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Some of the fizz certainly seems to have left Cobra Beer's fortunes, after the UK-based company announced last week that it had been put up for sale by its founder, Lord Bilimoria.

Cobra last week appointed investment bank NM Rothschild to contact potential buyers in the coming weeks in a bid to find a purchaser for the brand.

Some commentators have questioned how Cobra's revenues have held up in recent months against an industry-wide fall in sales, while others have suggested the brewer has become a victim of the falling demand in the UK for premium lagers.

The peer of the realm is hoping to raise up to GBP200m (US$301m) from the sale of the Indian-themed lager company he founded 18 years ago. This comes only weeks after Diageo walked away from purchasing a minority stake in the company, valuing it at a mere GBP100m.

The private company was developed in the UK for the sale of beer in Indian curry houses. Last year, sales reached around GBP55m and have been predicted to hit GBP177.6m this year.

However, in the year to the end of July 2007, Cobra made a pre-tax loss of GBP13.1m, despite a 42% rise in sales.

Roger Protz, editor of the Good Beer Guide, believes Cobra has been a victim of "falling sales and demand for premium lagers".

A spokesperson for Cobra told the BBC that, while current losses remained "broadly similar" to that of the beer market as a whole, the move to sell the company was a "deliberate business decision".

"We have sacrificed short-term profitability to invest in the brand," the spokesperson said. "Profits have been reinvested back into the business."

So with sales so strong, why is the company yet to make a profit?

For a start, Cobra has found it difficult to break into the UK pub market, which currently accounts for only 10% of its sales. This at a time when 'world beers', including San Miguel and Peroni, are outperforming traditional lager sector in pubs and bars.

In addition, Jim Boulton of the Story Worldwide advertising agency believes Cobra tried to "take on the big boys by replicating their approach", and ended up as just another 'me too' brand, while beer industry analysts have pointed to the brand's rapid growth, questioning whether it has expanded too fast.

Add to this the brand's failure to make a mark on the US market, and you can almost understand Bilimoria's decision.

Yet, despite Cobra's failure to so far make a profit, there could be interest in the brand due to its growing presence in India.

With the Indian beer market growing at a rate of 27% a year, according to data-research firm AC Neilsen, as alcohol consumption rises among the country's middle class, Bilimoria has forecast gaining a 10% share of India's beer sales by 2012, selling more beer in the country than in the UK.

Earlier this year Cobra bought a controlling stake in a brewery in Bihar, north-east India. The company also has contracts with nine other brewing sites in the country. Cobra's plans to grow in India seem to offer a real opportunity for vast expansion - an attractive proposition for any potential buyer, surely.

However, with Diageo now off the radar, Rothschild has the job of contacting potential buyers, expected to include international brewers with a strong presence in the UK. Speculation has thrown up brewers such as Carlsberg, Heineken, InBev and Molson Coors, and United Breweries in India.

Either way, Bilimoria is said to be "open-minded" about selling a stake in the business, or accepting a full takeover.


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