meet the cash needs of upstream, the growth of independents has been nothing short of phenomenal.


Independents that started as small local marketers, ie small, independent, family-owned business, are now investing to extend distribution, building brands, leveraging speed-to- market and flexibility to capture opportunities, and automating, manufacturing and distribution facilities to position for a head-to-head fight with the majors.


These independents are not pure play companies but rather act as marketers for their own branded product line, as resellers for major’s products, as contract manufacturers and distributors for private labels, and even as distributors for base oil and additives to other independents. Despite the premium prices commanded by the Major brands, Independents are able to generate comparable Return on Sales due to their much lower costs. They are finding places beyond the direct reach of the Majors.


At present, if we examine the product offer of any large distributor around the world, we will usually find at least one private label or independent brand. Private label growth accelerated through the recession as distributors and resellers looked for ways to enhance earnings amidst declining volume. Auto parts stores, mass merchants and quick lubes resellers are extending this trend today as we see more conversion of both packaged and bulk product from major brands to private label and independent brands. The trend began with industrial hydraulic oils, and then commercial engine oils, and now penetrating the consumer engine oil market.


Tackling the challenges at home… German-based Liqui Moly is selling direct to independent workshops by leveraging its strong direct sales force and auto parts wholesalers. UK-based Morris Lubricants sells primarily direct with emphasis on OEM technology, marketing, and motor sports promotions. In the Americas, Mexico-based Roshfrans sells through its exclusive and company-owned distributor network with a focus on auto parts stores by leveraging quality, sponsorships, and competitive pricing. And in the USA, the Service Pro product line supplied by Warren Oil, and the CAM2 product line are sold to distributors and direct accounts.


In most cases, the success of Independents comes from providing local customers with a balance of quality, responsiveness, and cost. For the majors, this has become an operational hurdle as they drive to simplify product offerings, standardise delivery lead times and Minimum Order Quantities (MOQ), and focus on larger volume strategic accounts. The ultimate challenge is how can a Major create intimacy with customers and respond to needs when 50-70% of their sales are now through distributors and resellers? Social media is providing a partial bridge to visibility with customers, but additional SAP & ERP technology combined with new sales and marketing models will be the winning combination.


“Are we winning?”...


How many times have you been asked the question… “Are we winning in the lubricants business?” I can tell you that after 30 years of working with companies around the world, there are no two companies that look at this question with the same lens. Although we have a set of common financial and operating measures, the mix of priorities, preferences, aspirations for profits, and boundaries that define what we are willing to do in the marketplace is all over the map.


Simply put, “Winning my way, is not winning your way”. Even 24


within the group of multinational oils who basically all play in the same growth markets, what makes Shell happy with its long-term focus on growing profits through commanding market share positions and a broad product-brand portfolio will not satisfy an ExxonMobil or BP with their focus on capital efficiency and willingness to sacrifice competitive product volume for ever higher net profit margins from a more focused premium brand offering. Although we all share the same basic drivers for industry profits, marketers come to this business in all colours and shapes, each carving out a different future.


LINK www.jaggeradvisory.com


Biography


Suzan Jagger is President of Jagger Advisory, a global strategic and financial advisory company that specialises in the Global Lubricants Business. For 25 years, Ms. Jagger has been recognised by clients as a thought leader in the development of Best-In-Class business models for supply chain, marketing & sales, as well as transaction and advisory services supporting acquisitions, divestments and restructuring lubricants businesses for the leading Multinational Oil and Independent Marketing. Jagger Advisory leverages a deep understanding of the competitive and financial drivers for success in some of the most challenging markets.


Suzan has been a featured speaker and keynote at international industry conferences sponsored by such trade associations as NPRA and ICIS LOR. She began her career at Mobil and later held Director positions at Muse Stancil and PFC before establishing her advisory business. She holds a master’s degree in Chemical Engineering from Massachusetts Institute of Technology. She is based in Jagger Advisory’s head office in Litchfield, Connecticut, USA.


LUBE MAGAZINE NO.131 FEBRUARY 2016


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