From meagre and untimely beginnings in recession-hit 1990, Karan Bilimoria tells GrowthBusiness how he has turned Cobra beer into a brand that is now sold in more than 45 countries.

From meagre and untimely beginnings in recession-hit 1990, Karan Bilimoria tells GrowthBusiness how he has turned Cobra beer into a brand that is now sold in more than 45 countries.

When Karan Bilimoria travelled to the UK in 1981 he had already developed a love for beer, drinking in the Indian Army messes with the young officers who served under his father. But when he arrived in the UK aged 19 to study law at Cambridge, he found the lagers in Indian restaurants didn’t complement the food they were served with.

‘They were very gassy and fizzy: you felt bloated after one or two glasses,’ he laments. The idea for Cobra, therefore, was born out of a love for Indian cuisine and the opportunity that Bilimoria identified was for a suitable liquid accompaniment for the millions of curry lovers across the UK. At the time, the vast majority of beer consumed in the UK was real ale. While less fizzy, Bilimoria felt this was still too heavy and bitter to complement your average vindaloo.

Belief and passion

Having cut his teeth on importing polo sticks from India, Bilimoria was familiar with the difficulties of negotiating red tape, but little could have prepared him for his first business meeting with the Mysore brewery and its executives in Bangalore.

He recalls, ‘There I was with a dozen high-powered and experienced brewing executives, including the master brewer and the managing director and, as I remember it, they all – individually and collectively – laughed in my face.’

With £20,000 of student debt and no experience in the industry, Bilimoria realised he had a battle on his hands. He’d never sold a bottle of beer in his life, which didn’t fill his audience with confidence: ‘I approached the pitch with complete and utter belief and passion. I stood up to them.’

By the end of the meeting only two of Mysore’s executives were convinced that a less gassy accompaniment to Indian food could succeed: Balan, the owner of the brewery, and Cariapa, the chief brewer. ‘Without their support, Cobra would have a very different story,’ says Bilimoria. A year later, the team at Mysore – individually and collectively – apologised to him. Today the business generates retail sales of £96 million and operates in over 40 countries.

An extended stay in Bangalore allowed Bilimoria to work with various combinations of barley, malt, yeast, rice, maize and hops until he hit on the mix of flavour and smoothness that suited his plans.

With his then business partner Arjun Reddy, Bilimoria began to source the bottles for their beer, negotiating the strict export guidelines set in place by India’s excise authority, while hastily agreeing a distribution deal in the UK. Everything was set. The artwork for the labels of what was then named Panther beer had been sent to the printers and production was ready to begin. There was just one problem. The distributors who had been pre-selling the beer in the UK found that although people loved the lager, they hated the name.

Bilimoria was faced with a tough decision: go ahead with the launch – in which he had invested much time and money – and hope for the best, or go back to the drawing board. ‘Our brand was always very important to us, from the choice to produce the beer in India and import it to the UK, to the name itself,’ he says. ‘I have learnt that no matter how much effort you have put into something, you should never go ahead unless you have tested it with your consumers.’ New branding was designed from scratch and Cobra, the second choice on the list of names, was born.

The credibility gap

Bilimoria says that one of the greatest challenges Cobra faced in the early days was raising the finance to fund his ambitions: ‘Nobody believed we stood a chance in the beginning. They used to say, “Don’t waste your money, not that you have any”, but you
have to have the guts to keep going.’

Finding funds was a tough task due to Bilimoria’s non-existent credit rating, coupled with the fact that in the month Cobra beer was first imported, the UK was entering the worst recession since the Second World War. Banks had clamped down on lending and interest rates were around 14 per cent.

‘We needed to bridge what I call the credibility gap to secure finance,’ explains Bilimoria. ‘When nobody knows you or your business, you need confidence and sound research behind you to be able to punch above your financial weight.

‘When you’re a growing business, the temptation is to keep your costs really low. This means entrepreneurs are often scared to go for the best advisors because they’re worried about it being too expensive, but the credibility you acquire from working with a top advisor makes it worth the expense.’

Initially using an overdraft facility, Cobra was later able to take advantage of the Government-backed Small Firm Loan Guarantee Scheme (SFLGS), securing £55,000 for the company. This, Bilimoria soon realised, was not going to last long. Cash flow was critical for growth, and distributors had no intention of paying cash on delivery for shipments of beer.

Bilimoria hired accountant Grant Thornton and was advised to contact a venture capitalist and release 33 per cent of his business in return for investment. But he preferred the idea of holding onto all the equity, so was advised to contact Andrei Warhaftig, who managed a high street bank in West London. Warhaftig asked how much Bilimoria thought his company was worth, and said that if he could get one investor to agree with his £1 million valuation and invest £50,000, Cobra could have a bank loan for the remaining £195,000 eligible from the SFLGS.

Drawing on his contacts, Bilimoria did just that, ultimately giving away just five per cent of his company in return. The bank loan came through – and it was a welcome wedding present, arriving the day before he married his fiancée Heather.

Giving something back

Having taken on a variety of roles from the start, Bilimoria felt it was finally time to begin building a reliable team around him. ‘Lots of people find delegation difficult, especially when they’ve built a business up themselves. The key is always to take on people who are better than you at something. A chief executive needs to be an all-rounder, but ultimately they must be good leaders who have enough confidence in their team to delegate responsibility.

‘Without wanting to sound arrogant, I’m reasonably good at marketing and sales and so on – but my directors are better than I could ever be. Once you achieve that balance and the product is right, it’s more about the people you have around you.’

He’s also keen to show that giving something back to the communities in which you work is an important part of business. ‘I find that one of the most fulfilling aspects of entrepreneurship is the feeling that you’re making a difference in everything you do. Through your input, and as a result of your actions and your initiatives, you have taken something forward or helped somebody.’

Karan Bilimoria has recently released a book, Bottled for Business: The Less Gassy Guide to Entreprenuership, which outlines what its takes to be a successful entrepreneur. It is published by Capstone (£14.99p).