurately segmenting Mountain Man’s customer base was not only more difficult but more important as well. Targeted ad campaigns had to be as accurate as possible, not only so that younger customers could develop a specific interest in Mountain Man Light, but also so that older customers could separate themselves from that branch of Mountain Man entirely.
And, to avoid a drop in that cherished loyalty rate of theirs, they still had data they could analyze and leverage from their existing mailing list that told them more about their most loyal customers and how to retain them. If Mountain Man wanted to find more data to analyze, they had the option of testing their Mountain Man Light product with different segments of young consumers to analyze feedback and understand their ICP more clearly.
By better understanding their ICP, Mountain Man had a better shot of sending out targeted email campaigns that would resonate and convert. Eventually, Mountain Man Light could even be leveraged as a tool to upsell Mountain Man Lager to younger buyers in personalized ad campaigns. It’s all about 1) whether or not they could effectively use and analyze data and 2) how effectively they could personalize campaigns to their older vs younger customer profiles.
The E-Commerce Advantage
The point is, whether or not you’re an e-commerce brand, there are plenty of ways to leverage data effectively to help you better understand what next steps your company needs to take. Because Mountain Man didn’t directly sell to customers themselves, they had less data that they owned and could analyze, but still managed to use industry data to decide what to do with their customers.
Want to know whether or not to pivot? Need to better understand your customer segment(s)? Deciding whether or not to launch a new product line? Look to data (whether industry or internal) for answers.
You’re lucky if you have an online distribution channel of any kind. It means you have far greater access to data that can be used to calculate retention rates, churn rates, AOV’s, LTV’s, and etc., which equips you and your company with so much more to work with when given heavy decisions to make or goals to reach. Mountain Man wasn’t as lucky, which is why it made their case that much more difficult.
When you have an advantage as great as this, don’t let it go to waste. The raw data is already there - let Cotera help you transform it into useful metrics you can apply to decision-making processes or reaching sales objectives. And, if you ever have trouble understanding your customer segments, we got you covered. It’s ineffective to rely solely on industry data when it comes to your own customers, so allow us to show you the endless specifics of what your data can reveal about them. Above all, Cotera is here to help you make the most out of the data you own.