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Cobra Cobra Document Transcript

  • Brand R Chartered Management Institute National Convention 27th and 28th October 2005, Leeds At the end of October several hundred managers descended on the Queens Hotel in Leeds for the Institutes first National Convention. It was a very intensive two days with 41 workshop options, a formal dinner, breakfast sessions and three keynote speeches, not to mention the now ubiquitous networking opportunities. The highlight, however, was surely the keynote speech from Karan Bilimoria, founder and CEO of Cobra Beer, whose insightful talk is reported in this article.24 Stakeholder November2005
  • Brand R Stakeholder November2005 25
  • Brand R The son of a general in the Indian army, Karan Bilimoria came to the UK as a young post-graduate, starting his career at Ernst & Young in 1982, where he spent four years qualifying as a Chartered Accountant. He then studied law at Cambridge and it was whilst a student there that he first had the idea for Cobra beer. ilimoria maintains that the best England. Still there were problems. When B business ideas stem from passion - loving something passionately or hating something with a passion. Bilimoria the first container of beer was being test marketed in Indian restaurants in the UK it appeared that customers loved the taste loved beer, but hated lager, especially the but didnt like the name. Not Cobra, but kind he found in England as the universal Panther Beer, which was Bilimorias accompaniment of Indian food. In 1990 original choice for the brand name. Never he left Cambridge with a Law degree, a too proud to listen to the market, the £20,000 debt and a business idea to name was changed to Cobra despite the Mr Billimoria wants to take on the big beer labels develop a non-gassy lager to complement costs already incurred for design and Indian food. He was planning to enter the packaging and the inevitable delays that most competitive beer market in the world resulted from re-doing it all. at the start of the worst recession weve had in the UK over the last 20 years. Changing the brand name isnt the only Needless to say, he got little evidence that Bilimoria was market-led encouragement from family, friends or the from the outset. He didnt go into beer business community who all thought he just because he liked drinking the stuff. was mad. In that context, you can His Ernst & Young training ensured that understand the origins of the Cobra hed thoroughly researched the market, vision, "Aspire and achieve against all the figures in the two charts showing that odds with integrity". perhaps he wasnt quite as mad as many people thought. Market led Having a good product in a growth Not knowing anything about beer, apart market is always going to be a winner but from how he wanted it to taste, Bilimoria Bilimoria went one better than that. He returned to India, where he struck a deal targeted a niche market that was not well with the countrys largest independent served by the competition and where he brewer (Mysore Brewery, also the Indian had a clear USP - beer for Indian armys beer supplier), to develop the restaurants brewed in Bangalore. product, manufacture it and export it to 100 80 60 40 20 1% 50% 60% 0 1960 1990 2000 Figure 1: Lager’s share of the UK beer market26 Stakeholder November2005
  • Brand R £m included in the top 50 best places to £8,500m9000 work in the small company category.8000 Bilimoria is a great believer in Harvards7000 recruit for attitude, train for skills policy, £6,000m re-named hire for will rather than skill at6000 Cobra. The culture is cosmopolitan,5000 relaxed (no dress code, no fixed hours of4000 £3,000m work) and inclusive (all employees can join a share option scheme). Its a priority to3000 foster an environment where ideas can £1,200m2000 flourish and, where appropriate, be £600m1000 £300million implemented quickly. The idea of the month scheme is judged by different, 0 1950 1960 1970 1980 1990 2000 randomly selected members of staff eachFigure 2: Growth of the UK market for Indian food month. A recent winner was the idea to have three large clocks in the reception areaFinancing the business Success showing the time in the UK, India and the US to remind all staff every minute that theSales growth was slow in the early years Cobra Beer is now one of the fastest Cobra is now becoming a global business.