Monday, 6 July 2009

The cobra strikes journalists

The virtual collapse in Britain of Cobra Beer, with creditors left owed some £75 million, has brought forth a very honest appraisal in the London Times by columnist Sathnam Sanghera on the failings of the journalist profession which touted the Cobra story so heavily for so many years as an example of the marketing and financial brilliance of its entrepreneurial creator Lord Bilimoria.
No one seems to have picked up, until it was too late, that for all Cobra’s glitzy marketing efforts — it spent £40 million on marketing over 20 years — people rarely drank the stuff unless in Indian restaurants, that the company had never been profitable and that, in the year to July 2007, the latest for which accounts are publicly available, Cobra lost £13 million.

Indeed, the story of Cobra highlights a number of awkward truths for the business world, the first of which is this: business journalists rarely get the full truth about companies. The fact is that, despite all the awards we enjoy giving ourselves, with the exception of one or two individuals, we failed to predict almost all the crises enveloping us: the Ponzi schemes, the frauds, the credit crunch, everything in fact, including Cobra. Not that it’s our fault: journalists are only as good as their sources and if there’s one thing we’ve learnt this year it is that the people running businesses are as clueless as everyone else.

The second painful truth revealed by the Cobra debacle is that the business world is hugely susceptible to the influence of public relations. This is, in part, because business is overrun by PR people — and Cobra was more image-obsessed than most, announcing plans to sponsor this year’s Bafta awards as part of a £8.4 million PR and marketing drive only months before it went into administration — and, in part, because business is a bit boring and a good story, such as Cobra’s, gets seized upon.
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