No More Halves on Havoline


ChevronTexaco has regained sole rights to market Havoline brand lubricants in the United States, it announced Aug. 14, following the expiration of sharing rights that Shell Oil Co. gained in the wake of the Chevron-Texaco merger two years ago.

Officials at ChevronTexaco said it will now be better able to execute its strategy for a brand that ranks among the five top-selling motor oils in the United States. The company also regained sole rights to Express Lube, its chain ofoil-change centers.

Today marks a new era for the Havoline brand as it will now be managed by a single company that is totally dedicated to its success as a top oil brand in the U.S. and worldwide, said Craig Duncan, vice president of North America for ChevronTexaco Global Lubricants.

ChevronTexaco and Shell became dual marketers of Havoline as a result of Chevrons 2001 merger with Texaco. As a condition for its approval of the merger, the U.S. Federal Trade Commission required Texaco to divest its stakes in Equilon Enterprises LLC, a three-year joint venture with Shell that combined the companies U.S. lubricant businesses. Shell ended up buying Texacos share in February 2002 and, as part of the separation, shared U.S. marketing rights to Havolinefor the next 18 months.

The arrangement established an unusual situation in which twocompetitors sold two different products – ChevronTexaco reformulated its Havoline soon after divesting its Equilon stake – under the same brand. One company, presumably Shell, could benefit from promotions carried out by the other. And Shell, even as it continued selling Havoline, made it very clear that it was striving to convert as many Havoline customers as possible to its own brands – Pennzoil and Quaker State.

Shell officials could not be reached for comment for this article. ChevronTexaco officials declined to discuss what it was like to share Havoline, but industry observers said the experience must not have been enjoyable.

Any company is going to be slightly sour when someone else is making decisions about their brand, said Stephen B. Ames, of SBA Consulting LLC, in Pepper Pike, Ohio. The company that is not going to use the brand permanently – in this case Shell – cant afford to invest in it for such a short time. And you would expect them to subvert it to their other brands and thusnot give it the best exposure.No company is going to be totally satisfied having another company influencing their brand.

ChevronTexaco officials maintain the company did not back away from advertising during the interim period, even if another company stood to derive some benefit.

We certainly havent been shy about supporting the brand, said James Welchman, manager of product management and marketing for ChevronTexaco Global Lubricants. He noted, for example, that ChevronTexaco made Havoline a sponsor of the U.S. winter Olympic team in 2002. Weve been aggressive throughout about investing monies to promote it.

Still, ChevronTexaco plans to increase its promotion of Havoline now that it has sole rights in the United States. The company launched ads announcing its recovery of those rights and has ramped up cross-promotions with Express Lube and with other companies, such as Sony. Welchman said there will not be a dramatic increase immediately but that spending on radio and print ads will increase in coming months, leading up to a big campaign pegged to Havolines 100th anniversary in 2004.

Welchman said ChevronTexaco is also giving a new focus to the Havoline business.

Were changing our mindset to make it more of a marketing-led company, he said. What that means is that this is going to be a company which is increasingly nimble and flexible in terms of extracting the value of the Havoline brand. We now have our biggest brand back and we really want to capitalize on it.

Welchman did not disclose specifics about the plans to increase emphasis on marketing, but he did indicate that ChevronTexaco believes that recovering sole rights will help. He said the company will now be able to reduce confusion for the customer and rebuild confidence in purchase decisions. No longer will customers have to sort their way through multiple styles of Havoline packaging or be surprised to find that outlets no longer carry the brand.

Welchman said ChevronTexaco made the best of the interim period, using it as an opportunity for introspection in the brand. But he added that the company is glad to move on. Certainly sharing a brand is difficult for both parties.

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