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Indian immigrant's beer strikes in
Britain
By Raju Bist
MUMBAI -
Fourteen years ago, when Karan Bilimoria started hawking
his newly-launched Cobra beer from the trunk of a
battered Citroen, he invited incredulous looks from
fellow Indian immigrants in London. "Selling an Indian
beer to British pubs?" they asked skeptically. "It just
won't jell."
But Bilimoria, who never takes "no"
for an answer, was convinced there was a market for a
less gassy beer to wash down the spicy Indian curry then
fast catching up all over Britain. Today, if the awards
lining the study in his house near fashionable Chelsea
are any indication, Bilimoria's conviction has been more
than vindicated
In 2001, he received the
India-Non-Resident Indian Millennium Honor, awarded by
the NR Indian Institute UK. The next year, he was
presented the executive association of Great Britain's
Outstanding Achievement Award. And early this year,
Bilimoria was chosen as the Asian of the Year 2002.
The award, instituted by publishers of Asian
Who's Who International, was presented to 41-year-old
Bilimoria in the presence of the British Home Secretary
David Blunkett. Also in attendance were several
prominent Indian immigrants who had won the award in
previous years.
"When I first came to Britain as
a 19-year-old, I was warned that since I was an Asian
I'd never get to the top because there was a glass
ceiling," Bilimoria revealed in his acceptance speech.
"But what I have learned while creating Cobra beer from
scratch and against all odds in the most competitive
beer market in the world, is that if you have the
passion, drive and aspiration to succeed, there is no
greater or more meritocratic country than Britain."
And Britain indeed has been kind to the
first-generation entrepreneur who had not set out to
introduce an Indian beer in the first place.
After completing an accounting foundation course
at the London Guildhall University, Bilimoria joined the
Institute of Chartered Accountants in England and Wales.
Having qualified as a chartered accountant, he later
went to the Sidney Sussex College, Cambridge University
to study law. Bilimoria played polo as a law student.
This hobby led to his first foray into the world of
business: selling polo sticks imported from India to
stores like Harrods and Lilywhites.
A chance
introduction in 1989 to a brewer from the south Indian
city of Bangalore resulted in the Cobra beer brand, its
distinctive colorful label featuring a map of India.
Initially, Bilimoria imported the lager from Mysore
Breweries in Bangalore and sold it to Indian restaurants
before venturing to British pubs and hotels. It was not
some dreamy-eyed motivation; however, that led him to
becoming a full-fledged entrepreneur. The impetus was
more mundane: He wanted to make quick money to pay off
his student and other personal loans.
As is
often the case, the beginning years were tough. England
was then going through a recession. "What helped the
enterprise click was that the gassy and harsh Euro fizz
beers did not go well with the spicy Indian curry. They
were difficult to drink and reduced the excitement of
visiting an Indian restaurant," recalls Bilimoria.
The market conditions, too, helped with rising
demand for Indian restaurants and food in the UK.
According to estimates, last year there were over 9,000
Indian food restaurants in the UK alone, with a combined
annual turnover upwards of 4 billion pounds (US$6.3
billion). Further studies showed that 62 percent of the
customers ordered beer with their food. "Also, research
showed that over 25 percent of people in the UK eat
curry once a week and nearly 50 percent once in a
fortnight," says Bilimoria.
His premium lager
beer turned out to be the ideal choice. First British
Asians and later Britons started opting for the less
gassy, smoother lager. The beer is stocked in 5,000
restaurants and has enjoyed a compounded annual growth
rate of 50 percent in five of the past seven years.
This gradual shift in beer drinking preference
helped Cobra beer to grow rapidly. In June 1997,
Bilimoria started brewing his beer in Bedford, UK.
According to figures released by Cobra Beer Ltd, between
1995 and 1998, sales of Cobra beer soared by around 70
percent. Over the next three years the company clocked a
52 percent growth in sales. In 1999, Cobra Beer made it
to the Sunday Times Virgin Atlantic Fast Track 100 as
among Britain's fastest-growing unquoted companies. A
niche player, Cobra was able to stand on its own against
British and imported beers, including the Belgian Stella
Artois, which traces its history back as far as 1366.
