Harvest Energy has become the latest name to add to the shopping list of fuel suppliers for independent retailers. Formerly known as Futura Petroleum, the company has been in the UK for 12 years and is a big supplier to most of the major multiples, having already built up a 4% share of the motor fuels market, according to the company’s head of sales, Simon Davis, who is leading the launch into the independent sector.
"We are bigger than a lot of the major players in the retail fuels market, and for us moving into the dealer market is a natural extension of our business," he says. Davis describes Harvest Energy as primarily a fuel manufacturer, specialising in the production of petrol and diesel, and being at the leading edge in the UK, in terms of new product development.
"We own the City diesel brand, for instance, and were the first company to introduce City petrol into the UK - the trademark is ours," he explains.
"All the fuels that retailers currently sell were first introduced to the UK by us. Since the beginning of 2005 we’ve introduced ethanol-blended petrol, biodiesel, blended diesels, and more recently - in March this year - we introduced E85.
"We supply Asda, Morrisons and Tesco with probably around 20% of their volume, so we’re a very significant player with them. We also supply other significant companies such as Wincanton and Exel Logistics, with fuel for their own use."
The company’s name was changed to Harvest Energy last May, necessitated by the fact that Futura was originally a joint venture with Neste, the Finnish national oil company. The Neste involvement was bought out in 2000. However, Futura is actually Neste’s brand name: "We knew that if at some point we wanted to develop anything for the UK market, we had to have our own brand or pay them a lot of money for the rights," explains Davis. "So it was necessary to change the name. We were looking to develop a bio-ethanol plant in the Netherlands which already had the name Harvest Energy, so with our developments in biofuels and future fuels there’s a natural synergy there."
Harvest Energy now employs 20 people and turnover this year is likely to be in the order of £1.5bn. It has a smart office in London’s Cavendish Square and depots in West Thurrock, Essex; Immingham; Milford Haven, South Wales; Nottingham and Grangemouth. It manufactures fuel in Essex and the Baltic states.
Its long-term aim is to be a 10% marketer in the UK, but growth will come through supply - not retailing.
"We don’t own filling stations and have no intention of ever doing so," stesses Davis. "Historically all we’ve done is wholesale fuel. We don’t come with all the baggage and dictatorial approach you can get from big oil companies. Our attitude is very simple - the retailer runs his business. Our job is to provide him with secure supply and support. We stick to what we’re good at. That’s why we continue to do business with people like Asda and Tesco, and the major oil companies."
Davis has a lot of experience in the petrol retailing sector. He started as a cashier at Ultramar, then worked for Kuwait Petroleum for eight years in various roles. He then took on the role of director of petrol at Morrisons for four years, following which he ran the Safeway petrol business for three years. He joined what was Futura Petroleum in June 2005.
At this stage the major selling point for Harvest Energy would seem to be the price deal it offers. Currently the company has only one dealer site with the company’s branding, athough retailers can have their own branding if they want to. Bunkering is also allowed.
"We’re like a low-cost airline without the nasty bits," explains Davis. "But unlike the airlines our customers do get a good service! We can offer dealers a continuously competitive price; security of supply; consistently good service on delivery; and some basic support such as credit card packages; pump maintenance and a good brand image. We’re not doing it on a shoestring - we have recruited an area manager and we only have one site!
"The key thing for us is to keep the costs down and maintain efficient logistics. If you keep those things in check, you can continue to be competitive. If we were just going to offer the same deals as everyone else we wouldn’t bother."
Davis accepts the roll-out of Harvest Energy will be a slow burn: "Once we have a few sites the momentum will build. I like to think that in three years we will have around 200 dealers.
"If retailers want the comfort and support of a major brand, then fine. But I would question how much support those dealers get. "Our business is about relationships, and we’ve done very well over the years."
Harvest Energy’s first dealer ===
With a PHD in engineering, and working in his forecourt business on a part-time basis to accommodate his other projects - including managing a leased site in the Midlands - Dr Velauthan Sarveswaran, is not what you would call a typical independent petrol retailer. And now he has distinguished himself further by becoming the first Harvest Energy-branded dealer in the UK. His site, Newport Street Service Station, located in the centre of Swindon, Wiltshire is now dressed in the new green, white and blue livery of the latest brand to target the independent sector. It wasn’t a big decision according to Sarves (as he is known to his friends). It seems that quite simply Harvest Energy came along at the right time with the right deal.
"I was in a situation where I needed a new supplier," confirms Sarves. "I had been been uncompetitive for about 18 months - my prices were 4-5ppl more than the local Shell, Esso and Asda sites which all compete heavily with each other. It had a detrimental effect on my business - fuel volume fell from around 1.8mlpa to around 1.3mlpa. So when I was able to, I looked at the other brands on offer, and also considered having my own brand and buying on the spot market. I was looking for a deal that made my site viable again.
"Then a friend of mine suggested I talked to a contact which led me to approach Simon Davis. He gave me a better deal than anyone else. It is a flexible deal - but ultimately it’s down to price. We have had the Harvest Energy branding since the end of July, and as I am able to be more competitive on price, the volume is slowly improving. I am confident that with the Harvest Energy price support I should be back to normal quite soon.The branding is fresh and bright and customers seem to like it. At the moment while prices are going down it’s hard to keep up with Shell. But once the price is stable I’ll be only about 2ppl higher than the Shell site."