(it took 5 years to hit £1 million sales) and growing beer brands in the UK, with alike many start-ups finance was the current turnover of £80 million and aroundbiggest challenge for Bilimoria. He had 200 employees. It is available nationwidefinanced the initial product development in more than 6,000 Indian restaurants,and launch phase with a £55,000 loan major supermarkets and off-licences andthrough the Governments Small Firms now mainstream bars, pubs and clubs.Loan Guarantee Scheme. Before long Cobra Beer is exported to over 30more cash was needed to finance growth countries and now has offices in India,but despite numerous attempts, Bilimoria South Africa, and the USA as well as HQcouldnt find a bank willing to extend his in London.Small Firms loan by the £250,000 he nowneeded, until he finally found an astute Cobra was listed on the 1999 Virgin Fastbank manager who believed in Bilimorias Track 100 list of the fastest growing,business plan but didnt like the idea of privately owned companies in the UK.being the only one who did, so he asked Founder and Chief Executive, Karan F.what the business was worth. Bilimoria Bilimoria CBE, DL, has been honouredplucked a figure of £1million out of thin air. with the RSA Albert Medal, and asThe bank managers canny response was Business Person of the Year by thethat if he could raise £50,000 by selling London Chamber of Commerce; Bestshares in 5% of the company, the loan Business Leader by the Sage Businesswas his. Raining venture capital would Awards 2004 in partnership with The Daily Photo: Bilimoria receiving his Business Person ofhave been comparatively easy, but at a Telegraph; Entrepreneur of the Year 2004 the Year Award from the London Chamber ofmuch higher cost. Giving away 30% of by the National Business Awards, London Commercethe company would have been more and South East England; Entrepreneur oflikely. Eventually Bilimoria was introduced the Year 2003 by the London Chamber of Partnershipsto a business angel who was prepared to Commerce; 2003 London Entrepreneurinvest £50,000 for a 5% shareholding. of the Year (Consumer Products), and Although the company has grown veryWhen Cobra Beer floats, which it currently Entrepreneur of the Year 2003 by the strongly over the last ten years, theplans to do on AIM next year, the Asian Achievers Awards. He is also Co- number of permanent staff is surprisinglybusiness angel could be looking at up to Chairman of the Indo-British Partnership low - around 230 for an £80miliona thousand fold return on his early and Visiting Entrepreneur at the Centre for turnover company. This is down toinvestment. Not bad going, but still not as Entrepreneurial Learning at Cambridge Bilimorias strong belief in out-sourcinggood as Bilimoria himself, because University. everything, although he maintains thatalthough he relinquished more share in Cobras relationship with suppliers is one1995 to secure an injection of a further Great place to work of genuine partnership. From the earliest£3.5million, he still owns 72% of the days in Bangalore, product development,company. For the past two years, Cobra has been manufacture and distribution have all Stakeholder November2005 27
  • Brand R Bilimoria also supports a number of charities and acts as a business adviser. These include the Thare Machi Starfish Initiative, which fights prostitution and slavery in the developing world; Rethink Severe Mental Illness; The Memorial Gates Trust; and the Shrimati Pushpa Wati Loomba Memorial Trust for the education of children of poor widows in India. To quote Bilimoria again, More and more in Britain we are demonstrating that it is not just important to be the best in the been outsourced, with Cobra now Community world, but the best for the world. So many brewed in Bedford, Poland, Belgium and businesses are putting back into and Holland as well as India. Bilimoria would Bilimoria has always had a strong sense engaging with the community. be the first to admit, however, that of corporate social responsibility. outsourcing isnt all plain sailing. With the Wherever your business is, you must Innovation growing popularity of Cobra in the mid- reach out and be outward looking and 90s, Bilimoria found that shipping the beer give back to the community, he says. Another of Bilimorias strong beliefs is over from India was swallowing up 50% of Every business can do that. From our constant exposure to new ideas to drive management time in organisation and very early days weve been able to innovation. He is a member of the administration. The obvious solution was Hoffman Group, (named after the famous to brew in Britain. But would this be achieving the impossible bridge over the acceptable to customers? It had always Grand Canyon), whose meetings judge been assumed that the beers their success in terms of IPH - ideas per Indianness was a crucial part of its brand identity. Bilimoria therefore decided to consult customers before making any ASPIRE AND ACHEIVE hour. One outcome has been King Cobra, the worlds first ever double