Boston Beer Company Considers Launching Green Beer

Case Type: new product; operations strategy.
Consulting Firm: Mars & Co. first round full time job interview.
Industry Coverage: food & beverages; tobacco & alcohol.

Case Interview Question #01358: Your client the Boston Beer Company is an American brewing company founded in 1984 in Boston, Massachusetts, USA. The brand name for the beers is Samuel Adams (often abbreviated to Sam Adams), after Samuel Adams, an American patriot famous for his role in the American Revolution, who, according to tradition, was also a brewer. Based on sales in 2016, the Boston Beer Company is the second-largest craft brewery in the United States, behind Yuengling.

Recently, your client the Boston Beer Company is thinking about manufacturing a green beer. It has hired your consulting firm to help it decide what to do. Is it a good idea to introduce green beer? What kinds of things would you think about to help it make the decision?

Possible Answers:

This is actually a strategy and an operations case question together. We have classified the case as an “introducing a new product” and an “operations strategy” case question because it has significant strategic implications.

Candidate: I don’t want to sound too by the book, but I think I would use a 3C’s framework here to look at the customer, the competition, and the company.

Interviewer: OK, where would you like to start first?

Candidate: To start with, I would need some information on the target customer for green beer. For example, is the client Boston Beer Company planning to sell the green beer to the same people who drink their regular beer? Or do they think that the color green will attract a whole new customer base? In other words, are they trying to grow the overall market for their beer by selling green beer to otherwise non-beer drinkers?

Note: This is a good use of a framework to set up the answer. When you do apply an off-the-shelf framework like the 3Cs, be sure that it is appropriate. Interviewers tell us that they really dislike it when candidates struggle to bend a problem to an ill-fitting framework.

Interviewer: Okay, so you would want to know who the target customer for green beer is. How would you find out whether people would be interested in such a new product?

Note: Here the interviewer is moving away from strategy to see if the candidate has solid intuitions about implementation. Some of the things he will be looking for are an ability to ask questions that will yield good information, sensitivity to cost and ease of implementation, and common sense.

Candidate: I would do a survey of both beer drinkers and non-beer drinkers, and ask their opinions of a green beer product. This would help me to determine whether green beer would tap into a whole new (non-beer drinking) segment of the population, thereby creating a new market for our client, or whether the company’s regular beer drinkers would switch to green beer, thereby cannibalizing sales of the regular product.

Cannibalization would be okay if the margins on green beer were higher than on regular beer, so I’d want some information on that too. Otherwise, we’d need to have a strong feeling that the market for green beer would be big enough to sustain a new product introduction.

And, I’d consider seasonality. We may get an answer back that says the market is not large enough for us to enter, but 90% of beer is consumed during 3 months of the year. This would have significant operations implications on procurement and inventory.

Interviewer: Good. So market size as determined by customer preferences is a critical piece of data. What else would you want to know?

Note: The interviewer might have pursued the market-sizing piece of this even further by asking the candidate to estimate the market size for the new green beer product. The interviewer might also have asked the candidate what market size would be attractive.

Candidate: Well, I would want to know how easy it would be for competitors to copy our green beer idea, if we were successful with it. Is the green dye proprietary? And if so, would red, blue, and purple beer be introduced by the competition with similar success? Or are there literally no barriers to entry? If not, then a marketing free-for-all would probably ensue (like in regular beer today), and we would need to be prepared to play or fold.

Note: The company’s ability to thrive in the green beer business depends on its ability to develop a sustainable competitive advantage. The candidate might have focused a little more on the competitive response to the product, but this is a good answer and one that follows the 3C outline established at the start.

Interviewer: What would you want to know about the company’s ability to manufacture the new green beer product?

Note: The interviewer’s question leads right into the third C: company. He has chosen to focus on one operations issue (ability to manufacture the green beer). He might also have asked about ability to distribute the beer to key markets, about the company’s cultural willingness to make a green beer, or about the fit with its current brand name.

Candidate: Ah, right. They would need to either have capacity in their existing plants or be prepared to build a new plant for green beer.

If their current plants are underutilized, could they manufacture green beer with the same equipment? In other words, I’d want to know how similar the manufacturing processes are for green and regular beers.

If their current plants are operating at capacity, we’d need to do an analysis of the economics of building a new plant for green beer, which would be largely based on whether we could sell enough to recoup our investment.

Interviewer: Well, that looks like a good start. Let’s move onto a second case.

Note: The candidate gets off a little easy here. A logical and likely follow-up from the interviewer would be to ask the candidate how to make the new plant investment decision.

Possible Bad Answer:

Candidate: Green beer? That’s a ridiculous idea. That’s one of those gimmicky things for St. Patrick’s Day or something. A beer company can’t manufacture that stuff for real. I’d tell them not to do it.

– And just how convincing do you think this would be?

Interviewer: Well, your client is actually pretty serious about it, and they’d like you to look into some of the issues. Where do you think you’d start?

– Note: If you get off on the wrong foot, the interviewer will often give you another chance by rephrasing the question or focusing on a different angle. It’s always wise to take his or her hints.

Candidate: I’d interview my friends, who would all agree that it’s a bad idea, and I’d write up the interviews in memo form and tell them not to do it.

– Note: This is an exaggerated response that is clearly not acceptable. However, the message here is that it’s important to avoid starting with a strong bias as you go into a case interview. Also, if the ultimate recommendation goes against the client’s initial intentions, it’s especially important to have solid, credible data to back up your recommendation.

Interviewer: I see. Well then, you said you were looking into investment banking as well?