According to a number of Valvoline marketers JobbersWorld has spoken with, Valvoline advised them early last week that it has decided to terminate the repackaging agreements it has with its marketers. The terminations go into effect October 1, 2009.

Technically, what this means is that Valvoline will no longer authorize the use of its trade name and trademarks for the purpose of repackaging lubricants by distributors. Repackaging typically involves (but is not limited to) filling 55-gal drums from bulk. In addition to the technical meaning, however, some of its distributors say there will be a very significant practical impact to their business from Valvoline's termination of repackaging agreements. Not the least of which will be a high probability it will drive up the distributor's costs by increasing the cost of Valvoline in drums (since they can now only sell factory-filled drums). In addition, it will likely drive up the distributor's cost by reducing inventory turns, requiring more warehouse floor space, and leaving some dedicated marketers with unused capacity in tanks purchased and/or isolated specifically for Valvoline products in bulk.

Interestingly, marketers say they remain unsure why Valvoline made this decision. In fact, some say they were blindsided by it. At the same time, others suspect the reasoning behind the move is about product integrity and an effort by Valvoline to reduce the probability that something other than its product is in the drum when it says Valvoline on it.

Whatever the case, whatever the cause, or the outcome, this is a significant change in how one major does business in the US market. It will be interesting to see if this drives up, or down demand for Valvoline lubricants. Additionally, it will be interesting to see how others react to this change.

CAM2 International, LLC announces the launch of their Blue Blood Racing Motor Oils and Gear Oil, specifically engineered for racing engines to provide maximum horsepower and wear protection. In the world of racing, technological advances have resulted in racers seeking the edge required to win in today's competitive world. These engines require a lubricant that can withstand extreme load conditions, such as CAM2's Blue Blood product line.

CAM2's racing heritage dates back to 1966. Its award-winning 20W-50 formula was developed as a three-way venture among Sunoco, General Motors and Penske racing. Using CAM2 racing motor oils, race teams competed and won in Trans Am, Can Am, CART Championship (Indy Cars) and NASCAR. Penske Racing, using CAM2 oils, won three times at Indy with racing legends Rick Mears and Bobby Unser.

Bill Strock, Director of Motorsports at CAM2 said, "We have continued that winning streak by delivering even greater levels of performance with the launch of our Blue Blood Racing Motor Oils. Featuring the highest quality base stocks and advanced additive technology, these oils are formulated to provide the highest levels of protection for today's racing engines."

According to CAM2, Blue Blood Racing Motor Oils deliver:

• High zinc levels for superior anti-wear protection
• Top-of-the-line shear stable VI improvers, for stay-in-grade performance
• Improved oxidation stability in high-performance engines
• Maximum horsepower production

CAM2 Blue Blood Racing Motor Oils are available in three multi-viscosity grades and SAE 70.

As with Warren and Smitty's, Cam2 announced a price increase last week in the area of $0.40 a gallon. This increase takes effect on July 24th for bulk, and August 1, 2009 for packaged product.

Also... Advanced Lubrication Specialties (ALS), a leading blender in the North East, advised it's customers of a $0.40 a gallon increase on finished lubricants effective August 3, 2009. This is an across the board increase on all products and container sizes.

A number of interesting questions are now being asked in the lubricants business. The first is about the recent round of price increases among several of the nations leading independent lubricant manufactures. The question is, WHY? Why are they increasing prices when demand for lubricants is significantly down?

To get answers, JobbbersWorld turned to its parent company; Petroleum Trends International (PTI), the leading market research and consulting company in the lubricants space. According to PTI, there are two reasons why independents lubricant manufactures recently increased prices.

The first, PTI says, is not particularly mysterious or hard to get your arms around. In fact, it's simply about costs. Thomas Glenn, President of PTI notes, "Base oil prices have increased from $0.50 to $0.75 a gallon in just the past 30 days." And when you consider base oil accounts for roughly "90% of the volume in a PCEO and HDEO (including carrier/diluent oil used in additives), it's not hard to understand why independent lubricant manufactures had to either increase prices, or significantly compress their margins. Interestingly, Glenn notes, "it appears although they increased prices, they also took a hit on margins this time around." Because Glenn says, "Whereas the price of base oils increased $0.50 to $0.75 a gallon, the price increases pushed through on finished lubricants were almost all in the area of $0.40 a gallon." And if you think this suggests independents had fat in their margins that could easily be trimmed, Glenn says, "Think Again, because many independent lubricant manufactures work on paper thin margins and can ill afford to give away a few cents on a gallon, let alone,10 to 15 cents."

But the second reason Glenn says prices increased is because, "although overall demand is down, demand for private label (products produced primarily by independents), is up." In fact, private label continues to be one of the fastest (if not, arguably the only) growing segments in the business. And when asked why, Glenn says, "it's once again all about cost, but this time, not the producer's cost, but the consumers cost." When the price differential between private label and major brands is as high as "2.50 to $3.00 a gallon" (as it is today), it's not hard to understand why private label is getting so much attention in these tough economic times, Glenn says. It's also not hard to understand why some independent lubricant manufactures feel they must, and can increase prices

This leaves the third, and maybe most important question now asked. Will the majors bump up the price of their finished lubricants due to their higher cost of base oil (which is captive supply), or will they try close the gap between the price of their brands and that for private label by, what some say is, leveraging their position in base oils?

Champion Brands LLC introduces a new product to their high performance lubricants line. After a long testing and development period Champion Racing XP Synthetic 75w90 hit the market in April. The product was formulated after a request from a major manufacturer of high performance rear-ends states Mike Reddick, Vice President of Champion Brands.

Champion Racing XP 75w90 is specifically built to combat the effects of shock in ring & pinions and succeeds were other synthetic gear lubricants fail because it imparts an iron sulfide barrier coating on metal surfaces that effectively prevents micro-welding caused by extreme heat and friction. This formulation demonstrates excellent lubricant film strength between spur, helical and spiral bevel gears and meets API Service Categories GL-3, GL-5, and/or MT-1. Although our synthetic gear oil was "purpose built" for competition racing it could be used in conventional or limited slip differentials and manual transmissions, adds Reddick. In addition to the new gear oil, Champion produces Racing XP Synthetic Blend 20w50 and Power Shield, which is an oil booster and engine assembly lube.

JobbersWorld is all about issues impacting lubricant distributors. You are our primary audience and you are the ones we need to hear from. What's on your mind? What issues would you like to see us tackle? And what news would you like others to know about?

• News
• Mergers and acquisitions
• Promotions
• New products
• Classified

We reach out to nearly 10,000 participants in the lubricant distribution supply chain once or twice a week (depending on what's NEWS) and we tell it like it is.

Please contact us via e-mail at tom_glenn@jobbersworld.com, or direct at 732-494-0405.

Thank you