Lube Quality Rising in Myanmar


Myanmars consumption of medium- and high-grade lubricants has risen steadily the past five years and now accounts for 40 percent of the nations overall lube demand, according to a new report by consulting firm Solidiance.

The Singapore firm predicted that the trend will continue but added that foreign firms are rushing to supply that demand and are creating stiff competition.

International and Asian brands which target medium- to high-end car lubricants are entering the market, creating fiercer competition in the segments, Solidiance Associate Partner Mickael Feige told Lube Report Asia.

The firms findings followed from a September report, Winning Myanmars Automotive Lubricant Market, which states that before 2010, 90 percent of the lubes consumed in Myanmar were low grade. By last year, medium- and high-grade lubricants accounted for 35 percent and 5 percent, respectively.

The market was dominated by products from low-end grades [before 2010, but] the demand for high-end lubes has been expanding due to the expected increase in demand for new car models, the report stated. This has prompted key international players to pay more attention to the high-end lube segment. They are seeking to increase usage of synthetic type oil.

For example, Feige said, Last year Shell partnered with the Thai consumer products marketing and distribution company DKSH to distribute exclusively, and Spanish lubricant company Cepsa partnered with big service centers for commercial cars. DKSH is also responsible for the distribution of Shells premium lubricant products market in Thailand.

Feige added that prices of low-end lubricants are about U.S. $2 per liter, while prices for mid- to upper-range lubricants vary from around $8 to $14 per liter. Automotive engine oils represent about 75 percent of total lubricant consumption in Myanmar, followed by gear oils.

According to Myanmars Ministry of Commerce, there are currently 209 registered international and local lubricant brands in the country. For local brands, lubricants are imported in bulk and repackaged and rebranded under their own name and are generally categorized as low-end lubricants, Feige said. It is estimated that around 50-plus brands are currently active and have ongoing marketing activities.

He said examples of local brands include Ninja, Alpha and LuckyBell and almost all brands are imported, and there is only one blending plant, for the brand Cosmic. Cosmic is owned by Hin Hin Management and Holdings Private Limited, a Singapore-based oil and lubricants company and authorized distributor for Esso lubricants in Indonesia.

According to the report, the end of international sanctions against Myanmar and regulatory changes allowed the number of auto imports to increase by 8 percent last year. Solidiance also cited increases in purchasing power and international loans for infrastructure modernization as positively affecting sales of two-wheelers and commercial vehicles. All of this has driven up lubricant consumption, the firm said.

However, consumers have a tendency to base their decisions on price and incentives when purchasing lubricants, the report said. It added that sellers such as car workshops and retail shops are highly influential on consumers decisions because end-users are lacking in awareness about lubricants.

While Myanmars lubricant market remains attractive, Solidiances survey noted that many lubricant producers are trying to resolve copyrights regulations. There are definitely black market issues, Feige said. For example, one popular brand, Trane from Thailand, can be easily imported from the Thai-Myanmar border. But increasingly, Myanmar customs officials are trying to control illegal imports and ramping up checking at border points, so that flow is expected to decrease in the medium to long term, said Feige.

Myanmar is plagued by parallel imports, so if a global brand has gained market share, there are other importers who try to import that brand. For example, Caltex is imported by at least three distributors here, he added.

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