South Africa: Cobra Beer expected to start talking to independent local breweries such as Bavaria Brau and Namibian Breweries next year about brewing Cobra locally, founder and CEO Karan Bilimoria said last week, Business Day commented on December 22. Cobra Beer is a UK-based group founded in 1990 by Bilimoria, a law graduate and chartered accountant who saw a gap for a less gassy beer to accompany Indian food.

The beer is now sold in more than 5000 Indian restaurants in the UK as well as supermarkets and off-licences. The group, with an annual turnover of more than R715m, now exports to 30 countries. Cobra Beer moved into SA's premium beer market about 18 months ago, selling its beer through local restaurants at about R18 for a 330ml bottle. Since then the group has added new brewing facilities.

Most of the company's beer is brewed for the South African market by the Charles Wells brewery in the UK, but it has recently tied up with Polish brewery Browar Belgia, which brews Cobra for the European and export markets. This has helped bring the price of Cobra beer down substantially since June. It is now selling in about 400 different outlets in SA including restaurants, bars and bottle stores.

In restaurants, the beer is priced at about R14 a bottle. As a result of new distribution agreements with Makro and 17 Acategory Picardi Rebel stores in the western and southern Cape, retail customers can buy Cobra beer at about R6-R7 a bottle.

Cobra has also recently started to brew in India through an agreement with the Mount Shivalik Group. In India the duty on imported beer is about 400%. However, brewing in India has brought the price of Cobra beer down to about 40 rupees a bottle from 100 rupees a bottle for the imported version. Bilimoria said the South African market for beer, like the Indian market, was highly price-sensitive.

Cobra beer does not intend to be a mass-market product, and expects to be more expensive than nonpremium beers, but it has to be priced affordably to increase volumes. Brewing locally will also help keep prices down. Not all companies importing beer into SA will succeed as it is hard to tackle South African Breweries, with its substantial market share and ability to keep costs and prices low, Bilimoria says.

But he has found the South African market receptive to new beers as a result of consumers' desire for more choice. Bilimoria said that Cobra Beer's volumes in SA were relatively small but what was important was that it was getting repeat orders, showing the product was well accepted.

Cobra is not profitable in SA and has not budgeted for a profit within its first three years due to the investment required in setting up marketing and promotions. It is marketed locally through tastings, promotions and sponsorships, but in the UK Cobra has a wide-ranging campaign on the TV, billboards, the London Underground and other media.

Next year the group plans a new TV and internet advertising campaign, and it has three new products in the pipeline which will be introduced in SA as well. The first is a "0,0%-alcohol" beer (to be marketed as "venom-free beer"). The second will be a strong lager, and the third product is still under wraps.