Instructions

This Spreadsheet contains the Exhibits from the Mountain Man Case Study and an interactive forecasting model
which allows users to evaluate the effects of launching the MM Light Product.
Clicking on any of the Radio Buttons contained in the Scenario Option Box will Change the Assumptions to
reflect the scenario chosen.
Alternative scenarios can be evaluated by changing the yellow or orange assumption cells directly.
Changes made to orange cells will be overwritten when a Scenario option is reselected

Exhibit 1
Mountain Man 2005 Income Statement

Net Revenues

$50,440,000
$34,803,600
$15,636,400
$9,583,600
$1,412,320
$4,640,480
$151,320
$4,791,800
$1,677,130
$3,114,670

Cost of Goods Sold

Gross Margin
Sales, General & Administrative
Other Operating Expenses
Operating Margin
Other Income
Net Income Before Taxes
Provision for Income Taxes
Net Income After Taxes

100.00%
69.00%
31.00%
19.00%
2.80%
9.20%
0.30%
9.50%
3.30%
6.20%

Exhibit 3
Competitive Market Shares in Barrels by Brewer
East Central Region
Anheuser-Busch
Miller
Coors
Other 2nd tier Premium & Popular Brewers

15,620,252
8,553,948
3,347,197
4,648,885

42.00%
23.00%
9.00%
12.50%

Craft / Specialty Brewers

Imports
Total

557,866
4,462,929
37,191,077

1.50%
12.00%
100%

Exhibit 4
Beer Consumption by State (2000 to 2005 Shipments in Barrels)
STATE

2000

ILLINOIS
INDIANA
KENTUCKY
MICHIGAN
OHIO
WEST VIRGINIA
WISCONSIN
EAST CENTRAL REGION
TOTAL U.S.

2001

Source: Beer Institute

Exhibit 5
Consumption by Type of Beer (2005)
Light Beer
Premium Beer
Popular
Imported Premium
Superpremium (craft and high-end domestics)
Total Barrels
Source: Extrapolated from Beverage Marketing Corp. Data

EAST CENTRAL REGION

18,744,303
7,326,642
4,351,356
4,462,929
2,305,847
37,191,077

% Total
6-year CAGR
50.40%
4%
19.70%
-4%
11.70%
-5%
12.00%
6%
6.20%
9%
100.00%

EAST CENTRAL REGION

4,462,929
29,618,974
3,109,174
37,191,077

% Total
12.00%
79.60%
8.40%
100.00%

Consumption by Origin / Packaging (2005)

Imported
Domestic - Packaged
Domestic - Draught
Total Barrels
Source: Freedonia Analyst Report
Exhibit 5: Light Beer Market Shares and Dominant Brands
Light Beer Competitive Market Shares
East Central Region
Anheuser-Busch
Miller
Coors
Other brands
Imports
Total Light Beer

2002

2003

2004

2005

9,038,323
9,165,381
9,268,188
9,108,157
9,032,851
9,063,267
3,954,209
3,947,446
4,021,685
3,905,265
3,993,643
3,998,855
2,517,894
2,486,731
2,564,013
2,490,928
2,591,949
2,555,739
6,761,561
6,695,665
6,854,064
6,774,702
6,746,578
6,700,174
8,493,144
8,601,604
8,682,331
8,760,272
8,702,382
8,584,283
1,274,626
1,311,838
1,360,589
1,348,527
1,373,205
1,359,231
4,741,019
4,784,791
4,890,122
4,855,313
4,877,662
4,929,529
36,780,776 36,993,456 37,640,992 37,243,163 37,318,269 37,191,077
197,609,645 200,146,800 202,605,792 202,586,016 204,318,220 203,515,149

2005 Market Share

49%
24%
11%
14%
2%
100%

Leading Domestic Light Beer Brands

Brand
Bud Light
Miller Lite
Coors Light
Natural Light
Busch Light
Michelob Ultra
Milwaukees Best Light
Other domestic brands
Total

2005 Market Share

32.90%
17.80%
14.70%
9.80%
6.40%
5.60%
3.40%
9.40%
100%

Leading Imported Light Beer Brands

Brand
Corona Light
Amstel Light
Labatt Blue Light
Other imported brands
Total

2005 Market Share

57%
26%
15%
2%
100%

Scenario

No MM Light
MM Light with 5% Loss of Revenue
MM Light with 20% Loss of Revenue

Case Facts Used in this Scenario

Source

Revenues from MM Beer in 2005

Contribution Margin
Annual Change in MM Beer Revenues
East Central Light Beer Market in 2005
Annual Change East Central Light Beer Market
# Barrels of MM Beer
Variable Cost per Barrel MM Beer
Increase in Cost of MM Light Beer (If launched)

$50,440,000
31.0%
-2.0%
18,744,303
4.0%
520,000
$66.93
$4.69

Exhibit 1
Exhibit 1
Case Fact Page 6
Exhibit 5
Exhibit 5
Case Fact Page 3
Case Fact Page 6
Case Fact Page 6