Stella Artois was first imported to the UK in 1926.
Cobra's current retail value turnover is more
than $90 million. The beer is also being exported now to
more than 35 nations. About 90 percent of the Indian
restaurants in Britain stock Cobra beer, available in
330 milliliter and 660 milliliter bottles. The company
has also introduced draught beer, and a wine, labeled
General Bilimoria and named after the founder's father,
a high-ranking Indian army officer in the south Indian
city of Hyderabad. The wines, sourced from southern
France, are selling in excess of 400,000 bottles per
year. Three more wines from South Africa will be added
to the range this year.
The awards at home alone
are not proof that Bilimoria has finally arrived. His
appointments on key social and political organizations,
too, announce that the entrepreneur's achievements have
been recognized: Member of the government's National
Employment Panel; chairman of the panel's Small and
medium-sized enterprise (SME) board; mentor in the Joint
Police Mentoring initiative; governor of Thames Valley
University; committee member of the London Chamber of
Commerce and Industry's Asian Business Association and
member of the committee Bank of England - LCCI/Asian
business association panel.
As Cobra grew, its
reputation kept pace and there was no shortage of banks
willing to lend funds. In September 2002, despite a
large loan from the Bank of Scotland, Bilimoria still
fell short to finance his expansion into overseas
markets. He therefore took his company public. But the
original founder still owns 72 percent of the company.
Around the same time at the stock float,
Bilimoria also took Cobra to the land of his birth,
beginning with sales in Mumbai, which boasts of India's
most Westernized and cosmopolitan citizenry. Cobra
Indian Beer Pvt Ltd, a newly floated company, retailed
the beer for Rs 99 (US$2). Even though this was nearly
twice the cost of other beers, Cobra was warmly
received. Enthused by this, Bilimoria is now talking of
brewing the brand in India. Two options are under
consideration: contract manufacturing or buying up
Indian breweries.
Nostalgia alone is not driving
Bilimoria to India. A little bit of shrewd business
thinking has gone into the proposed move. The marketing
wizard is buoyed by the fact that India is virtually a
virgin market when it comes to beer. Per capita
consumption in some developed countries is around 100
liters a year. In India, the figure is a mere 0.5
liters. Moreover, in India, only 5 percent of alcohol is
consumed in the form of beer, while in developed
countries beer accounts for some 60 percent of the
alcoholic beverages consumed. So the scope for expansion
of the beer market is much more in India than in other
countries.
With local manufacturing the Cobra
beer would be priced on a par with brands manufactured
by Indian players since the British firm will then not
be required to pay 300 percent import duty. But if
Bilimoria is expecting a smooth walkover in India on his
way to beer riches, he is sadly mistaken.
For
decades, the beer industry in India has been dominated
by two local giants, the United Breweries Group and Shaw
Wallace Distilleries, with the two having cornered 42
and 33 percent market share, respectively. Cobra
overtook United Breweries' Kingfisher brand in the UK,
but will have a tougher time in the new market - the
beer is the most popular and enjoys a 25 percent market
share.
Also, Bilimoria will not be the first
foreign-based brewer to challenge the dominance of these
two beer giants. Recently, Australian maker Foster's
Indian subsidiary launched a renewed marketing blitz,
including organizing "beer tasting" sessions in
prominent Indian cities.
Two years ago, South
Africa based SABMiller, the world's second-biggest
brewer by volume, made an immediate impact as it went on
an acquisition spree. In quick succession, it bought up
local outfits Narang Industries, Deccan Breweries, Pals
Breweries and Rochees Breweries. SABMiller has already
grabbed 10 percent of the Indian market.
But
ever the fighter, Bilimoria asserts he is ready to face
all odds. A weekend scuba diver, he says that he is only
too familiar with plunging into unknown territory. He is
often called to speak to young entrepreneurship
students. "Always look forward to fulfilling your goals.
Let nothing and nobody come in between you and your
target," is a common refrain in all his speeches.
(©2003 Asia Times Online Co, Ltd. All rights
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