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Castrol Bumps Price
Western Marketing Drops AIOD
Private Label v Big Brands
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Petroleum Quality Institute of America

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The First and Only Independent Newsletter to Focus on Lubricant Distributors.

Your needs, your concerns, your outlook. No bias, no fluff and no punches pulled. Whether it's buy backs or brand battles, allocation of co-op ads, operating costs or turf wars, Jobbers World keeps you on top of the issues that matter to YOU: The Lubricant Marketers!

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It's official - Castrol Announces Price Increase 

Castrol advised its marketers it will increase the price of Castrol lubricants in the US by up to 8%. This increase is effective March 7, 2011. Interestingly, Castrol advised its marketers that additional increases should be anticipated due to the current volatility in the market. 

 Western Marketing Drops AIOD

Rich Hasten, President of Western Marketing Inc., confirmed rumors JobbersWorld's has been hearing on the street that Western Marketing Inc (headquartered Abilene, TX), resigned its membership in the Association of Independent Oil Distributors (AIOD) effective January 1, 2011. JobbersWorld views this as a significant event in that Western Marketing was consistently one of AIOD's top buying members. For those unfamiliar with AIOD, it's a buying group that markets lubricants, filters and other automotive products under the ServicePro brand name.


In an upcoming issue of JobbersWorld, we will take a closer look at AIOD and  buying groups in general to better understand the value they bring to the table for lubricant marketers.  


Private Label vs. Big Brands

By Thomas F. Glenn

Private label lubricants have been kicking some butt over the past ten years. Whereas they quietly entered the ring appearing to be no more than welterweights wearing unimpressive ring robes in the early days, they proved to be anything but. In fact, by the end of the first few rounds of the fight, it was clear private label lubricants could be one of the most formidable contenders the majors faced.  


But how did they do it? How did these  underdogs not only go up against, but also land some solid punches in the breadbasket of such heavyweights as Pennzoil, ExxonMobil, Castrol, Valvoline and other major lubricant brands?  


Well the answer is; they used a time-tested combination of moves. The first and probably most successful was the price punch. Private label hit the majors with a continuous flurry of price undercuts. And rather than defending against these shots, most of the majors stood tall as if they were merely slaps that didn't hurt. And quite likely, during the first few rounds of the fight, they probably didn't.


But they kept coming. In fact, by the forth or fifth round they started to look more like sucker punches. The reason they did is because private label lubricants danced around the ring watching the majors punch through price increase after price increase. And each time they did, the price gap got wider and private label would step in to score another point with a stinging undercut directly to the major's price gap.  By the time the price differences between private label and the majors swelled by $2.50 to $3.00 a gallon, the brow's of the majors were starting to bleed.


Another punch thrown by private label was ironically right in the kisser of the major's brand. Rather than shying away from the fact that private label lubricants were not in the ring wearing high profile designer trunks like the majors, they made it clear, performance was not about the name embroidered on their trunks. Instead, it was about the API, SAE, and ILSAC specifications they met. And with these measures of performance, private label scored more points by landing convincing blows to show that some were just as good as the majors.


In addition to this combination of punches, unfortunately like in many fights, private label also hurt the majors by occasionally hitting below the quality belt.  Because when you compete on price, you can be sure some will cut corners on quality. And when they do, the majors have little choice but to hope the referee steps in. Only problem, for the most part, there were no referees in this fight. As a result, points were scored, and still are, even by  low blows.


So with the success private label enjoyed with its combination of punches and fancy footwork in the early rounds, they were even more emboldened in the rounds that followed.  Where once they shied away from fights with the majors, some private labels were now willing to go toe-to-toe with them. At times, it appeared they were even taunting the majors by getting in their face and making such statements as "brand is worth nothing" or "we are as just as good if not better, and much less expensive."   


With this, it was becoming clear by the mid 2000's the majors were losing rounds to private label. Moreover, the majors might need to change the way they were fighting private label if they wanted to retain their title. Only trouble is, how does a major compete with a fast and furious low priced competitor? Do they continue to stand tall hoping the muscle of their brand will overcome the competition's price, or do the rope-a-dope hoping private label will punch itself out because its margins are too thin? And if not, are they willing to run the risk of having their brands bloodied or busted up by going blow-to-blow with private label on price? Or do the majors try something different?


From what we are seeing today, it appears the latter may be the case. Rather than risking the health and wealth of their heavy weight brand leaders by entering them into a ring with light weight price fighters, the majors are now winning some rounds by fighting back with an expanded portfolio of products. Whereas this portfolio showcases the usual headliners, it now includes an increasing number of second tier and no name/unbranded price fighters on the major's card to punch it out with private label.


Interestingly too, whereas the majors often cried foul when private label hit below the belt, some of the private label fighters are saying the majors are also not fighting fair.  They argue that the majors are once again delivering low blows by increasing the price of their base oils, while standing ground on the price of their finished lubes.  In doing so, the majors have a window of opportunity to land price punches themselves while private label is a few pounds overweight.

So here we are, ring side, watching the big brands and private label slug it out.  Although it's clearly a tough fight, I for one am going out on a limb to say, some of the scrappy upstarts will put some of palookas away.  At the same time, there will be a number of dirty fighters in the private label corner that lose their license to fight and will not be seen in the ring again.

 Spectrum Acquires A/R Packaging Corporation

Spectrum Corporation and A/R Packaging Corporation are pleased to announce Spectrum's acquisition of A/R. The two companies have merged their operations effective December 15, 2010. The combined entity will continue to operate all current facilities located in Tennessee and Wisconsin.


The merger of industry leaders in the custom blending and/or packaging of lubricants, chemical & care products, fuel additives, brake fluids, coolants, industrial and various other petroleum products will provide current and new customers with unequalled products, technology, customer service, warehousing/inventory management, and distribution capabilities throughout North America and globally.


Spectrum and A/R's private equity partner, Dominus Capital, will continue to assist the combined business in achieving and implementing its growth initiatives.


Spectrum and A/R look forward to an exciting future. If your current or future needs involve formulating, blending or custom packaging of a variety of petroleum products, please contact us to explore how Spectrum and A/R can work with you to help you attain your sales and technology goals.


Posted December 21, 2010

Branded Lubricant Manufacturer/Marketer has an Opening for an experienced Lubricant Manufacturing Quality Assurance Manager

Position-Quality Assurance Manager for a Large Branded Lubricant Manufacturer/Marketer at a Third Party Lubricant Manufacturing Facility located in Eastern Pennsylvania.

An International Lubricant Manufacturing/Marketing Company is looking for a self-starting, performance-driven, technically knowledgeable individual to fill the" Manager of Quality Assurance" position at a third party toll blending Lubricant facility in Eastern Pennsylvania.

Click here for more.

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