Madcap Craftbrew & Bottleworks, Inc.: Zebra Beer

July 14th, 2005

The Challenge
Madcap needs to develop a marketing plan that will build permanence to its brand image while increasing revenue, increasing awareness and overcoming the ‘try-it-once’ stigma that plagues the micro-brew industry.

Definition and Analysis of the Problems
Madcap’s Zebra brand of beers has not been able to develop a loyal following of repeat buyer’s.
Recommendations and Reasoning

Madcap must make a fundamental change in its approach to the market in order to maintain its status as a long-term, viable business entity. Without drastic changes in its product and marketing plans, Madcap only holds a small chance of growing revenue fast enough to compete with the likes of Samuel Adam’s and Pete’s. Madcap must expand its market offerings and make adjustments to production and marketing that will allow distribution outside of the Ohio/Indiana/Kentucky region and into the lucrative markets on the West coast and the Northeast.

Introduce new brands to compete with Premium and Ultra-Premium brand categories. Play off of the MCB name to create a more conservative, yet superior flavored beer for the Premium market space and a darker, richer bock or stout for the Ultra-Premium space. Launch the MCB brands nationally by contract with regional breweries for manufacture and distribution. This give MCB a brand at a lower cost that will bring in volume business and build a level of loyalty. If we look at regional Premium beers we find an extremely loyal following. Brands such as Genesee Beer and Utica Club are examples of successful regional Premium beers. MCB should capitalize on this phenomenon in order to allow revenue growth and expansion of its Super-Premium and Ultra-Premium brands.

Maintain the Zebra brand position as a Super-Premium. Although the Bloomington test market data seems to show that a lower price-point may be the answer to increase adoption of the Zebra brand, it would also dilute the perceived value of the brand and hence the product. In a micro-brew situation such as this, a lower price point will often bring higher sales initially, but the result is the same in the end; it is always difficult to build a loyal following in the micro-brew market. MCB needs to show the marketplace that Zebra is NOT a micro-brew, but a Super-Premium or Ultra-Premium beer choice.

Repackage the Zebra brand to take advantage of less expensive paper labeling. This will increase per case margin and remove problems with bottle supply coming out of Mexico. MCB needs loyal consumers and cost savings/margin increase in order to stay alive in this terribly competitive market. The company knows about the issues related to its packaging cost and production as well as the market perception that printed labels is more expensive. Take advantage of this perception and help increase margin.

Launch the Zebra brand in on the West coast, beginning with California, by contracting production and distribution to regional breweries. The company knows that there is a high level of demand for specialty beers on the West coast – California in particular – and have received many inquiries as to the availability of Zebra in California. Contracting with a West coast brewery for manufacturing and distribution will allow MCB to benefit from increased demand, brand awareness and revenue growth while moving to position itself as a long-term player in the adult-beverage market.

Other Considerations
• Create a more conservative micro-brew brand that is not as bold as ‘Zebra’ the Zebra brand is difficult to find a loyal following for simply because it ‘feels’ like a fad beer.

• Test market a beer targeted to women. 30% of beer drinkers in the U.S. are women who are rarely targeted directly as beer drinkers.

• Consider moving product of Zebra beers to a contracted facility altogether and utilizing the excess capacity of the current brewery to product an “MCB light” brand of micro-brew to go head-to-head with the big players in the Premium category. The current brewery has the capacity to produce significant volumes of a more conservative mass-market beer.

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