A partner for Cobra?

With his eye on 10 percent of the Indian market by 2010 and needing capital to pursue the goal, Cobra Beer founder Lord Karan Bilimoria is hopeful a sale or partnership would provide the necessary finance, notes a BBC News report dated November 24, 2008. Quoting an unnamed company spokesman, the report notes that he has appointed N.M.Rothschild to assist in locating such a prospective buyer or partner. The news had also been carried by London’s Sunday Times (ST) on November 23, estimating the sale value of the company at £ 200 million.

The firm raised £ 15m ($ 22m) from its investors, including Bilimoria who continues to hold about two-thirds of Cobra’s shares, after failing to sell a stake to drinks giant Diageo, described by ST as the world’s biggest spirits producer.

"Bilimoria is said to be open-minded about selling a stake in the business or accepting a full takeover. He is keen to secure investment to take Cobra to the next stage of its development,” notes ST, adding, "Although Cobra has yet to make a profit, it remains one of the UK’s fastest-growing beer brands in a market that is in overall decline. At retail, it has sales of £177.6m. The brand has grown by 28 percent in the last year, according to the data-research firm AC Nielsen.”

"Potential buyers are expected to include international brewers with a strong presence in the UK, such as Carlsberg, Heineken, InBev and Molson Coors,” states ST. United Breweries of India, where Cobra has a growing presence, are also likely to be contacted, as are private-equity firms, note the reports.

Served in about 95 percent of all Indian restaurants in the UK licensed to sell alcohol, Cobra has recently started to sell in pubs and bars where it is trying to compete with up market international brands such as San Miguel and Peroni. It has also developed a second beer brand aimed at women: Cobra Bite was launched in the summer of 2007 and comes in several flavors, including ginger, lemon grass and lime, states BBC News.

Lord Karan Bilimoria: Pursuing growth in India

Early last year Business Standard (March 25, 2008) had reported that Bilimoria, was "in talks for a distribution tie-up in the US with Anheuser-Busch, whose Budweiser lords it over half the beer market in that country.”

Bilimoria’s own attempt to make inroads in the US market with his Krait brand of beer was not too successful due to reasons that included stiff competition from Budweiser, stated the journal. "We are in talks with Budweiser to distribute Cobra in the US. We will hopefully reach an agreement soon,” Bilimoria had then told Business Standard.

"While Cobra managed to hold its own in the SABMiller-dominated South African beer market, it managed only flat results with Krait Prestige, which was marketed as the world’s first Champagne Lager. By signing a distribution pact with Budweiser, Bilimoria is hopeful that Cobra will do better in a country whose per capita beer consumption is estimated to be 81.6 liters a year,” wrote Suvi Dogra in the Business Standard.

According to the BBC, "The company regards India as its biggest growth opportunity. Beer consumption is less than one liter per head per year, but it is growing rapidly and Cobra hopes to capitalize on that.”

"The way the Indian beer marketing is growing, we have set a target of 20 million cases a year by 2012 in India,” Dogra had quoted Bilimoria, adding "Towards this end, the company is investing $ 80 million. Cobra also hopes to upgrade each of its facilities to an individual capacity of five million cases a year in two years.” In that pursuit it was said to be exploring opportunities across the states of Haryana, Punjab and Andhra Pradesh.