fermented changes. Thousands completed some simple response cards asking them to AGAINST ALL ODDS lager. There are now also award winning non-alcoholic and draught beers. When rank in order of importance four key characteristics of Cobra Beer: WITH INTEGRITY Bilimoria found it difficult to get his message across to the thousands of The Cobra vision Indian restaurants in the UK due to the absence of targeted media he simply • Brewed in India support events by giving away our started his own. Tandoori Magazine now • Less gassy product for free as a donation in kind. goes to all Indian restaurants. • Premium lager Over the years, Cobra Beer has given • Smooth taste away around £100,000 worth of beer at a Another great example of Cobras variety of charitable events. But the innovating culture is its own brand It transpired that Cobras least important generosity also serves as a good General Bilimoria wines, named after characteristic for customers was being marketing opportunity. Its a win-win Karans father. The idea was germinated brewed in India. Decision made. Bilimoria situation, Bilimoria maintains. at Cobras 1999 management retreat placed his businesses with the Bedford- based, family-owned firm Charles Wells, which also makes Jamaican Red Stripe and Japanese Kirin Beer. It took six attempts, says Bilimoria, for the UK brewery to get it right, but the partnership has worked very well since. Bilimorias advice is to always appoint the best advisors and then work very closely with them. Many of Cobras partners, for example, attend its AGM. Although this will be costly, it is far less costly than employing all that expertise permanently within the company.28 Stakeholder November2005
  • Brand Rwhen someone suggested the growth in available to order online. The full General continued growth. The market has beenwine consumption was a threat to the Bilimoria range of wines are now also sold steadily expanding, but Bilimoria pointsbeer market. After a brief debate of ideas in restaurants in India, the United States out that Indian per capita consumption ofto counter it by encouraging people to and South Africa. As well as a profitable 0.6 litres a year (compared to 98.7 litres indrink beer rather than wine, it was soon new revenue stream the new line has the UK) is still very low. A partnership withdecided that jumping on the bandwagon enabled the company to provide a Mount Shivalik Group, the largestmade much more sense than trying to de- valuable new benefit to its Indian independent brewing company in Indiarail it, especially when subsequent restaurant customers who can now make will, almost a decade and a half after theresearch identified that whilst 35% of more money from offering a better quality Cobra brand was first developed in India,customers in Indian restaurants chose to wine. again brew the beer under licence on theorder wine with their meal, 50% of wineavailable in Indian restaurants was verycheap, low quality house wine.Following an extensive search they founda Merlot and Terret-Sauvignon from therenowned Languedoc region in the southof France and by November of the sameyear had their first General Bilimoria wineson the tables of UK restaurants. The firstwine sold out within months of its launchand the portfolio was expanded at thebeginning of 2001 with the launch of threenew wines from the same region includinga Marsanne-Roussanne and a Syrah. In2002, three premium quality South Africanvarieties were added to the range:Pinotage, Colombard-Chardonnay and aShiraz-Pinotage. The Pinotage isproduced in the Stellenbosch region by Figure 3: The Cobra Multiplier MatrixBeyers Truter, and Oliphants River, onSouth Africas Western coast, is the home Strategy for continued success sub-continent, but this time for Indiasof both the Colombard-Chardonnay and rapidly growing domestic market. LocalShiraz-Pinotage. A range of Spanish Bilimorias attendance on Harvard senior production will allow the company towines from the coast of Valencia, have management courses has clearly not avoid excessive import duties. Will hebeen added in 2004, along with a Chenin been wasted. The Ansoff origins of his succeed? He has with everything else soBlanc from South Africa. Cobra Multiplier Matrix will be far. No doubt AIM investors wil be taking a recognisable to many strategic marketing keen interest next year. SGeneral Bilimoria wines are now selling in students, but you still wont find manyexcess of 350,000 bottles a year, and are better strategy frameworks.available in hundreds of Indian restaurantsthroughout the UK, including two Bilimoria sees the Indian market providingMichelin-starred restaurants, and are also the next big opportunity for Cobras Stakeholder November2005 29