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Segmentation and Thought Process behind Market Sizing

Hi everyone,

I am currently practicing market sizing questions and would like some feedbacks based on a practice question I did. Basically, the quesitons ask to estimate the average number of Budlight sold in the U.S. Here is my thought process (Top to Buttom) below:

Amount of people drinking beer in the U.S: 

U.S Population: 330M, assuming 300M for calculation,

Breaking down the entire population by age hierarchy, including 24 year old and below, 24 to 40, 40 to 60, and 60+, assume each of age hierarchy counts as 25% of population.

24 year old and below: 10% due to underage, but can't be lower due to college students drinking. 300M *0.25 *0.1 = 7.5M

24 to 40: legal and prime age of drinking alcohol. assume 70% of people do and will drink beers throughout the year. 300M * 0.25 * 0.7 = 52.5M (round up to 50M)

40 to 60: will occasionally drink beer but won't be often. let's say 30% of them will drink throughout the year. 300M * 0.25 * 0.3= 22.5M (round up to 20M)

60 and above: very rarely drink beer due to age and health concern. assume 20% will drink. 300M*0.25*0.2= 15M 

Average number of bottles consumed by a person at different age group  per year: 

24 to 40:

Hot Months (5 months from May to September): 2 beers during the weekend + 0.5 beers during the week. 2.5*4 (4 weeks in a month) *5 = 50 bottles

Normal Months (7 month): less likely and frequently to drink, assume 1 beer per week, 1*4*7= 28 bottles. 

Average Number of Budlight consumed in Summer Month + Average Number of Budlight consumed in Winter Month = 28+50= 78 (round it up to 80).

40 to 60:

I was thinking of using the same Summer and Normal month method, and only adjusting it to 40 bottles a year since on my previous estimate, only half of 40 to 60 people will drink beer as opposed to 24 to 40. 

24 year old and below and 60 above: 

Using the same logic with proportion drinkers at that age group compared to the amount of drinker between 24 to 40, 24 year old and below and 60 above each would be about 20 bottles total in a year.

Eventually, I would use Amount of People drinking beer in U.S by age group * Amount of Beer each age group would have, thus:

80*50M (24-60) + 40*20M (40 to 60) + 20* 20M (Round up total for 24 year old below and 60 above) = 5.2B bottles per year in the U.S

 

I know that was a lot...But I honestly want to have some constructive feedbacks on where I am with my assumption, thought process, and analysis. 

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Top answer
Fiore
Coach
on Oct 28, 2024
Ex Engagement Manager at McKinsey

Hi there! This probably would be more useful discussed on a call!

Overall your assumptions sound reasonable, but there's ways to simplify your answer and not confuse/lose the interviewer at the same time. 

I'm giving away 3 free iv prep calls this week and would be happy to schedule one for us two!

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