Bilimoria’s Cobra beer snakes a growth trail

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By JAYANTA ROY CHOWDHURY
  • Published 9.04.12
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New Delhi, April 8: Lord Karan Bilimoria is looking to grow his beer brand Cobra in India.

The beer baron, a Parsi from India who studied at Cambridge and the founder-owner of the Cobra brand, told The Telegraph, “We have invested about $35 million here and hope to make our venture in Bihar a major hub for beer sales in eastern India.”

Cobra, which has its brewery at Bihta, about 40 kilometers from Patna, may well give stiff competition to India’s best-selling beer Kingfisher, owned by Vijay Mallya.

At present, the beer market is expanding at nearly 17 per cent annually. It was worth Rs 25,700 crore last calendar year compared with nearly flat sales in mature markets such as the US and the UK.

The country has attracted some of the biggest international brands, including SabMiller, Anheuser-Busch and Carlsberg, despite Indians drinking less than 2 litres of lager (per head) a year against 75 litres in the US and 35 litres in China.

“Even in 2011, a difficult year, we increased our global business both by value and volume … we sell to South America, Hong Kong, Japan, South Africa, Canada, US and Europe,” the British peer said.

He said the “idea of starting my own beer came when I was still at Cambridge”. As a student, Bilimoria was dissatisfied with the gassy and fizzy lager served to him. He was looking for an Indian beer, which was smoother than usual, and of international standards. “I started sourcing beer from Mysore Breweries and made sure it had all the refreshing qualities of a beer but was smoother.” A trained chartered accountant, Bilimoria founded Cobra in 1989.

Since then, the Cobra story has taken many twists and turns. The company was forced to enter pre-pack administration during the recession of 2008-09 when the European and US markets shrunk.

Eventually, Bilimoria entered into a ten-year joint venture with Molson Coors, a US-Canada giant.

Cobra decided to enter the Indian market and chose Bihar as its hub because it is centrally positioned to supply to Bengal, Jharkhand, Uttar Pradesh and Delhi. The Bihar market has expanded 10 times in the last seven years to 70 lakh cases.

In June last year, Molson Coors Cobra India, the joint venture between Molson Coors and Cobra, took over the brewery owned by Iceberg Industries Limited at Bihta.

“Thanks to the Nitish Kumar-Sushil Modi administration in Bihar, the state is developing into an investor-friendly hub … we intend to double our capacity to 4 million cases,” said Bilimoria.

Eyeing his success, rivals United Breweries and Carlsberg are believed to have drawn up plans to set up bases in the state.

Carlsberg is believed to be scouting for land in the Vaishali district, while UB is looking at Patna.

Bilimoria is now focusing on the production of barley in the state. Barley is an essential component for beer.

“Barley can be grown next to the brewery itself … right now we get our ingredients from Haryana. But we believe we can encourage farmers to plant the right varieties which we would procure… In beer, 75 per cent of raw materials is malted barley, it could well be a money spinner for agriculture in the state,” he said.