Cobra Beer: Distributing with the enemy

Beverages: Cobra Beer is in talks with Budweiser to distribute the brand in the US.

In a sharp mid-course correction, Karan Bilimoria, the NRI beer maker, is 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, the chairman of Cobra Beer, had earlier attempted to make inroads in the US market on his own with his Krait brand of beer. However, the attempt was not too successful due to reasons that included stiff competition from Budweiser.

"We are in talks with Budweiser to distribute Cobra in the US. We will hopefully reach an agreement soon," Bilimoria 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 litres a year.

On the domestic front, Bilimoria plans to introduce canned beer to push sales in the Indian market. "I see great potential in the canned segment. It will also help us export Cobra from India," he said.

The company already has the required infrastructure to package India-brewed Cobra beer in cans. "We may even export canned beer to the UK and South Africa," he added.

With a view to make India an exporting hub to feed the Asia-Pacific market along with other international markets, the company is on an acquisition spree. "By adding two new greenfield breweries this year to our current seven, we are looking to have 12 breweries by 2012 through acquisitions or franchise arrangements with existing breweries," said Bilimoria. The company is exploring opportunities across Haryana, Punjab and Andhra Pradesh.

"The way the Indian beer marketing is growing, we have set a target of 20 million cases a year by 2012 in India," he said. 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.

While he is sceptical of introducing mild beer in a country dominated by strong beer, Bilimoria is bullish on alcohol-free beer and flavoured beer. "Flavoured beer has great potential in the country," he said. The company will soon roll out Cobra Alcohol Free Beer, Cobra Lower Calorie Lower Carb and Cobra Bite.

Cobra Bite, a flavoured beer brand, includes natural fruit extracts and is available in sweet lime, apple and lemongrass flavours. At present, the company only brews two brands, King Cobra and Cobra Premium Lager, for the domestic market.  

According to Bilimoria, Cobra sold 200,000 cases in November 2006 and expects to sell 400,000 cases by May in India, whose beer market is estimated at 137 million cases.