The effervescent chairman and founder of Cobra Beer speaks out
If you’ve ever dined in an Indian restaurant in Britain with a pint of beer then you are most likely to have seen Cobra Beer.
It’s stocked in 98.6% of Indian restaurants in this country.
The beer brand, which was founded by Lord Karan Bilimoria CBE in 1989, is exported to over 45 countries including Chile, New Zealand and Japan. And plans are afoot to increase the beer’s presence in pubs across the UK.
Since first entering the Monde Selection Awards in 2001, Cobra Beer has now won a total of 78 gold medals, making it one of the most awarded beers in the world. The company also saw a 20% rise in sales this year compared with a year ago.
But Cobra Beer hasn’t always been this buoyant. It’s been at the brink of closure – three times.
How did it survive? We ask Lord Bilimoria:
Q. You’ve nearly lost your business thrice. How have you managed to survive?
Yes, I’ve nearly lost my business three times but I’ve managed to resuscitate it each time.
The first time was in 1998-99 when Cobra was boycotted by all Indian restaurants. I had started a trade magazine called Tandoori for the Indian restaurant sector. I owned 45% of it but never got involved in the editorial side. There was an article published in the magazine that upset the Indian restaurants, very understandably. Once they realised I was one of the co-owners, Cobra was boycotted by thousands of restaurants for a whole year.
We overturned the ban by going restaurant to restaurant and [we] convinced the owners that we wouldn’t do anything to upset our consumers. The editors apologised and we were able to claim our innocence – it was a painful process but we made it through.
My company by then had its own depot, distribution network and sales force around the country. We had 120 employees and went down to only 17 because we had to close down all our depots. Before the incident, we were growing 70% year-on-year for three years. That’s all the past now and now we share a very good rapport with all the restaurants.
The second time was in 2009 just before Lehman Brothers went bankrupt. The onset of the financial crisis led to one of the world’s biggest drinks giants pulling out of a deal with us at the eleventh hour.
The third time was in 2009 when we had to restructure the company in a horrible way. We were going through a company voluntary arrangement, which requires 75% of your creditors to agree. Ninety per cent of creditors agreed but in the end one creditor, without warning, tried to close down the business. Therefore, we had to abandon that route. So the only route left for us was a pre-pack administration.
The problem with pre-pack administration is that it has a bad reputation because people misuse it. But we gave a whole week to people to bid for the business. PwC and Rothschild phoned, proactively, every single bidder interested in buying the company. In June 2009, Molson Coors – the giant behind beer brand Carling – and Cobra formed a joint venture. The secured creditors have all been settled and I am settling the unsecured creditors. Everyone has been looked after.
That’s all in the past now and I’ve learnt a great deal from the tough times. There’s no looking back now.
Q. You are looking to break into the pub and bar market this year. How’s that coming along?
The Indian restaurants are Cobra’s foundation because they are very popular in Britain. In the nineties, there were 3,000 restaurants in the country compared to 10,000 Indian restaurants today.
We sell to 98.6% of Indian restaurants, so why not pubs and bars? We’re already in 4,000 outlets and are recognised as one of the leading beer brands.
We’re only in a few hundreds pubs and bars as opposed to 7,000 Indian restaurants. There is a big potential here and it’s the next big step for Cobra. We’re getting repeat orders from pubs and bars which have stocked our beer. For example, the Montpellier Group in Scotland. We’re trialling it in Liverpool and even within London.
When I started Cobra, we couldn’t even afford beer glasses. The only marketing tool we had was a flimsy blue table card. Now we have a multi-million-pound advertising spend every year.
Q. You’ve been in the House of Lords since 2006 – tell us about your work in Parliament…
In 2006, I was appointed an independent crossbench peer in the House of Lords. In that period, I’ve focussed on business, immigration, entrepreneurship and higher education.
Q. What are your thoughts on immigration?
This government has got immigration absolutely wrong. They are damaging the reputation of Britain because we are losing out on all the good immigration that every country needs.
I led a debate in Parliament recently on the phenomenal contribution of ethnic minorities and religious communities. To curb immigration to hit a target and to tar everyone with the same brush sends out a very negative signal.
For example – [the number of] international students coming to Britain has dropped for the first time in history because the perception being sent out is that Britain doesn’t want foreign students.
Back in 2007, in my first question in Parliament, I highlighted how Scotland was allowing its graduates to stay on for the two years and that so should we. I got cross-party support in the Lords and the then-Minister for Schools Lord Andrew Adonis introduced the post-study work visa scheme for foreign students to stay in the country for two years after they finished their course. I regard that as one of my biggest achievements. But now that’s gone and students are given just six months within which they need to find a job and convince an employer to sponsor their visa.
This government keeps coming up with ridiculous processes that it later U-turns. For example, the £3,000 bond for Indians to come to the UK, [and] the vans going around saying “illegal immigrants, go back”.
Q. Do you think Vince Cable is doing a good job?
The government is doing a lot to encourage entrepreneurship. I put an idea to Vince Cable about launching a competition in Britain for fast-growth companies who can get places on the business growth programme in Cranfield University and the post-graduate diploma in entrepreneurship at Cambridge University. He loved the idea but the civil servants sent me a long letter giving me bureaucratic reasons about why they can’t give one university preference over the other.
Cable needs to implement more ideas like this to encourage entrepreneurialism – there’s a lot more he can do.
Q. The general elections are less than a year away. Who do you think would make a good PM?
At the moment, I would say that David Cameron has been trying to champion entrepreneurship.
Some of the things Ed Miliband is saying are very worrying for business and I would be extremely worried if he becomes Prime Minister. His proposals about bringing back the 50p tax [are] disastrous. I think we should be back to 40p.
It worries me that we have career politicians who haven’t had any exposure to business. Ed Miliband hasn’t had any exposure to business in any way – he’s been a career politician. He lacks understanding of the real world of business.
Having said that, I am the chairman of the UK India Business Council [and have been] for quite a few years and have worked with David Cameron, Tony Blair and Gordon Brown. So even if it’s Miliband who I have to work with, I will be fine.
Q. What are your thoughts about UKIP?
I have debated with Farage on Newsnight and completely disagree with UKIP’s immigration policies. His comments on LBC Radio about living next door to Germans worry me. It worries me that a party like his gets as many votes as they do. Forget the European Elections – they came second in the recent by-election.
Say what you want to about them, but the reality is that people are voting for them.
However, I don’t think UKIP is capable of getting a single seat at the general elections. Do they have the ability to have a credible cabinet of ministers who we can trust to run this country? I’m sorry, I don’t think so. They are not a credible party and Farage can never be Prime Minister.
Thanks for your time.