Lord Bilimoria: From Cobra to CBI
By Lysanne Currie, CA magazine
2 December 2020
Lord Bilimoria, founder of Cobra Beer, is one of the first entrepreneurs to become CBI President and the first from an ethnic minority. He tells Lysanne Currie why the future is bright for UK plc.
Some ideas hit like an express train. Others take time to ferment – literally, in Cobra Beer’s case. “There was no eureka moment,” says Lord Karan Bilimoria of his foaming favourite, which was originally launched in 1989 as an alternative to the gassy beers typically served in UK Indian restaurants. “I wanted to produce a beer that would give the refreshment of lager and the smoothness of ale.”
Launching an original brand, in what he describes as “a very competitive, entrenched industry with big players going back over centuries” was always going to be a tall order. “But we showed we could still come up with a better product that changed the marketplace.”
There’s no secret to his success, he says. “No short cuts. You need to work hard.” This son of an Indian general trained as an accountant with what is today EY. “My training was invaluable – it’s a tough qualification but you don’t just learn about finance, you learn about business from the inside out,” he says. “I was very lucky, I worked on a range of businesses from tiny companies with one chequebook to giant multinationals. It also teaches you to be professional and to keep to your values and ethics.”
Bilimoria started out importing Indian polo sticks, before co-founding Cobra in 1989. “It was tough going at first,” he says. He travelled around Indian restaurants, door to door, come rain or snow, ferrying crates of beer in “a battered Citroen 2CV that cost £295, needed push-starting every day and where you could see the road through a hole in the floor”. Initially, the mighty Cobra failed to strike. But as the early-1990s recession loosened its grip, and Indian cuisine enjoyed a massive rise in popularity, relationships were forged and deals were struck with more than 100 top restaurants.
People on the boards of the biggest companies in this country create inspiration, which creates aspiration, and that aspiration creates achievement - it's a virtuous cycle
It hasn’t been all plain sailing since. But despite having only just weathered the 2008 crash (£75m in debt, it was rescued from administration by Molson Coors in 2009), Cobra is now worth more than £50m: a real home-brewed success story. “A great example of Britain’s capabilities in manufacturing excellence,” he says. Not bad for one launched with £20,000 of student debt.
Cobra has, of course, suffered during the pandemic due to restaurant closures, but this is just another, albeit steep, dip in the rollercoaster ride of entrepreneurial life – one that, for Bilimoria, always seems to trend upwards. Having been made a life peer in 2006, he has now added another entry to his CV, that of CBI President. “It’s such a privilege and a great position, especially at this time,” he says. “It’s been hugely challenging but it’s so good to see how important the CBI is to business and to the country.”
His appointment has “broken the mould” in several ways. He’s one of the first entrepreneurs to have become president. At 58, he’s on the young side; and for the first time ever, the CBI has elected somebody from an ethnic minority. “Dame Carolyn Fairbairn, the outgoing Director-General, was the first woman, and that took 50 years,” he says. “We are getting there!”
He has four main areas he wants to address. First, he wants to change the CBI’s image and show its support for entrepreneurialism. “We’re very proud to have the vast majority of the FTSE 250,” he says. “[But I want] to champion entrepreneurship in the country. It’s going to be crucial, to encourage companies to invest in start-ups, to finance the innovation that results from it.”
Naturally, British manufacturing also gets his thumbs-up: “We’re one of the biggest exporters in the world, which we also need to champion. Our top 10% of companies are some of the most productive in the world – it’s the remaining 90% we need to work on.”
He also wants business to compete via research and innovation: “I’ve seen the power of businesses and universities working together and I’ve been proud to chair the Cambridge Judge Business School’s advisory board for the last five years.”
Finally, he wants to champion diversity. “I wanted to do this well before Black Lives Matter,” he says. Citing the Parker Review, an independent body that considers how to improve the ethnic and cultural diversity of UK boards, he bemoans the lack of progress to date. “After three years of this review, almost 40% of the FTSE 100 and 70% of the FTSE 250 do not even have one [ethnic minority] board member.” He is spearheading the CBI’s Change the Race Ratio initiative, which launched in September with a target for every FTSE 100 company to have “at least one racially and ethnically diverse board member by the end of 2021”, and by the end of 2024 for the FTSE 250. “We want this to be a global movement,” he says. “Many companies in the UK have already put their weight behind it. Now we’re going to measure performance and report regularly on the progress made. What gets measured, gets done.”
Diversity is good for business too, he continues: “The facts speak for themselves. McKinsey research shows that companies that embrace diversity and inclusion are in the top quarter – or 39% more profitable than the bottom quarter. It makes good business sense and investors are also looking at it seriously.” Bilimoria enthuses about the notion that role modelling is essential for the diversity pipeline. “I’m a great believer that people on the boards of the biggest companies in this country create inspiration, which creates aspiration, and that aspiration creates achievement. And that achievement creates inspiration, which creates a virtuous circle.”
Bilimoria has seen the power of diverse boards in action. For nine years he served as an independent director in food wholesaler Booker, before it was bought by Tesco. “I was the first element of diversity on the board – up till then it was all white males. We were a £300m company. At the time I left the board nine years later, there were also two women on it and the value had gone up to almost £4bn. Diversity on boards worked and helped Booker grow by more than 10 times its value through a really challenging economic time, the credit crunch.”
Deal or no deal
Speaking at a time when Brexit negotiations are still ongoing, he is positive that the UK government wants a deal. “We’ve got to get a deal for the benefit of our businesses to grow the economy. It’s in everyone’s interest, however basic. Once we have the deals we’ll be able to build on the other aspects of this relationship. It is very important for everything else that goes beyond goods and services – security, the climate change issues. I’m very, very confident in a deal being done.”
And as for deals with the administration on the other side of the Atlantic… “The UK has always had a special relationship with America and always will,” he says. “So that relationship will continue and I’m sure we will get a trade deal with America. But it’s not something that’s just going to be done in the matter of a few months.”
Back home, he welcomes the government help for business during the pandemic but wants to ensure it continues well into 2021. “They’ve given us a very good bridge of support so far. The furlough scheme is amazing. If you’ve got a lockdown then you need cash to survive. I nearly lost my business three times so I know what it’s like to start a business in a recession and the difficulty of raising money.
“The government has got to continue to do what it takes to save businesses and jobs because we’ve got to look ahead to post-pandemic. We will come out of it, no question, whether it’s spring or summer next year. At that stage, we’ve got to have the jobs and businesses there to bounce back. They’ve already proven that, even with a limited opening up of the economy in July, August, they tend to bounce back. And we will be able to bounce back pretty quickly.”
So, what’s his advice for keeping your chin up while we’re still in the thick of it? His answer is unexpected, if quietly profound. “Practise integrity,” he says. “You also need to have a very good team, and a good lawyer. And if you’re lucky enough to have it, family support.”
One thing about successful entrepreneurs, he says, is that they “had the guts to come up with the idea in the first place. Which means you have the guts to stick with it when others will give up. Remember that.” Bilimoria is also big on the power of creativity in business: “Throughout my childhood I was told that I wasn’t creative because I was useless at art and couldn’t sing. It was only when I started my business that I realised anyone can be creative, and it’s a great asset.”
But, he says, you need determination for the creativity to work and for solutions to form: “Switching off is the best way. You think, think, think about a problem, you work at it, research it, discuss it, then you have to switch off and suddenly it falls into place. I come up with some of my best ideas when I am shaving or in the shower.”
Watch the Learn chapter of the recent CA Summit by visiting icas.com/news/the-ca-summit-learn-chapter