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Suppliers to Cobra Beer left out of pocket after new deal with Molson Coors

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Cobra Beer’s suppliers have been left up to an estimated £75 million out of pocket after the firm was bought by a joint venture between Molson Coors and Cobra founder Lord Karan Billimoria.

Cobra was snapped up through a so-called ‘pre-pack administration’ on Friday before the business could be offered on the open market. Molson Coors’ UK arm bought a 50.1% share in the joint venture for a reported £14 million.

The deal rose from the ashes of a failed bid by Cobra and Molson Coors to set up a company voluntary agreement (CVA), which would have guaranteed all unsecured creditors some – but not all – of the money they were owed.

“In very simple terms, people who were secured creditors, for example the banks, will get their money back,” Molson Coors’ UK strategy director Simon Cox told BG today.

“Unsecured creditors – people who lent money on an unsecured basis or people who are owed money – won’t get anything.”

Launched in 1989 as an ‘exotic, less gassy’ brew, Cobra Beer has experienced meteoric retail sales growth of some 40% a year in the past two decades, yet has never turned a profit. In 2007 the firm reported losses of £13 million.

Cobra was put up for sale in November last year but failed to attract the sale or partnership that would allow Lord Billimoria, an India-born peer, to realise his ambition of taking a 10% slice of the Indian market by 2012.

Since its launch Cobra has poured some £40 million into marketing and the brew is exported to 50 countries. With Cobra available in some 6,000 Indian restaurants in the UK, in recent years the firm has focused on the pub trade.

“Actually Cobra is already an extremely good brand, so we probably don’t have to do a great deal to generate consumers,” said Cox, a member of the board of the new joint venture, Cobra Beer Partnership.

“The business plan [for Cobra] was getting increasingly difficult to support through the credit crunch and the recession. Turning the business around is probably as simple as lifting what we consider to be a great brand and putting that in our infrastructure. We can support that fully.”

Molson Coors expects to bring production of Cobra to its Burton plant – from Wells and Young’s, which currently produces the beer under licence – within the next six to nine months. Cox added that he expected the brand to be turning a profit for the new partnership “very quickly”.

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Saturday, October 21, 3:45 pm

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