Lord Bilimoria: How Cobra Beer Scaled Against All Odds

0:00Entrepreneurs have one word that sets them apart from other people, and that is that they have guts. They have the guts to do it in the first place. Each recession is very different, and that recession, interest rates have gone up to 15%, even if that extortionate rate is difficult to borrow money. It's tough in a recession, but it didn't stop us from starting our business.

0:20Alex Chisnall:Lord Karan Bilimoria, the founder of Cobra Beer, the chancellor of the University of Birmingham, and the president of the CBI. In this Bite Size episode, he shares his 10 Ps that built Cobra into a global brand, from product and price, through to passion, principles and profit. We got almost 100%, literally 99 % reorders from day one. When you get those reorders, that gives you the confidence to extrapolate this into a global beer brand. Because my mission from the beginning was to brew the finest ever Indian beer and make it a global beer brand. And that is still my mission to this day. Welcome to this special Bite Size episode of Screw It, Just Do It.

0:56Alex Chisnall:from our back catalogue of over 550 past episodes. If you like what you hear, don't forget to follow the show and grab your free two-day pass to the Festival of Entrepreneurs this October. Just head to festivalofentrepreneurs.co.uk to claim yours and don't forget to dive into the back catalogue. Now open for this year's Festival of Entrepreneurs. Join us at the NEC in Birmingham on October the 8th and 9th for two game-changing days with 200-plus speakers and thousands of ambitious founders. Get your free limited two-day pass at festivalofentrepreneurs.co.uk or click my personal link in the show notes.

1:30Alex Chisnall:Without further ado, I'm going to hand over to Karen Lord-Billimoria and I'll let you say a few words. Thank you, Artax. Great to see you. Great to be with all of you. And what a time to be celebrating Global Entrepreneurship Week. I remember going back many years when I spoke at the same event in 2007 when Gordon Brown was Prime Minister. And what a different time that was. That was boom time. And of course, straight off that, we had the credit crunch, and then we had the global financial crisis. Then we had the Great Recession, and then we had the Eurozone crisis, and a long period of recovery from what was a huge economic shock around the world.

2:08And you look back to just the beginning of this year and how we as an economy were absolutely fine. We were growing, not a lot, we were growing. And suddenly this black swan event comes from nowhere. and took me back to the time when I started Cobra Beer. And I had the idea for Cobra when I was a student. I graduated from university in India when I was 19 years old. I was lucky I skipped a couple of years. And I came to the UK, studied, qualified as a chartered accountant for what is today EY, did a law degree at Cambridge. And it was while I was at university here that I came up with the idea for Cobra Beer.

2:43Like most business ideas, it was a very simple, big idea. I was dissatisfied with the product or service. and I thought I could do it differently and better. I hated fizzy lagers. I loved ale. I couldn't drink ale with food. I love drinking ale on its own in a pub. And I thought, well, how can I produce a beer that combines the smoothness of an ale and the refreshment of a lager? And then it's rounded and easy to drink and balanced. A beer that would have a globally appealing taste and that would accompany all food, curry and Indian food. So that was my idea. Of course, having an idea is one thing, putting it into action is another thing.

3:18And I teamed up with a childhood friend of mine from Hyderabad in India. And our families had known each other for four generations. And we started COVID from scratch. We started COVID from scratch in the summer of 1990. The summer of 1990 was in the middle of a terrible recession. At that time, each recession is very different. And that recession, interest rates have gone up to 15%. And even at that extortionate rate of base rate, you couldn't borrow. It was difficult to borrow money. So it's tough. It's tough in a recession, but it didn't stop us from starting our business. And I just said that you will see many businesses starting at a time like this when people will say, but their business is closing down.

3:57There are also businesses starting up. And to put your big idea into action, of course, you need luck. And the best definition of luck is one that I've heard in the Harvard Business School classroom. Luck is when determination meets opportunity. You're not determined. You won't even see the opportunity. And we had a lucky introduction to the biggest independent brewery in India, Mysore Brewery's in Bangalore. And we went there. I went with a whole little sample bottles of beer, sat down in the laboratory with the brewmaster, Dr. Kariapa. And we created the recipe for Cobra beer just by conveying to him what this taste I had in my mind of an extra smooth, less gassy beer that would accompany all food.

