Karan Bilimoria: Cobra Beer
How the Cobra Beer founder carved a niche in 'beer and curry' culture
One look at Cobra Beer founder Karan Bilimoria’s background and you would be forgiven for thinking that his is a rags to riches story – but without the rags part. Boarding school-educated in India, the son of a General, his mother a member of a wealthy family, a post graduate degree from Cambridge plus a Cambridge Polo Blue – this is hardly a classic ‘born on the wrong side of the tracks’ story. But on getting to know him a rather different story is revealed.
The Bilimoria family had all the trappings and perks of a wealthy Indian family but not the hard cash. Having started his first degree at the precocious age of 16, the teenage Bilimoria struggled to find the money to come over to England to study to be an accountant. He was funded piecemeal with a clutch of grants and family handouts.
When he eventually started Cobra Beer from his flat in Fulham in 1990, just as the UK was going into recession, he was up to his neck in debts to the tune of £20,000. Today, all that is far behind him.
His company, in which he has a 72% stake, is turning over more than £12.5 million, sales are growing at the rate of 60% a year. Bilimoria intends to float the company on the Alternative Investment Market by the end of 2002 to fund massive expansion plans.
But that’s just the small beer aspect of his business. There are also the other areas like his glossy magazine Tandoori and his internet project curryzone.com. In addition, he has just made it onto the Fast Track 2000 listing and is featured in both the Asian Times and Eastern Eye listings of successful businesses.
Bilimoria’s success, thus far, has come from focusing his sharp intellect and knowledge on the right opportunities that crossed his path – and coming up with a highly successful business brew.
But it has not been a journey without some measure of discomfort and near disasters.
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Mild mannered and courteous in the extreme, Bilimoria reckons he can trace his early influences back to his grandfather. As a young boy he was told to take up all sports and play to your best or don’t bother doing it at all. “I wanted to join the Army but my father talked me out of it,” he recalls.
His grandfather later stepping in with some more salutary career advice, pointing him in the direction of accountancy. “He said if you look at company reports and the qualifications of the board members, you see accountants everywhere. His theory was it would teach you about business and give you a career to fall back on.”
Lucky break number one was an introduction to Ernst & Young after he gained his first degree in India. Ironically, when he did arrive in the UK, his Indian degree wasn’t recognised and he ended up doing four years training instead of three.
Next stop was law at Cambridge University. “It was at Cambridge that I realised that I could sell. I had to do door canvassing to get myself elected to the Union.” Coincidentally his sales patter paid off and he was elected vice president of the Student Union.
When he finished at Cambridge his ideal career choice was supposed to have been corporate finance. However polo got in the way. He was committed to a polo tour and brought back some sample polo sticks. The next thing he knew, he was in business putting his selling skills to good use. And sell he did, but not without some opposition. “I tried to get my polo sticks into Harrods and they wouldn’t even see me as I didn’t have a company.”
Bringing it home
Next he turned his sights to the Indian restaurant trade for his eventual success. Indian restaurants were expanding rapidly in the UK and becoming a familiar site in every high street. The preferred liquid accompaniment to quench the thirst was, of course, a long cool beer. However what was on offer did not match up to Bilimoria’s standards. “The trouble with all the beers I tasted was that they left you gassy and bloated and with not enough room for your food.”
Initially Bilimoria imported beers from a brewery in India and the first container arrived at the same time as the recession. “When I started out I was 27, I had no mortgage, no commitments,” he recalls. “I raised money every way I could except for venture capital.” High up on the lists of credits is his old-style bank manager who had such belief in Cobra that he agreed a loan of £30,000.
But even with that amount of money, it was hardly a flashy business. No livery of smart vans touring Indian restaurants nationwide delivering their wares. As Bilimoria recalls with a wry smile: “I had a battered old 2CV as a company car and we used to park it down the road from the restaurants we were delivering to.”
Apart from being new into the marketplace, which already had an established beer in place, Cobra also had the problem that the beer was bottled in large bottles. Indian restaurant customers were more used to the smaller bottles. Ever quick to turn a negative into a positive, Bilimoria pointed out to his potential clients just how authentic this method was of drinking the beer and the benefits of the sharing aspects of one bottle and two glasses. It worked and the cases began to shift. It was, he recalls, a real struggle but after five years his revenue hit the million mark.
In the meantime, in order to keep going and raise funds, something had to give. In 1995 Bilimoria sold some of his shares in the business to get himself out of his somewhat limited business accommodation which he was sharing with his new wife. The sale raised £3.5 million to establish him in proper offices.
Despite the gradual acceptance of his beer, Bilimoria found that shipping the beer over from India was swallowing up 50% of management time in organisation and administration. The solution was to brew in Britain.
A growing market
Bilimoria placed his businesses with the Bedford-based, family-owned firm Charles Wells, which also makes Jamaican Red Stripe and Japanese Kirin Beer. It took six attempts, says Bilimoria, for the UK brewery to get it right. Now it is producing a draft form of the beer which is available in 1000 outlets. No longer do you have to be in an Indian restaurant to pick up a bottle of Cobra. Today the beer is available in supermarkets, off licences and a number of London bars.
In a bid to branch out and tap into a growing wine-drinking trend in Indian restaurants (some 35% of customers in Indian restaurants drink wine), 1999 saw the launch of wines. Initially two – and subsequently another three wines – have been introduced and the company is now selling 2500 cases a month. This accounts for just over 5% of the annual turnover.
Despite the fact that the beer market generally is in decline in the UK, Bilimoria insists that the premium beer section is not. “We are in the growing part of the beer market where we appeal to the new breed of repertoire drinkers.”
And he has every intention of exploiting his beers even further come the proposed floatation next year. “Of course there are disadvantages to floating and I am not doing it as an exit route. I think it will give the company extra credibility and I would like my employees to get share options.”
As for the future, Bilimoria sees plenty of opportunities for growth apart from the obvious further expansion into the export market. “We haven’t even touched the mainstream market yet. We have all the pubs and clubs to investigate.”
He describes his staff as a great team and says that his philosophy is always to outsource to the best companies available. It is a move that has paid dividends. Saatchi, his advertising agency, has won four awards with the Cobra advertising campaign. As he recalls, when he first started down this route to conquer the most competitive beer market in the world, some of his contemporaries may have sniggered a little. The way things are stacking up for his company, one suspects that if Bilimoria wasn’t such a gentlemen he may be doing some laughing himself.