Valvoline Puts the Kibosh on Repackaging |
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.
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CAM2 International, LLC Launches CAM2 Blue Blood Racing Motor Oils and Gear Oil |
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.
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More on Cam2... and something new on ALS |
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.
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Price Increases...BUT WHY??? |
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?
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New Champion Racing XP Product |
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.
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