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Cobra Beer Tycoon Taking A Bite Out Of The Indian Market

Ther has never been a better time to be an Indian businessman, particularly if you happen to be Lord Karan Bilimoria. The Hyderabad-born founder of the Fulham-based company behind Cobra Beer is on an upward trajectory with no downward slide in sight. His beer business is booming with £120 million of annual retail sales in 50 countries and his biography-cum-entrepreneurial manual is selling well. And the accolades are coming in thick and fast.

The list of awards, directorships and committee memberships on Bilimoria's CV runs on for three pages and includes everything from chancellor of Thames Valley University to vice-chairman of the London Chamber of Commerce.

Last year, Bilimoria became a cross-bench peer in the House of Lords at the tender age of 44 and has since wasted no time in making his views heard on all manner of subjects, ranging from business investment to the depleted resources of the British military. He rarely misses an afternoon session and still manages to pop home several times a day to see his South African wife Heather and their four young children.

But out of this mountain of responsibilities, it is his ties to India that most consume him.

"All the things I do, I really believe in. But the one that takes up more of my time is the Indo British Partnership. There isn't a month where I'm not entertaining a major Indian Cabinet minister in London or going on a trade mission. It is top, top priority. And it is a great privilege for me to be part of this time when India is really taking off," he enthuses.

"The potential of doing business for British companies is so huge and at the moment we're not doing nearly enough," he adds. "But people are starting to wake up."

When he founded Cobra in 1989, the beer was brewed in Bangalore and imported to the UK, where it quickly became a staple of the nation's curry houses, but ironically it was only a few years ago that he started selling it in India.

Bilimoria says he always intended to sell Cobra there as part of his aim to create a global brand but was waiting for the market to liberalise and reform. When the country's GDP growth spiked in 2002, he immediately opened an office and began the search for a brewery. After two years of in-country production, Cobra is now selling one million cases annually. In the past five months, the company has opened three more breweries. "India is going to be our biggest market by far. It will overtake our UK sales within two years," he declares.

Cobra is making good progress in Britain, branching out of restaurants into thousands of style bars, off-licence chains and supermarkets. Despite an onslaught of other premium "foreign" competitors such as Peroni, San Miguel, Tiger and Baltika, Cobra Beer sales are still climbing in UK supermarkets by 100% year-on-year and in Scottish mainstream pubs and bars by 240%.

"The consumer is in the driving seat. The consumer wants more choice, better quality. As long as you have products offering something different, something better, then you succeed. What drives that is innovation," Bilimoria argues.

In the past 15 months, his company has launched Cobra 0.0%, a premium non-alcoholic beer, Cobra Lower Cal and King Cobra, a double-fermented strong lager packaged in champagne bottles.

But it is likely to be the Indian market that takes Cobra to its goal of being a $1 billion brand by 2014. And Bilimoria admits that his background gives him a unique advantage over other foreign rivals. The subcontinent, where his mother, brother and other extended family still live, was the inspiration for Cobra. Bilimoria's father, Faridoon, who eventually became commander-in- chief of the Central India Army, preferred beer rather than whisky to be served in the regimental messes where he sometimes took his son for meals. As a result, Bilimoria became a committed beer fan.

But as a 19-year-old university student in London, Bilimoria hated the brew on offer in the local pubs and restaurants. The lager was "too gassy and fizzy" and the ale, albeit much more appealing from a taste point of view, was too heavy and bitter to accompany a spicy curry. An idea started fermenting. And the thought had still not left him seven years later, when while visiting relatives, Bilimoria sat on a wooden deck overlooking the mountains near Simla, drinking an Indian beer.

"I remember that day very clearly. I said: I'm going to do it'," he recalls. And he did. After qualifying as a chartered accountant and obtaining a master's degree in law, Bilimoria's ideal career path should have led to banking or corporate finance but an entrepreneurial future of "limitless opportunities" was far more appealing.

The timing couldn't have been worse. "I had all the odds against me. I was starting my business in the worst recession since the war in the most competitive beer market in the world," he says. "There were 10 Indian beers trying to get into the market, only one of them had established themselves as a successful business, which was Kingfisher. They had an eight-year headstart on us."

On the plus side, British taste buds were becoming more adventurous and Indian food was at the top of the wish list. Bilimoria persuaded the Mysore Brewery in Bangalore to produce a drink he could market in the UK.

"Once we got the product right and I knew it was going to work in restaurants and as a lager in its own right, the other part that was difficult was raising finance. I had no security. No-one thinks you stand a chance of succeeding. My family had dismissed me, saying all this education and you become an import/export wallah," Bilimoria laughs softly.

In the end, it was his financial acumen that saved the day. This chief executive could give a course in how to eke capital out of every possible avenue, from unsecured loans to factoring and invoice discounting. The Government Small Firms Loan Guarantee scheme helped him over a later financing hump and allowed him to bypass the venture capitalists to retain a 67% stake in the business.

Bilimoria's management style is also impressive and one of the reasons that he appeared as a speaker at the Entrepreneurial Exchange annual conference at Gleneagles last week. He hails from the "show your employees respect and engender loyalty" camp and gets results for his efforts.

IN 1998, Cobra hit a major crisis that nearly sunk the ship when an article criticising Indian waiters appeared in a company-sponsored magazine and led to a boycott by its customers. Right-hand man and sales director Samson Sohail drove around the country, sometimes in the middle of the night, to explain to restaurant owners face-to-face that Cobra management did not see the article in advance of its publication.

"I learned a lot from my father, who was in charge of 350,000 troops when he retired. He was always emphasising the importance of a happy, efficient team. We are a small company with only 100 people in our headquarters. Everyone says that you feel the buzz when you walk in. You see smiling faces," Bilimoria says. "You create an environment where you allow people to come with ideas and make them happen. You don't have many rules but you still have to be professional. You find that balance by not demanding respect, but giving respect and it comes back to you."

With such a team at its disposal and given its future prospects in Asia, it is perhaps unsurprising that Cobra has become a takeover target.

"It's always been our objective to float the company. June 2009 is our deadline. But we get approaches from the big global brewers all the time," Bilimoria admits. "The synergies of tying up with a global brewer are very favourable for them and for us. If they made us a good offer, we would consider it."

In the meantime, Lord Karan Bilimoria refuses to be distracted from his original mission: to create the best Indian beer in the world.

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