Assumptions Used In this Scenario

Is MM Light Actually Launched?
Loss of Contribution (only applies if MM Light Launched)
Advertising Cost of MM Light (only applies if MM Light is Launched)
Incremental Sales General & Administration Costs
Initial Market Share for MM Light in East Central Light Beer Market
Growth in Market Share for MM Light in East Central Light Beer Market
Discount Rate
Perpetuity Growth Rate for 'Net Change in Contribution'

NO
0.00%
$0
$0
0.00%
0.00%
12.00%
3.00%

Case Fact From Page 7

Case Fact From Page 6
Case Fact From Page 6
Case Fact From Page 6
Case Fact From Page 6
Case Fact Footnote Page 8
Assumption

Calculation of Contribution per Barrel of MM Light Sold

Revenue received in 2005
# Barrels of MM Beer
Revenue per Barrel of MM Beer
Variable Cost per Barrel MM Beer
Contribution per Barrel of MM Beer
Increase in Cost of MM Light Beer (If launched)
Contribution per Barrel of MM Light

$50,440,000
520,000
$97.00
$66.93
$30.07
$4.69
$25.38

Calculation of Break Even Volumes Required - First Year Breakeven

Current Revenues of MM Beer
Projected Revenues of MM Beer Next Year
Projected Contribution from MM Beer
Projected Loss of Sales from Introduction of MM Light
Projected Loss of Contribution from Launch of MM Light
# Barrels of MM Light Needed to recover Loss of Contribution
Cost of Advertising MM Light
Incremental SG&A cost
# Barrels of MM Light Needed to recover new Advertising Costs + SG&A

$50,440,000
$49,431,200
$15,323,672
0.00%
$0
0
$0
$900,000
35,461

# Barrels of MM Light Needed to Break-Even in First Year

Assuming a
-2.0% annual change
in MM Beer Sales Next Year
Change this cell to 0 to assume
no change in market size

35,461

Compared to forecast sales in the first year of

Which Represents
% Share of E.C. Beer Consumption from Premium & Popular Brewers
% Share of E.C. Beer Consumption
% Share of E.C. Light Beer Consumption
% Share of 'Other Brand' E.C. Light Beer Consumption

0.76%
0.10%
0.19%
1.35%

Using Data from Exhibit 3

Using Data from Exhibit 5
Using Data from Exhibit 5
Using Data from Exhibit 5

Calculation of Break Even Volumes Required - Two Year Breakeven

Two Years of Lost Contribution (from One Year Breakeven Calculation)
Initial Advertising Costs (One Time only)
Two Years of Incremental SG&A
Contribution per Barrel of MM Light
# Barrels of MM Light Needed to Break-Even in First Year

$0
$0
$1,800,000
$25.38
70,922

Compared to forecast sales over the first two years of

Assuming MM Lager Market

continues to change at
-2.0%
per annum
or

35,461 per annum

0 Barrels

Which Represents
Average % Share of E.C. Beer Consumption from Premium & Popular Brewers
Average % Share of E.C. Beer Consumption
Average % Share of E.C. Light Beer Consumption
Average % Share of 'Other Brand' E.C. Light Beer Consumption

0.76%
0.10%
0.19%
1.35%

Using Data from Exhibit 3

Using Data from Exhibit 5
Using Data from Exhibit 5
Using Data from Exhibit 5

More Advanced 2 and 5 Year NPV Calculations

Taking Assumption of Market Change from Assumption Section at top of Spreadsheet
Year
2006
2007
2008
2009
2010
Revenues from MMBeer
$49,431,200 $48,442,576 $47,473,724 $46,524,250 $45,593,765
Contribution
$15,323,672 $15,017,199 $14,716,855 $14,422,517 $14,134,067
Loss of Contribution

$0

$0

$0

$0

$0

Launch Advertising Cost of MM Light

Incremental SG&A
Total Incremental Costs associated with MM Light

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

East Central Light Market

Assumed Market for Light Beer
Market Share for MM Light
Barrels Sold MM Light

$19,494,075 $20,273,838 $21,084,792 $21,928,183 $22,805,311

0.00%
0.00%
0.00%
0.00%
0.00%
0
0
0
0
0

Contribution

$0

$0

$0

$0

Net Change in Contribution

$0

$0

$0

$0

$0

1.12

1.25

1.40

1.57

1.76

Present Value

$0

$0

$0

$0

$0

2 Year NPV of Launch Effect

$0

5 Year NPV of Launch Effect

$0

Discount Factor

$0

Break-even Not Achieved within 2 years

NPV Calculation in Perpetuity

Annual Change in MM Beer Revenues
Annual Change in Net Change in Contribution

-2.0%
3.0%

Terminal Value of Contribution from Original MM Beer Business from year 6 onwards
NPV of Terminal Value of Contribution from Original MM Beer Business from year 6 onwards
NPV of MM Beer Business Overall assuming no MM Light Launch

98,938,470
56,140,345
109,454,800

Terminal Value of Net Change in Contribtion from Launch of New Beer (Year 6 onwards)
NPV of Terminal Value of Net Change in Contribtion from Launch of New Beer (Year 6 onwards)
NPV of Contribution to MM Beer Business Overall given Assumptions used here

0
0
109,454,800

Change in Company Value from Original Case which assumed no launch of MM Light