‘Cobra beer,’ says our waiter at Sri India, in London’s Bishopsgate,obra Beer a success that he even devised the recipe. Jon Bunn met him. ‘is very popular with the ladies’.
‘Why?’ we ask, while munching a poppadom. ‘Because it is so very smooth.’
It sounds like a classic marketing line, and a laughing Karan Bilimoria, Cobra Beer’s MD, makes a mental note of it. No doubt he will recount it to the account managers at Team Saatchi when they meet to discuss the increasingly popular brand’s next campaign.
Indeed, it was the creative types at Saatchi who conjured up the phenomenally successful, if slightly anarchic, Curryholic Dave campaign earlier this year, which has seeped into the nation’s consciousness and prompted over 1,000 calls a week to the company’s hotline – in fact, it was appropriately renamed ‘the vindaloo-line’.
Powerful marketing is one of chartered accountant Bilimoria’s three golden rules of business. The other two are unshakeable belief in your product and the importance of securing good finance. It is a simple mantra, but it seems to be working.
Bilimoria’s business career, like any other, has seen its highs and lows, but he is now poised to launch a major expansion into providing draft lager to the nation’s 8,000 curry houses thanks to a #1m share issue. A previous #500,000 share issue three years ago allowed the business to double in size.
More than #80m worth of beer is drunk each year to quench the thirst of the UK’s curry eaters. Cobra, in its distinctive gold-labelled ‘double size’ 660ml brown bottles, leads the way over Kingfisher for sales of bottled beer. It is also available in most supermarkets, and Marks & Spencer even has its own-label Cobra beer.
But tapping into the lucrative draft market currently dominated by Carlsberg – quaintly labelled ‘that Danish beer brewed in Northampton’ by Bilimoria – should see Cobra build on its existing #5m total market share. Bilimoria, 36, believes that within ten years, maybe five, Cobra should be selling #40m a year.
His confidence is shared by many of his existing shareholders, an impressive mix of well-heeled City types and businessmen, who rushed to invest a further minimum of #10,000 each in Cobra’s second issue.
Bilimoria’s beer roots are far removed from the giddy heights of City share issues. He claims he was ‘virtually weaned’ on the golden delight in the officers’ mess of the Indian Army, where his father was Commander-in-Chief of the Indian Central Army.
It was a depressing surfeit of ‘gassy, bloating and insipid’ UK lagers that first set the young Indian – over here in 1982 to study as a chartered accountant with Arthur Young – to pondering a remedy. A solution was to come many years later.
Bilimoria’s time at Arthur Young fired his desire to set up on his own.
‘During my time there, I helped audit two very successful private companies; Heron, run by Gerald Ronson, and Cambridge airport’s operator Marshalls,’ he explains.
‘It was a real eye-opener and showed just what self-made people were capable of doing. I had joined Arthur Young thinking I might be an accountant for the rest of my working life, whether in practice or as a finance director. But two years into my training contract I realised I did not want to make a career out of it.’
Instead, he went up to Cambridge to study law for two years, captained the polo team and, after a tour of his native India, decided to sell polo sticks – ‘a very limited market, but with good margins’.
Bilimoria learned his first practical business lesson then. ‘I discovered that selling was the key skill I would need in business.’ And as he developed his selling skills, he found persistence was equally important. It was only through trying, and then trying again and again, that he won an audience with the buyer at Harrods and eventually sold his first batch of 200 sticks to the Knightsbridge store.
The venture proved to be a good education for Bilimoria, but his business only turned over #50,000 a year. Not enough for an ambitious 28-year-old and, besides, that beer problem was still nagging him.
A chance introduction to a leading Indian brewer led to the birth of Cobra. Bilimoria spent six months perfecting his own brew in India with a talented young brewmaster at the Mysore brewery. Then, in June 1990, the first container of Cobra was shipped, pre-sold, to the UK.
Disaster struck when one of the purchasers, a Budweiser agent, pulled out after testing the infant beer. The beer tasted fine, but it failed a subjective ‘haze test’. The buyer simply walked away.
Bilimoria found himself with crateloads of beer and was forced to sell door-to-door to off-licences and restaurants in Fulham and Chelsea from the back of a battered old Citroen 2CV, called Albert. ‘It required extreme confidence in what we were doing,’ Bilimoria recalls, adding that he used to park the spluttering jallopy out of view from his potential customers to avoid embarrassment. ‘But I had total belief in the product as I had created it myself. I knew it was one of the best beers in the world,’ he stresses.
His faith was rewarded, and in year one Cobra turned over #220,000 – more than four times the amount earned from flogging the wooden mallets.
Growth – 50% annually over the past five years – has been pursued relentlessly since then largely, as Bilimoria admits, to the detriment of profit. ‘Growth is key,’ he says, ‘but I have learned more and more that it has got to be growth backed by profitability.’
Cobra is now profit-focused and Bilimoria is planning an AIM listing within three years. Auditor Grant Thornton is helping him meet both targets.
Coping with that rapid growth has been central to Cobra’s early success.
So often, fledgling businesses are unable to live with the demands placed on them by clients.
Bilimoria soon realised that importing Cobra from India – a key selling point – would not satisfy demand. After extensive research, which reassured Bilimoria that Cobra drinkers would not be offended by a UK-brewed Indian beer, Bedford brewer Charles Wells won the contract to produce Cobra under licence in the UK.
‘We asked our drinkers to rate four characteristics of Cobra in order of importance,’ explains Bilimoria. ‘The fact that it was extra smooth was most important, while the fact that it was imported was rated lowest.’ It took six attempts to create the right beer, but Bilimoria believes he has created a better product, a belief that is backed by more consumer tests.
As with most business success stories, luck and good timing played a significant part in Bilimoria’s rise. He launched Cobra at the start of the last recession, but at the start of the bottled lager boom. Expectations were low but opportunity for success high. By sticking to his three golden rules – product, marketing and finance – the ‘Indian beer brewed in Bedford’ is booming.
A quick look around the restaurant confirms that success, as a sea of lunchtime City diners have the distinctive giant-sized Cobra bottles in front of them. Bilimoria smiles proudly as he surveys the scene, and pours another glass of his very own home-brew.
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