Fancy a curry? Thanks, mine's a pint of Cobra

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By Teresa Poole

By Teresa Poole

19 July 2000

A quarter of Britain's adults eats curry once a week, with Indian restaurants serving up 200 million poppadams a year. But Karan Bilimoria is more interested in what these curry addicts are drinking.

He hopes they will wash down their chicken tikkas with several pints of Cobra, a lager he founded in 1990 which has become the leading bottled "Indian beer" in Britain, though it has never been sold in the South Asian sub-continent and is actually brewed in Bedford.

And for those who prefer wine with their lamb madras, Mr Bilimoria is offering General Billy's Merlot or Terret-Sauvignon blend, both from southern France and named after his father, a former commander-in-chief of the Central Indian Army.

"The European lagers in Indian restaurants taste like Euro-fizz and they're difficult to drink with curry," says Mr Bilimoria. "Cobra is much smoother, and goes better with Indian food." More than three-quarters of Cobra's UK sales are through Indian restaurants.

Aided by its billboard adverts featuring "Curryholic Dave", Cobra is level-pegging with Kingfisher, one of India's biggest beer brands, in the UK curry restaurant lager wars. Each holds around 12 per cent of restaurant sales, against Carlsberg's dominating 50 per cent share.

There is much to play for. A survey for Tandoori, a publication Mr Bilimoria helped launched in 1994 with the slogan, "The hottest magazine in the UK", shows 84 million pints of lager and 15 million bottles of wine are sold annually in Britain's 6,000 licenced Indian restaurants.

Increasingly, diners are turning to lagers that offer an Indian pedigree, with names such as Sunny Beaches and Indian Lancer also vying for sales.

Mr Bilimoria, 38, entered the UK curry lager market a decade ago and has expanded Cobra Beer Ltd, based in Parson's Green, west London, into a business with an annualised turnover of £9m and pretax profits above £500,000. Cobra is also exported from Bedford to 20 countries, and, the company's curryholics' online portal into the world of Indian food and drink, launches in the autumn.

The founder and managing director has retained a 72 per cent stake in the firm, Cobra Beer Ltd. "You believe in your company and your product," he says. "If you give your shares away early, you are giving them away too cheaply."If all goes according to plan, Cobra will float on AIM towards the end of next year.

Mr Bilimoria was born in Hyderabad and came to England when he was 19. He qualified as an accountant with Ernst & Young then read law at Cambridge, where he was a polo blue. After early business ventures selling polo sticks and leather jackets from India, and an aborted plan to expand into seafood, a family connection introduced him and his Indian business partner to Mysore Breweries, in south India.

The notion of an Indian lager brewed specially for export to the UK was born. "It took about four months of telexes and phone calls - they did not have a fax machine - but they said, 'If you want it, we'll do it, under your name and brew'."

Working with an Indian brewmaster, he devised the special recipe, with ingredients including rice and maize. Mysore Breweries agreed to produce an export-only brew under the Cobra name. The first shipment left India in April 1990, after a blessing by the Hindu priests.

By this point, Mr Bilimoria was £20,000 in debt and needed to get his new business off the ground. "People have the impression this business had family backing," he says. "Not at all."

But the timing was hardly ideal. "The recession started then and finance was a huge nightmare from day one. We got bits and pieces of overdrafts from banks." Mr Bilimoria also obtained a £55,000 British small firms' loan through a government-sponsored scheme to help young companies. "This was the first proper finance we had."

Sales and marketing involved trekking from one Indian restaurant to the next, convincing the proprietors to stock the new Indian lager. Most of these outlets are stand-alone family concerns, with no short-cuts available to build up a substantial customer base.

From early on Mr Bilimoria was on the look-out for UK alternatives to traditional finance, so that he would not have to part with equity. "It took me a long time to realise banks are not funders of small business," he says. In 1992 he started factoring, borrowing against invoices due to be paid by customers. "It's a great form of financing a growing business."

Mr Bilimoria linked up with Grant Thornton, the accountants, who introduced Cobra to an individual investor. He put up £50,000 for 5 per cent of the company, leaving the two founders each with 47.5 per cent. On the back of this, a further British small firms' loan of £190,000 was obtained in 1993. "It came through the day before I got married," says Mr Bilimoria. By this time turnover was running at £550,000 a year, and he was convinced he had a successful company on his hands.

All effort went on increasing the number of restaurant outlets and boosting sales volumes. Tandoori magazine, co-founded by Mr Bilimoria for the UK Indian food and restaurant industry, did its bit to help promote Cobra. (The cross-branding did backfire at one point, when the magazine's editorial branded Britain's Indian restaurant waiters as "miserable gits", prompting a backlash against Cobra and a grovelling apology from Tandoori, whose editor was sacked.)

In 1995, Mr Bilimoria's business partner decided to return to India. "I bought out his 47.5 per cent stake, but I needed to raise money. So I sold 23 per cent to individuals through a private placing." That valued the company at £2m and left Mr Bilimoria with his 72 per cent. This time he made use of the enterprise investment scheme, which offered incoming shareholders immediate tax breaks and the ability to sell free of capital gains tax after five years (hence the timing of the planned AIM flotation).

In 1996, with turnover reaching £1m and more funds needed for expansion, Mr Bilimoria switched from factoring to invoice financing, a variation on the same theme, but where the customer does not know his bill is being settled with an outside party.

Over the next year, sales of Cobra doubled. "Our volumes double, and our problems doubled," says Mr Bilimoria. There were delays in shipping the beer from Mysore, labels were sub-standard and cases arrived crushed. "So we were forced to investigate brewing over here."

Cobra decided to work under contract with an independent brewer, Charles Wells in Bedford. "They were already brewing Jamaican Red Stripe and Kirin, and they had the equipment to brew to our recipe which uses rice." There followed the challenge of brewing a Bedford Cobra which tasted the same as the Mysore Cobra. "That took us six attempts."

Since 1997, all Cobra beer has been brewed at Bedford. "The product brewed here is consistent, packaging is perfect, availability is excellent," says Mr Bilimoria. "And we were able to do draught beer." (Cobra's main rival, Kingfisher, was launched in the UK in 1982 and has been brewed here since 1986.)

Cobra's best marketing weapon, Curryholic Dave, made his first appearance on billboards in 1998, promising customers if they drink a lager with less fizz they can fit in more curry. The next instalment of the campaign starts in the autumn.

Cobra's founder says he does not plan to sell shares in next year's AIM float but he needs the ability to raise money as a quoted company for further expansion. At present, for instance, exports account for just 5 per cent of total sales. The General Billy's-branded wines, launched six months ago, have sold 72,000 bottles, and are about to be relaunched under the revised brand General Bilimoria, thought more respectable for good wines. "There's huge potential there," he says. "I wanted to give the Indian restaurant market the best wine for curry."

Mr Bilimoria will not be drawn on plans to extend his Cobra and General Bilimoria brands, say, to snacks or other food products. "I'm not ruling out anything."

So why has Cobra beer never been sold inside India, the world's second most populous market? "I was worried, quality-wise, I wouldn't have the control over it," says Mr Bilimoria. "And there might have been problems with availability." But the allure remains. "I will sell it in India - it's a question of time. It's a very over-regulated market. When that changes, I'll be there."