India-born Karan Bilimoria answered a cry from Britain's curry-lovers for a beer that combined the smoothness of real ale with the refreshment of lager.
Karan Bilimoria came up with a complex recipe for a smooth beer
After qualifying as an accountant with Ernst & Young, India-born Karan Bilimoria spent time at Cambridge reading law during the late 1980s. While at university, Bilimoria (now 53) became a big fan of real ale. The problem was that it didn't go well with his favourite Indian foods. He also disliked the gassiness of lager. So he came up with the idea of a beer that had "the refreshment of lager, but smoothness of ale", and that could accompany curries.
Bilimoria decided not to follow many of his fellow students in becoming an investment banker. Instead, in 1989 he teamed up with family friend Arjun Reddy to found Cobra Beer, which they ran from a small flat in Fulham. They were able to fund the business with an overdraft from Lloyds Bank and help from a government loan guarantee scheme, but their next challenge was creating the product.
Bilimoria had no direct experience of beermaking, but family connections enabled him to get an introduction to the owner of the largest independent brewery in India. Its brewmaster had a PhD from Prague University and would smuggle bottles of Czechoslovakia's world-renowned beers back to the laboratory, where the two of them would go about combining them to create the perfect drink. While most beers contain only a few ingredients, the eventual recipe for Cobra was a complex mixture of malt, barley, maize, hops and rice.
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Bilimoria and his partner began by selling Cobra to individual Indian restaurants, initially from the back of an ancient 2CV nicknamed "Albert". Nearly all of the restaurants that tried it out ended up reordering it, confirming that the product had plenty of potential. Within three years Cobra was growing fast enough for an angel investor to pay £50,000 for 5% of the company (valuing it at £1m).
Despite this, Reddy still had doubts, so the duo parted amicably in 1995, with Bilimoria buying out Reddy's stake. Over the next decade sales grew rapidly, at around 40% a year, and Bilimoria was given a peerage in 2006.
By the summer of 2007 Cobra had annual sales of £43m. But Bilimoria "sacrificed the bottom line" to maintain growth: the firm made a loss of £13m, with £5.7m in interest payments. As a result, after the global financial crisis struck and "cash became not just King, but Emperor", the firm went into administration in 2009.
However, Cobra was quickly relaunched as a joint venture with brewer Molson Coors, which took a 50.1% stake (Bilimoria owns a large part of the remaining 49.9%). In 2013 it madejust under £6m of profits on £54m of sales (expected to be more than £100m this year), and is repaying unsecured creditors who lost out in the bankruptcy. The firm now plans to roll out the double-fermented premium King Cobra beer, while increasing growth in the Indian market.
Bilimoria's failures and successes have taught him several lessons, which he is eager to pass on to other entrepreneurs. You "have to be committed to your plans and willing to make the leap" and to have the guts to stick with your dreams "when others would give up". Unsurprisingly, given Cobra's history, he also emphasises that "profitable growth is more important than growth".
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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
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