If the test of a good entrepreneur is an ability to bounce back, Lord Bilimoria looks set to pass with flying colours. Earlier this summer, he bought back Cobra Beer, his failed business, from administrators in a 'pre-pack' deal.
Karan Bilimoria, 47, is a director of the new firm, a joint venture with US brewer Molson Coors, which paid £14m for a 50.1% stake. But the move has enraged creditors, left with almost £70m in debts, says Matthew Goodman in The Sunday Times. Bilimoria says he fought to avoid this and was working on a company voluntary arrangement (CVA) that fell apart when Cobra's brewers, Wells & Young's, vetoed it. When the CVA, which would've given creditors some cash, broke down, pre-pack was the only option.
Cobra's fall from grace has been dramatic, says Sathnam Sanghera in The Times. Last November, it was being touted round top brewers with a reported price tag of £200m; only months before it went into administration it planned to sponsor this year's Baftas as part of an £8.4m PR drive. But for all its "glitzy marketing efforts"(it spent £40m on marketing over 20 years), people "rarely drank the stuff unless in Indian restaurants" and it "had never been profitable".
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Bilimoria's is not the typical immigrant's rags-to-riches tale. His father was commander-in-chief of the Central Indian Army. Bilimoria moved from India to Britain at 19 to train as a chartered accountant at Ernst & Young. He read law at Cambridge, where he captained the polo team. When he left, he began importing polo sticks from India to sell to Harrods. He struggled with various ideas, earning the name of 'import-export wallah' back home as he experimented with fashion, furnishings and fabrics, says Josephine Moulds in The Daily Telegraph.
After "lots of dead ends" he decided to pursue an idea he'd had at Cambridge to develop a "less gassy" beer, easier to drink with food, particularly Indian food. In 1989, aged 27 and £20,000 in debt, he and a friend, Arjun Reddy, founded Cobra Beer. The next year, with the help of a brewery in India, the first crates were shipped to Britain.
Persuading people to buy his beer was tough. It was "at the beginning of the worst recession since the war at that time", he tells The Guardian's Jemima Kiss, and he was selling into "the most competitive beer market in the world". He and Reddy would drive round to Indian restaurants in an old 2CV, parking a distance away so managers wouldn't be put off their premium-branded Cobra.
It was Bilimoria's positioning of Cobra as a beer to drink with curry that helped it take off: it was a niche that none of the big brewers had thought of. Cobra is now sold in 90% of licensed Indian restaurants as well as most supermarkets. It is exported to 50 countries, including India. Bilimoria's mistake was to focus on rapid sales growth and expansion at the expense of the bottom line, says Goodman. But not all the figures look bleak. Cobra has defied the "malaise in the beer industry" by growing 20% year on year. Cobra's creditors may be left with a bitter taste, but Molson Coors may have landed a "fantastic deal".
A flawed poster-boy for British business
Bilimoria became a poster-boy for entrepreneurship in Britain, aided by a flair for self-promotion (his autobiography is entitled Bottled for Business) and "rubbing shoulders" with the powerful, says Josephine Moulds. As chancellor, Gordon Brown appointed him a 'national champion' for entrepreneurship, and in 2007 Tony Blair made him one of the youngest peers.
Bilimoria, like other Asian entrepreneurs, has "got away with more than most", says Sathnam Sanghera. His ethnicity was "undoubtedly one of the reasons he had a profile that far outstripped his achievements and one of the reasons he was so ludicrously over-promoted", being appointed deputy president of the London Chamber of Commerce and Industry and the youngest-ever Chancellor of Thames Valley University.
This is not some "politically correct conspiracy"; it's because so many Asian entrepreneurs are very successful that we assume they all are, and because we like to hear stories that prove that multiculturalism can work. Bilimoria is not the most extreme example. That "unhappy accolade" goes to the schoolboy founder of Miss Attitude, Reuben Singh, who was publicly feted by Blair and made a government adviser before being "unmasked as a serial fantasist" and declared bankrupt.
Bilimoria has not come down to earth with such a thud, but his reputation has been dented. As Brian Flanagan, whose firm Spark Promotions UK is owed £62,018 for developing a beer pump for Cobra, tells The Sunday Times: "How can he possibly offer advice to others in business when he clearly has no intention of taking his responsibilities seriously?"
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