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Making the Cobra Dance

Forty students from the Harvard Business School sat in the elegant surroundings of The Bombay Club in the heart of Harvard Square intently listening to the story of Cobra Beer Ltd, as told by its dapper UK-based founder and CEO Karan Bilimoria. In town for an Executive Education program at HBS as a member of the global Young President’s Organization (YPO), Bilimoria discussed starting Cobra Beer and the twists and turns he took to building it into a rapidly growing global business of œ52 million in retail sales. At a YPO dinner last year at HBS, Bilimoria met and hired two HBS students, Mousumi Shaw (OF) and Rahul Advani (OB) to work with him as summer interns. The talk was sponsored by SABA, the South Asian Business Association at HBS.

Born in Hyderabad in Southern India in 1961, Bilimoria graduated college at age 19 and left for the UK to study to become a chartered accountant.

After working at Ernst & Young for four years, Karan pursued a law degree from Cambridge University. It was here Bilimoria began small entrepreneurial ventures, such as selling polo sticks from India to premium London stores such as Harrod’s.

As a student, Bilimoria would eat at the myriad of Indian restaurants or curry houses in Britain and soon identified a problem which he turned into a business. When he would order beer with his spicy Indian food, the established lager brands or house beers would cause bloating. This in turn would limit the amount they would spend on food and beer. Even the alternative to lager, real ale, didn’t go well with Indian food. As a result, Bilimoria and his business partner, Arjun Reddy, founded Cobra Beers.

These beers were brewed of rice, maize and hops for a smoother, less gassy drink. The company’s mission: “To brew the finest ever Indian beer and to make it a global beer brand.”

Bilimoria’s entry into the Indian lager beer market in 1990 was well timed with two major consumer trends in Britain: The growth of lager over ale (1% lager to 99% ale in 1960 to 60% lager by 2001) and the growth of UK Indian restaurants from 3000 in 1980 to 8500 by 2001. Originally set to be labeled ‘Panther’ Beer, last minute market research indicated that the name ‘Cobra’ was an overwhelming favorite among survey respondents.

With twenty thousand pounds of student debt, Bilimoria and his partner sought initial funding from bank overdrafts and virtually every possible source of funding except venture capital. As a result Bilimoria has managed to retain 72% ownership in the company to this day, stating “I have nothing against venture capital – I just managed to avoid it.” He bought out his partner in 1995.

In the early nineties, Bilimoria and his small sales staff called Indian restaurants around the UK trying to persuade restaurant owners to stock Cobra Beer. Rather than overtly putting down other brands when selling Cobra, Bilimoria explains “we believe customers should have a choice, we just want to make sure one of those choices is Cobra.” Word of mouth, a television and cinema ad campaign and Bilimoria’s evangelicizing have all contributed to an annual growth of almost 20% and exports into 30 countries. Bilimoria’s team even developed and published the first Indian food and restaurant trade magazine, “Tandoori”, after discovering there was no efficient means of advertising to Britain’s highly fragmented Indian restaurant market. After identifying wine as a growing threat to Cobra Beer in Indian restaurants, Bilimoria (the son of an Indian army general) launched ‘General Bilimoria’s’ red and white wines made in South AfricaProduct and package innovation also lies at the heart of Cobra Beer’s strategy. In packaging, the Cobra Beer bottle is etched with the story of Cobra Beer not unlike the hieroglyphics on ancient Egyptian pillars.

Until recently, Cobra Beer was ‘born in India, but brewed in Bedford.’ Now the beer is brewed in Poland as well as the UK and is widely available in most of Britain’s restaurants, competing with its biggest rival Kingfischer. It has now also moved into UK’s supermarkets, bars and pubs. Bilimoria’s biggest challenges will be the Indian and US markets. He recently opened offices in New York and Mumbai, and had talks to tie-up with Virgin Airlines and serve Cobra Beer on its London-to-Dehli flight.

Bilimoria made a point to highlight the culture at Cobra as a key to the company’s success. “We have no dress code – people can come to work in shorts for all we care. If you give respect and trust to your employees you get trust back.” He also had several tips for young aspiring entrepreneurs: “Invest in building a great team, including hiring people to head up marketing/sales, finance, and other functions who are better at it than you. Invest in training your employees. Research and understand your market thoroughly, improve a product or service, and lead, do not follow.”

Bilimoria admits that there have been some failures along the way. After the success of the trade magazine, Tandoori, Bilimoria started a consumer magazine dedicated to Indian food and drink that resulted in large financial losses.

Nevertheless, Cobra is today one of Britain’s 100 fastest growing companies, and the recipient of numerous business and personal accolades, both Cobra Beer and Bilimoria are going places. Bilimoria has received several Entrepreneur of the Year awards, is very active in Indo-British trade partnerships and charities in both the UK and India.

While there may well be a political career in store for Bilimoria, he expressed his commitment to growing his business while keeping busy with his involvement in political life and family.

February 9, 2004
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