W hen the big trees fall, new ones grow back in their place. In the road transport fuel sector, Greenergy has become part of the new growth, supplying the needs of the market as the traditional operators fall away.
Founded as a niche manufacturer of green fuels in 1992, it has evolved to supplying one fifth of the road fuel sold in the UK around 10 billion litres. Its sales are 25% up, in a market that’s 1.5% down.
It cut its teeth meeting the stringent demands of the supermarkets, where keeping cost down is everything. With claims of 99.2% on-time deliveries and 99.2% invoice accuracy, efficiency is the name of the game.
And now its founder and chief executive Andrew Owens is targeting dealer groups with a radical approach, which makes the traditional oil company operation look distinctly dinosaurian.
"We don’t do tradition here, what we do is break-through alternative business structures. We’re just going to do it completely differently."
All will be officially revealed at the Forecourt and Fuel Equipment show at the Birmingham NEC (March 25-27). But some retailers have already been contacted about ’Flexibrand’.
"We’re aiming to supply more product to dealers under a variety of branded, or unbranded operations," explains Owens, an efficiency obsessive, who has seen an opportunity in the dealer sector to grow his retail supply operation.
"We’ve put together a portfolio of different brands that can be applied to retail sites. We will then take over the delivery of fuel to those sites." Owens is offering a service that can either supply a truck onto the site, or hold the underground stocks and supply free into the customer car. That way the dealer doesn’t have to hold any stock whatsoever, which releases a lot of working capital.
"We own the oil underground so the transfer of title to the dealer is as their customer comes in and fills up their car," says Owens. "But the retail margin is with the dealer."
The Greenergy service is principally about supplying the dealer with the lowest-cost, most reliable supply of fuel.
"Sometimes when I’m talking to dealers I feel they often think of it in a reverse way as they start with the retail price and count back, whereas actually it should be about having the lowest cost and doing your economics forward.
"What we’re offering is very good regional, national, delivered-in pricing; unconditional, without strings attached. The dealers can then decide their own destiny from there. They can either have one of the brands from the stable that we’re offering, or they can have their own brand if it’s appropriate. They could even have one of the recognised oil major brands.
"But we’re not doing the branding. Greenergy won’t appear on any pole sign. We deliver on behalf of other people that own the brands."
Greenergy has developed specific offers for different areas such as premium, motorway, A-road, high volume, maybe the site has more commercial traffic, or a strong convenience offer.
"If a dealer has a certain number of sites it’s unlikely that all the sites will benefit from the same brand," says Owens. "So we have different formats for different opportunities.
"But they all start with the core pricing, and build up from there. Some of the brands, for instance, have zero premium, and the dealer won’t have to pay anything at all to have that brand format. The brands which are very prestigious will have more brand royalty."
Owens is refraining from mentioning the brand names publicly until the official launch, but he says they are a mixture of both established and newly created brands, including some oil company brands: "We’re giving complete cost disclosure to the dealer so they can pick and mix what elements of service, supply and features they want. There’s no one size fits all.
"It’s a multi-format offer which gives dealers the freedom to manage their estate in a low-cost, low-capital, high-reliability way."
"They don’t have to deal with multiple suppliers they can deal with one supplier who can take a high degree of responsibility for the estate in terms of stock availability.
"It is efficient to have one supplier covering all the bases. If you were buying 100 tonnes and you were buying from five different companies, you’re actually buying 20 tonnes from each company. So you’re not benefiting from a single supply base. We’re bringing the dealer the inherent economies of buying in scale."
Owens believes the time is now right to launch an offer of this kind because of the changing structure of the market: "Looking at the trends, it’s clear that dealers have the lion’s share of the sites and that there are more significant, well-capitalised dealer groupings. In the next two or three years the dealer is going to become more confident and powerful. There’s great interest in the sector from professional financial institutions, so whereas we thought maybe a 100-site chain was a big chain, we might see 500 or 1,000-site chains.
"Once you get the vertical disintegration of the supply chain happening now the true costs of the supply chain cannot be lost in the muddle. There will be real, explicit price transparency, which will bring the normal economics into play in retail. With us, dealers will have price transparency and freedom within the contract.
"But we’re not presecriptive we want to evolve with the dealers."
Founded in 1992 by current chief executive Andrew Owens as a supplier of niche environmental fuels. Since then has transformed into the UK’s largest supplier of road fuels.
Mission: Deliver long-term customer partnerships by being the fuel and infrastructure provider with the lowest cost; highest reliability; best systems and control; easiest people to deal with; most transparency on sustainability.
Greenergy supplies fuel to oil companies and supermarkets which operate petrol stations and also to major users of fuel such as bus and logistics companies.
In 2011 it supplied 9.9 billion litres of fuel in the UK one fifth of the road fuel sold in the UK. In the same period overall UK fuel sales were 1.5% down, Greenergy sales were 25% up.
It supplies this fuel from 19 locations across the UK, either ’ex-rack’ (customer collects from terminal) or ’delivered in’ (Greenergy arranges delivery). Every day it arrange hundreds of fuel deliveries to its customers by truck.
It blends much of the fuel, using its own facilities for petrol and diesel blending on the Thames estuary and on Teesside and, for waste-based biofuel manufacturing, in Immingham.
To manufacture fuel, it buys petrol, diesel and biofuel products from across the world, receiving 70 shipments of oil every month. It has biofuel dedicated sourcing offices in Brazil and the US, where sustainability considerations require it to be close to its suppliers and customers.
To support its growth, it has also invested in new fuel storage terminals, adding Plymouth to its supply network in 2009, Teesside in 2010 and Cardiff in 2011. It is now looking to establish a position at further inland locations, and to this end the company is working on the development of a rail distribution network with Teesside as the hub.
From terminal to retail site, the company has built a unique IT platform giving exceptional levels of real-time management information combined with high levels of security and control.
Service KPIs: On-time deliveries 99.2%; Invoice accuracy 99.2%.
Source: Greenergy website www.greenergy.com