As one era ends, another begins. Last summer, Cobra Beer founder Lord Karan Bilimoria relinquished the role of hands-on chief executive. In came Adrian McKeon. Here they tell the transition story and reveal how Cobra will go truly global.
Eight months ago, Cobra Beer founder Lord Karan Bilimoria handed his ‘baby’ to a man he barely knew. Not easy. But it’s clear he’s unequivocally satisfied, nay delighted. New chief executive officer (CEO) Adrian McKeon, the former UK managing director of Beam Global Spirits & Wine, came with an enviable reputation and has been nothing short of “phenomenal”, according to the man himself.
In his first two weeks, McKeon met with all 300 employees in the UK, India, South Africa, America and elsewhere face-to-face. In the first six months, he has delivered far more besides. He has held a top-to-tail review of the business, added senior appointments to the board, made the company’s first acquisition of a brewery, closed operations that were under-performing, focused the UK operation on expanding existing sales channels and creating new ones, planned the launch of a brand new business model of producing beer and has sharpened the existing culture. No wonder he’s popular.
Nevertheless, Bilimoria, who has diluted his stake to just over 50% through issuing share options, admits he did indeed find it tough. “This is something that Arjun Reddy and I created from scratch,” he says. “The beer didn’t exist. The brand didn’t exist. We built up a culture and tried to make sure those principles, values and culture remained. You’ve got to accept change, but for me it has been very difficult to do.”
THE RIGHT BALANCE
Arguably, the worst thing you can do when you bring in a successor is meddle. So has Bilimoria found the balance? McKeon thinks so. “Karan’s moved back quite significantly from the operational part of the business,” he says. “He’s always there when I want advice, and I meet regularly with him once a week for an hour and a half or so to sort through the business issues and get his opinion. But actually he has been fantastically generous in letting me get on with running the company.”
Externally, too, Bilimoria says, the role distinction is clear. “I will not go over Ade’s head,” he is keen to point out.
It’s not the first time Bilimoria has handed over aspects of the business. After setting up with Reddy in 1989, the former Arthur Young (now Ernst & Young) chartered accountant and Cambridge law graduate did a little of everything. When Bilimoria then hired a financial controller upon Reddy leaving the business, he relinquished the accounts department, although not the fundraising role. It wasn’t until 2001 when former ebookers.com chief financial officer and long-term target Dynshaw Italia joined as finance director that he stepped
away from that.
With Bilimoria having already used a number of financial instruments at Cobra to fund growth – including small firms loan guarantee, bills of exchange, factoring and trade finance – it was left to Italia to innovate too. And he did. In 2006, he raised £27.5m, £25m of which came through PIK – payment in kind – notes from hedge fund, Och-Ziff Capital Management.
THE HIRING PROCESS
In an effort to recruit a CEO who could make a similarly impressive impact, Bilimoria started the process early. As he took his seat in the House of Lords in July 2006, it had already begun. This coincided with Cobra having reached a size that would both attract top candidates and enable the company to afford new hires. Over the next year, Cobra worked with two of the leading headhunters in the country, Odgers and Whitehead Mann, with Bilimoria personally interviewing 20 individuals. McKeon ticked the boxes.
In his first 18 months at the helm of Beam Global Spirits & Wine in the UK, profits grew by 26% following acquisitions of Allied Domecq brands. He had previously worked at boardroom level for Constellation Brands and then as managing director of Allied Domecq Wines.
At the interview stage, Bilimoria was struck by McKeon’s presentation, which reassured him that, despite a large company background, he had the right mentality to handle a fast-growing entrepreneurial business.
“Even before he started he had thought about it a huge amount and he presented to us as a company,” recalls Bilimoria. “He said: ‘This is what we’re going to do. We’re going to be pirates; we’re not going to be in the navy,’ and he gave us his pirate strategy.
“He made it very clear. He showed a graph and said: ‘For six months I’m going to cost you, then I’ll start paying back through my strategy and my team. But give me six months to get the team and strategy right.”
COBRA THE CHALLENGER
When informed of how he’d made an impression, McKeon seems amused that the pirates analogy was so influential. “That’s a concept I read in a book by a guy called Adam Morgan,” he says. “To me it summed up perfectly how to approach life, not just business. It’s much more fun to be a pirate than it is to join the navy.” The book, The Pirate Inside: Building a Challenger Brand Culture Within Yourself and Your Organisations, details a more maverick approach to business.
“One of the things our competitors don’t do is share information on consumer understanding with their customer base, because they treat it as proprietary,” McKeon continues. “Our approach is the opposite. We say: ‘If you’re going to sell them more beer, then why wouldn’t you make it Cobra, because that’s the fastest-growing beer in the UK.’ That’s very different and allows us to act like pirates, which is a cool, cool place to be. As far as I’m concerned it’s much better to fly under a sail that’s got a big skull and crossbones.”