4:35And it's a very complex recipe. He said, we'll need it to be complex. We need lots of ingredients. So we've got malted barley, yeast, water, and hops. And that's what a basic German beer has. In fact, Germany, that's all you're allowed to use according to their regulations. But in our case, to get this taste, we had a very, very complex recipe. So we have three varieties of hops in addition to malt, malted barley, in addition to the yeast, in addition to the water. We have maize, we have rice, we have wheat, and a very complex way of making it, let alone the ingredients. That's what gives Cobra its extra smooth taste.

5:12And then you have this great product, you have this great idea, you've got to put it into action in terms of selling it. And there's no shortcut to selling. Selling means going door-to-door, winning those customers against all the odds. And of course, when we started, Kingfisher had already been in the marketplace for over eight years, the biggest Indian beer brand in India. And they were brewing in the UK. They had thousands of restaurants already selling Kingfisher Draft. Carlsberg, one of the biggest beer brands in the world, was in almost every Indian restaurant as well. So you'd walk into a restaurant and say, why do we need you?

5:44We don't need another Indian beer. We've already got Kingfisher. We don't need another beer. We've already got Carlsberg. Some of them had a well-known German beer at that time. And that's when you've got to convert this no into a yes. And you've got to convert obstacles into opportunities. And we only had the big bottle of Cobra as one single SKU. Because the brewery said, that's all we produce in India. Even now, if you go to India, almost 90 % of beer sold in India is in that double-sized 650 ml bottle over here, 660 ml or 620 ml double-sized bottle of beer. And they said, if you survive in a year's time, we don't think you're going to survive because you're up against all the odds.

6:19We'll produce small bottles for you. But for now, you have to just sell those big bottles. And of course, the restaurant says, A, don't want your beer. B, our beer was more expensive. And C, there was this double-sized bottle that they were not used to. They were used to draft beer as small bottles. And we converted that obstacle into an opportunity where we said, this is how beer is sold in India. It's the authentic way of selling beer in India. And you can serve it to your customers at a restaurant table, an Indian restaurant, where customers share the food and they can share the beer. And the waiters can leave the bottles on the table, which means the waiters are freed up to do other work.

6:49And it takes the weight off the waiters. And then people, by sharing, as long as they're drinking responsibly, because the beer is smooth and goes well with food, you'll sell more beer. And then the other aspect of it is people at other tables will say, what are they drinking? It looks like a bottle of wine. It's not a bottle of wine. It's a bottle of beer. I'll try one. And it spreads like wildfire around the restaurant.

7:06Alex Chisnall:And that's how we built Cobra. If you're enjoying this conversation and thinking, I need to be around more people like this, then I've got the perfect solution for you. The Festival of Entrepreneurs is where 5 ,000 to 10 ,000 ambitious entrepreneurs come together to learn from the people who've actually done it. It's on October the 8th and 9th at the NEC in Birmingham. And I'm giving my listeners free two-day passes. Real entrepreneurs, real stories, real strategies, exactly like what you're hearing right now, but live and in person. Go to festivalofentrepreneurs.co.uk and get your free two-day pass before they're gone.

7:41And the big bottle took off. We got almost 100%, literally 99 % reorders from day one. When you get those reorders, that gives you the confidence to extrapolate this into a global beer brand. because my mission from the beginning was to brew the finest ever Indian beer and make it a global beer brand. And that is still my mission to this day. And once you get those reorders, that confidence and you keep going. Now, the restaurants were fantastic. I will never, ever forget one of my fundamental lessons that I learned from the restaurateurs. And the Indian restaurants, curry restaurants are our base, our foundation.

8:14And they will always be our base. And I'll always be grateful to them. They said in the beginning, you think this beer is so good, leave a couple of bottles, we'll test it with our regular customers. If our regular customers like it, we'll put in an order and if our wider customers like it, we will reorder and they put their customers first. So any decision that I've made on my journey, any crucial fundamental decision, I will never do it without checking it with my consumer, with my customer. And then we grew Cobra, the restaurants eventually in the supermarkets and then into the pubs, bars and from Indian restaurants, we now sold in Lebanese, Thai, Chinese, Turkish gastropubs, casual dining pubs, and of course hotels and export it to about 40 countries around the world.

