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Aim was to brew India's finest beer: Cobra founder
Lord Karan Billimoria, who began exporting it to the United Kingdom in 1990 and has now built it into a household name in Britain, says he used to personally deliver it to Indian restaurants in his car.
Affordability, regulations and distribution are holding back the growth of the beer industry in India, he tells Faisal Kidwai on the sidelines of TiEcon Delhi 2012.
Here are the excerpts:
Could you tell us a bit about the company?
I launched the company with a friend in 1990 and started exporting it to the United Kingdom from Bangalore in the same year and then began producing it in the UK and Europe. In 2005, we started manufacturing it in India but this time for India.
We now export it to 30 countries across the world, have a joint venture with Molson Coors, they have the biggest brewery in Colorado, Denver, and England and largest beer brand in Britain. We own the only brewery in Bihar.
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Aim was to brew India's finest beer: Cobra founder
During the initial days, I used to deliver beer crates in my car to restaurants in the UK and handle everything from production, finance, shipping to telesales, etc. I can identify with anyone's role in the company because I have done it all.
Why did you decide to go into beer business?
I had a degree from India and law degree from Cambridge University and was a chartered accountant with Ernst and Young. I could have gone into investment banking, became a lawyer or an accountant, but didn't want to become any of these because I wanted to be in charge of my own destiny and had a big idea.
I love beer and found a gap in the market. I like lager and English ale but found that neither the gassy lager nor ale went with food, particularly Indian food. So, I created a beer in India and exported it to the UK. My mission was to brew the finest Indian beer and it's now recognised as one of the best beers in the world and we are a household name in the UK.
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Aim was to brew India's finest beer: Cobra founder
What makes Cobra so popular?
People genuinely love the taste of it. We've built the brand in the UK through Indian restaurants, which are our foundation base, and we are available in 97 per cent of Indian restaurants there.
Everybody in Britain eats and loves Indian food, so our brand caters to all nationalities and segments. We were able to capture the market through Indian restaurants, but now Cobra is available everywhere, from supermarkets to pubs.
How's the beer market in India?
Beer market in India is rocketing. It has been growing in double digits for 10 years and during the past five years, it has been growing between 12-15 per cent.
It's the fastest-growing market in the world, yet it's one of the smallest markets in the world in per capita terms. Indians consume just 1.5 litres beer per person, while China consumes 30 litres, the UK 90 and the Czech Republic 150 litres. China is currently the biggest beer market in the world, but India will catch up in the next 20 years.
Beer should be consumed as a drink of refreshment. It has, on average, five per cent alcohol content in India, while liquor has 40 per cent and country liquor has more than 80 per cent alcohol content and that causes health and social problems.
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Aim was to brew India's finest beer: Cobra founder
What's your view on government policies vis-a-vis beer industry?
The Indian beer market is thriving, but some major factors are holding it back. First, it's relatively expensive. A bottle costs about Rs 75 in a country where so much of the population lives on two dollars a day, so for a large section of the population, beer is an expensive item.
In the UK, beer is the ultimate fast-moving consumer good. It's not just beer that's affordable to everyone, but even premium brands, such as Cobra, don't cost a fortune.
One way to make it affordable is to reduce the taxes. India has one of the highest taxes on beer. Second, regulations. India is a highly regulated market. On the one hand, there's Gujarat that has prohibition and on the other there are import and export duties in every state.
Third, distribution. There are just 50,000 licenced outlets allowed to sell alcohol in the whole country. In the UK, a country that has just 60 million people, there are more than 50,000 pubs and we are not counting grocery stores, supermarkets, restaurants, bars and nightclubs. Half of one province in China has more outlets than the whole of India.
If the affordability and availability is made easier than the government will generate more revenue and that can be channelled into development.
And it's not only the government that will boost its revenues, even farmers will benefit because beer is a natural product. Barley, rice and maize are all natural products and so the growth of the industry will be beneficial to farming, too.