Friday, October 18, 2019

Clark gas stations investing over $25 million in Puerto Rico

By on August 20, 2019

Looks to increase market share with independent retailers by year’s end

SAN JUAN — Illinois-based Clark Brands LLC and Puerto Rican distributor Bita’s Fuel Corp. announced they invested more than $25 million as part of their Puerto Rico expansion plan.

Clark’s brand marketing manager, Héctor Gierbolini, said five or six stations will be opened by independent retailers by the end of this year to further solidify the company’s presence on the island. In November, it had set out to open 10 gas stations, a number it has surpassed with 14. In addition to the negotiations that could be concluded by year’s end, he said, the company may set up in others as well.

As part of the company’s strategy to achieve a greater impact on the Puerto Rico market, Bita’s Fuel and Clark gas stations have developed an innovative support program for retailers that includes a competitive price guarantee, the highest quality gasoline, investment in the stations’ corporate image, marketing and advertising support, and the inclusion of the “On The Go” brand in station convenience stores, as well as studies, market support and data programs offered by Clark Brands, the executive explained to Caribbean Business.

“[Last week’s] announcement validates once again the commitment that Gasolineras Clark and Bita’s Fuel have with Puerto Rico, even more so now, given the scenario of uncertainty that the country’s political situation has generated for investors. The arrival of our gas stations and the investment being made in each of our service stations is focused on improving the customer experience and providing retailers additional tools to maximize their business,” Gierbolini said.

“We have had a great reputation as a distributor during our 17-year trajectory in the market. We have managed to consistently stay in the price lead for the past few years, according to data published by the Department of Consumer Affairs [DACO by its Spanish acronym] and now, under the partnership with Clark, we have positioned ourselves as the best alternative that an independent retailer has to see their business grow,” he assured.

Clark has service stations in San Juan, Bayamón, Ceiba, Juncos, Santa Isabel, Guayama, Manatí, Vega Baja, Morovis, Camuy, San Sebastián and Aguada.

The brand’s Puerto Rico market share fluctuates between 10 percent and 15 percent, but the company’s goal is to increase its participation to 20 percent, the executive said.

Clark began operating stations in Puerto Rico last year, but 10 months later, even retailers who are affiliated with other brands continue to show interest in switching to Clark.

“There is no doubt, once that independent market that no longer has a brand moves to the Clark brand, it will see 20 percent to 30 percent and possibly more in many instances. The price is linked to the brand, and obviously the independent market that has no brand has the disadvantage when the consumer asks, ‘Where does the gasoline come from?’ In our case, since it is a brand, the consumer already feels more confident.”

Gierbolini said the retailers who approach Clark should have terminated their contract with other brands, and projections are based on the growth and investment Clark would be making over the following months.

“A transaction takes 45 to 60 days to complete per station. It is not an overnight decision. It is a decision the retailer thinks about, analyzes the proposals made and compares with other proposals from other companies,” he said.

Clark Brands licenses both Clark and Crown gasoline brands and is a petroleum payment-processing solution for more than 1,000 independent petroleum marketers and retailers in 32 states and the District of Columbia.

Retail state

The fuel that Bita’s Fuel Corp. provides to Clark as a local industry distributor comes from Buckeye Caribbean Terminals LLC, Shell Trading in Yabucoa or Total Petroleum in the San Juan metropolitan area, Gierbolini told Caribbean Business.

Data from DACO’s economic studies division on gasoline wholesaler prices reveal that as of July 31, 87-octane, or “regular,” gasoline distributed by Bita’s was being sold at 67.6 cents per liter. Meanwhile, higher-octane, or “premium,” gasoline had a price of 73.94 cents a liter. Meanwhile, diesel’s price was 63.11 cents a liter.

According to DACO’s table, compared with Bita’s prices, the price for Total’s regular gas was 72.7 cents per liter, premium was priced at 82.7 cents and diesel 67.7 cents, according to the last date registered in the report, July 18. Meanwhile, for the last reported date, July 23, Sol Puerto Rico, or Shell’s, prices were the same per liter, respectively.

Therefore, when comparing the differences in the price of regular gas with Shell and Total, Bita’s is 5.1 cents less. For premium gas, the difference is 8.76 cents. In the case of diesel fuel, the difference is of 4.59 cents.

As for the general market, data on gasoline consumption in Puerto Rico from the latest Economic Activity Index (EAI) shows that 73.9 million gallons were purchased in June, according to the table prepared by the Economic Development Bank for Puerto Rico. This figure represents a 15.5 million-gallon drop compared with the same month last year, when consumption reached 89.4 million gallons.

However, according to the EAI, the average monthly retail price per gallon in June this year was $2.92, or 12 cents lower than in June 2018, when a gallon cost $3.04.


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