8:54We brew Cobra here in the UK with my joint venture partners, Molson Coors, one of the largest brewers in the world, the biggest brewery in Britain and Bersenpont Trent. And we also brew Cobra Zero, non-alcoholic beer in Holland. And we brew King Cobra, double fermented beer, champagne bottle in Belgium. And we have about three breweries in India along with my joint venture partner, Molson Coors. We brew our Malabar Blonde India Pale Ale IPA at Burtonwood Breweries in the northwest near Warrington. So the range increased over the years. The SKUs increased over the years from big bottles to small bottles, to cans, to draft.

9:30But to this day, our number one selling SKU is that big bottle Cobra. And it was the first mover. And now, of course, you will see all the major beer brands have the big bottle beer. And we were the first movers in that category from an unknown brand coming from nowhere. So you have all the odds stacked against you. You cross that credibility gap in the early years. In the early years, when you have zero credibility, nobody knows you, nobody knows your brand, nobody knows your product. Why do people supply you, finance you, buy from you when you have zero credibility? And they do that in those early days.

10:02If you have faith and confidence and belief and passion in yourself, in your product, in your brand, that gives people the faith to trust you, to give you a chance. And in the early days, I remember meeting a very successful entrepreneur. And he told us some things, which I'll never forget, sitting at his kitchen table in Leeds. And one of the things he said, entrepreneurs have one word that sets them apart from other people. And that is that they have guts. They have the guts to do it in the first place. A lot of people have business ideas, by the way. I've got an armchair behind there. I call them armchair idea wallows.

10:35Can you get off that armchair and go and put it into action? Keep up whatever other opportunities you have. My friends, when I started Cobra Beer, were working for the Goldman Sachs of this world, driving around in their BMWs. I gave up that opportunity as a qualified chartered accountant, a Cambridge law graduate, to drive a 295-pound Citroën de Cheveau called Albert, battered, bright green. You could see the road if you look down through the holes in the floor of the car. It needed push starting every day. And eventually, sadly, Albert failed its MOT three times. So you're giving up that opportunity and you're taking that risk.

11:08That takes guts. But he said what is even more so is entrepreneurs have the guts to stick with it when others

11:14Alex Chisnall:would give up. And I've nearly lost my business three times in my career. And it's horrible. More often than not, it comes from nowhere. And it's getting through that and having that resilience to keep going. And especially look at this year, the resilience that we've needed as businesses to not just survive, but to keep going. In my case, pandemic comes from nowhere. We're doing really well as business. and in March, March 23rd, lockdown. And two thirds of our sales, which was at 7 ,000 restaurants that we supply in this country, the other ones are to the supermarkets and the off trade. Two thirds of your sales are just shut down.

11:48It's an awful position to be in. And how do you survive? How do you keep going? And we survived. Then our factory, the brewery, because of shielding and looking after the workforce, we were reduced to just one SKU of Cobra. No draft, no cans, no small bottles, It was just the big bottle of Cobra. So we'd almost gone back 30 years when we started, when we only had that one SKU. Well, from the 23rd of March to the 4th of July, we only had the big bottle of Cobra in the supermarkets. That's all we had to survive. And even in that situation, you try and do your best. Even in that situation, when businesses are down on their knees, you can put back into the community.

12:26Alex Chisnall:That conversation just proves something. You are the average of the five people you spend the most time with. So here's my challenge. upgrade your network the festival of entrepreneurs is happening october the 8th and 9th and i'm giving my listeners free two-day passes to get in the room with five to ten thousand entrepreneurs who are actually building something this is where the risk takers the game changers and the people who've decided to screw it and just do it come for inspiration education and connection don't just listen to their success stories go meet the people living them grab your free pass now because the biggest risk isn't taking a chance.

13:02Alex Chisnall:It's missing the opportunity entirely. So some brilliant lessons there from Lord Billimoria. And here are some of the takeaways that I want to leave you with. Differentiate your product. Find out what makes it truly unique. Passion and principles matter just as much as profit. Resilience is non-negotiable. I love this one. You'll need the guts to keep going when others give up. Because guess what? 99 % of other people will give up. And that's why you won't. Build a brand that stands for something bigger than just business. Okay, if you enjoyed this bite-sized episode, dive into the full conversation with Lord Billamoria on Screw It.

13:41Alex Chisnall:Just do it. Don't forget to follow the show wherever you listen, so you never miss these real, unfiltered founder stories.