Karan Bilimoria: the dream lives on
The story of Lord Bilimoria is inextricably tied in with that of his greatest creation, Cobra beer. And, as Phil Mellows found out, despite the brand's fall from grace in 2008, the two are as closely yoked today as they have ever been.
Great brands, they say, tell great stories, and Karan Bilimoria has always been a great storyteller. The story of Cobra is his own story, too. It tells how an Indian student with £20,000 fees hanging round his neck had the chutzpah, the entrepreneurial skill and the luck — good stories always have a dash of fortune — to a launch a beer into the UK, then the world, against the odds, and eventually took a seat in the Upper House as Lord Bilimoria of Chelsea.
You get the impression that Bilimoria tells his story not just for those budding business people always eager to catch some magical secret, but for himself. The unfinished narrative keeps him going when he hits one of life's inevitable potholes.
"Success is not a destination," he says. "It's a journey, and that journey never runs smoothly. There are always bumps and crevices on the road."
In May 2009 those bumps and crevices nearly flung him into a ditch.
Cobra went into pre-pack administration, re-emerging as a joint venture with brewing giant Molson Coors in which Bilimoria has the minority shareholding. This latest chapter in his story cannot have been the easiest to write, but Bilimoria nevertheless tells it plainly, coherently and persuasively.
"My ambition has always been to brew the finest Indian beer and to make it a global brand, and I knew that to do that I had to create mass and scale. Beer is an fmcg product and that means low value and high volume, even for a premium product like Cobra.
"Some say we never made a profit. That's absolute nonsense! Look at our accounts. Invariably we made a profit, albeit at a low level, and our GPs were always very healthy thanks to premium pricing. But we had a deliberate strategy to sacrifice the bottom line for growth."
The stakes were raised in 2006 when Cobra won the backing of a hedge fund which insisted the company strengthen its management team and increase its marketing spend.
"We had huge costs, but we were growing at 20% and the company was highly valued based on future growth.
"Then came the credit crunch. Our growth value disintegrated. We had put our foot on the accelerator and the whole world collapsed around us — and it continued to collapse."
Efforts to rescue the situation eventually failed on 21 May 2009 — and then Molson Coors stepped in with its £14m bid.
"At that point we could have lost everything. Who knows what would have happened? It would have been a disaster scenario. There was only one way out.
"Pre-pack administration has got a bad name, and it's been sadly misused, but it can save a business from falling to pieces and it protects the stakeholders.
"Molson Coors described Cobra as 'an extraordinary brand'. They didn't want to buy us outright, and they wanted me to stay as chairman for at least 10 years. It behaved with integrity, with the ethics and family values of a 250-year-old company.
"I hope this episode will be written up as a case study of clutching victory from the jaws of defeat. You say we went bust — but it was only for a few seconds!"
Despite his entrepreneurial free-trade instincts, one of the issues Bilimoria has pursued as a politician is better regulation of the banks. He believes that if the Bank of England had been in charge, rather than it being left to the Financial Services Authority, the financial crisis would not have been so bad, and Cobra may not have found itself in such a predicament.
But Bilimoria doesn't want to labour the past. An exciting new chapter has begun — with Cobra being brewed, he is amused to find, in Burton — "the home of India Pale Ale!"
"The first year of the Cobra Partnership has been one of focus, consolidation, integration and building the foundations that can get the business on a profitable footing.
"We've realigned our pricing — we had always been more expensive than other beers, but it had dropped a little — putting value over volume. We've suffered a drop in volume this year as a result, but we've had a big increase in value. We're more profitable.
"And this year we are back in growth phase."
The most obvious influence of Molson Coors has been the refocusing of the brand on the functional product value, the "hard truth" that Bilimoria began with, Cobra's ale-like lack of gasiness that helps it complement Indian food.
"There's so much untapped potential in the Indian focus," he says. Even though Cobra is already in 95% of Indian restaurants, more of them could be boosting volumes by selling the 660ml bottle and serving draught. Supermarkets, the second-biggest channel, could do more with the link to Indian food.
Pubs, too, are a target, and Bilimoria is hoping to secure new listings with two major chains. "Nearly every pub sells food and most menus have an Indian dish. But it's not just a drink to go with food. People drink it because they love it. When I walked into the bar at Thames Valley University recently half the students were drinking it — and not because I was there.
"The Molson Coors view is that sales will ripple out from the curry core. I want those ripples to turn into waves!"
New advertising that urges us to 'Love Curry, Love Cobra', "takes us back to basics," says Bilimoria, who's looking forward to a year ahead in which the brand will be celebrating not only its own 20th birthday but the 200th anniversary of curry coming to Britain and the 50th anniversary of the Bangladeshi Restaurant Association. It's a timely point in history to give the brand fresh impetus, and there's a certain group of people who will be watching with special interest.
Cobra's collapse left 340 unsecured creditors owed a total of £71m, including £1.9m owed to brewer Wells & Young's.
"The secure creditors are almost all paid now, and I have pledged to insecure creditors that I will make sure they get their money," says Bilimoria.
"The joint venture is doing very well. It is growing profitably as part of a global player. Finance was always a problem for us. Now it's never an issue.
"My vision for Cobra, to make it a global beer brand, is intact. It's what I still want to do today — and we are the finest Indian beer and the biggest Indian beer in the UK. So we're bang on target. I'm in a position to realise my dream. And now we should be able to get there even quicker."
My kind of pub
"I live in Parson's Green in Fulham, within walking distance of two great pubs — the White Horse and the Duke on the Green. There have been lots of pubs I've loved over the years — the Chelsea Ram, the Admiral Codrington. As a student I used to drink in the Fitzroy Tavern. I love cask ales. The idea for Cobra came from them.
"The most important thing about a pub is that it's welcoming, so you want to go in there. Then I think it's the quality — and that can be delivered at any price point. Then it's cleanliness, hygiene and service.
"And it must have character. All great pubs do things slightly differently."
Key dates
• 1988 — Karan Bilimoria graduates from Cambridge and begins a career in accountancy
• 1989 — Abandons career to import polo sticks with business partner Arjun Reddy
• 1990 — Launches Cobra
• 1993 — Secures £250,000 funding to grow business
• 1994 — Launches Tandoori magazine
• 1996 — Sales double in a year, production moves from India to the UK and Bilimoria buys out Reddy
• 1998 — Cobra survives boycott by Indian restaurants following adverse comment in Tandoori
• 2002 — Cobra sold in India
• 2003 — Brewing begins in Poland
• 2004 — Cobra makes push into pub market. Brewing returns to India. Bilimoria awarded CBE
• 2005 — Variants Cobra Zero% and King Cobra launched. Bilimoria becomes chancellor of Thames Valley University
• 2006 — Appointed Lo
