After the companys U.S. business merged with Standard Oil and was rebranded as Chevron in the 1980s, Gulf Oil International (as it is known outside the U.S., Spain, and Portugal) was purchased by the Hinduja Group, a family-owned conglomerate based in India. Gulf has since narrowed its focus to lubricants, which brought in 68 percent of its total revenue in 2011 and 85 percent of its Rupees 1,075.76 crores (136.8 billion) of total revenue in 2012. The name and the orange disc logo survived substantial shake-ups and buy-outs, and now – over 100 years after it was established – Gulf is one of the most recognizable brands in the global oil industry.

The brand is currently present in 112 countries and counting, including 1,218 seaports. Earlier this year, the company began grease production in the United Arab Emirates, reached full production capacity at its 6,000 metric tons per year base oil blending plant in Argentina and completed a $1 billion acquisition of what it claims is the worlds top metalworking fluids company, Houghton International. Officials say the company continues to look for additional opportunities to grow organically and to make acquisitions.

How does Gulf continue to grow its vast global footprint while leveraging its promise of consistent quality within local and sometimes niche markets? The answer lies in one word, according to Gulfs international vice president Frank Rutten: Flexibility.

Responding to the Market

Gulf has edged its way onto the list of top ten global lubricants suppliers, and Rutten says flexibility is what sets it apart from the other nine. All the larger oil companies have a menu from which customers all across the globe must choose, Rutten told LubesnGreases. But we start from the other end. We ask what the customs are within individual geographies, and we find out how to respond to whatever local needs the customer rightfully expects within that environment.

For example, In countries like India, the roads are different, the quality of the fuel is different, and the engines are different. So what is normal in Europe can be exceptional in India, Rutten said, adding that the opportunity to enter a developing market before it is completely mature is very attractive to Gulf.

However, a higher sales volume in an emerging market isnt necessarily Gulfs main focus. Instead, Gulf targets lubricant technologies that are most logical for a specific market and then works with additive companies to develop a value proposition that differentiates its products from the rest, Rutten said. First, in every market, I think that customer value creation lies in helping the market get a better-quality lubricant. The Indian market is a great example where the industry average is the lowest-quality lubricant. We see this as an opportunity to penetrate such a market and offer higher quality. If you provide a product thats of a higher value to the customer, then its fair to say that you can also ask a higher price.

And higher value is different around the world, Rutten noted. For example, in countries such as the Philippines and Indonesia, end-users typically have their oil changed once every few months. For those markets, we have an engine oil with a 10,000-kilometer service interval. He described the value to consumers as the convenience of a technology they can rely on for a much longer period versus the inconvenience doing an oil change.

In contrast, Rutten continued, cross-national routes in the trucking market within India and China are of utmost importance. There, we offer a product with a 40,000-km service interval. In Germany, a focus on longer service intervals wouldnt work. So, were not imposing restrictions on such a market to use the same marketing approach and to offer them same global technology. Instead, we offer the best product possible by responding to the characteristics and the needs of local markets.

It goes without saying that catering to local and sometimes niche markets requires more research, more insight, more varied strategies on route-to-market approach, and of course, additional expenditures. But Rutten, who joined Gulf after 26 years working for majors such as Shell and Lukoil, said those factors dont stop Gulf from focusing on flexibility at all costs. If the others in the top ten want to optimize the integrated structure from an upstream to downstream market by becoming rigid and non-responsive to customer needs, thats fine. We will then respond by being more flexible, more creative and more responsive to those needs.

Rutten went on to pinpoint regional needs as specific as packaging size. You can have intense discussions about whether you supply a four- or five-liter bottle for an oil change. The size of the container can make a big difference. I think we have about five times more packaging sizes than most of our international competitors, simply because we want to reflect whats being asked of us within different markets.

Breaking into Latin America

Penetrating emerging markets comes with plenty of challenges and risks, and Gulf faces many of those business perils in Latin America. But the company is keen on the strong potential for growth throughout Central and South America, Rutten insists, despite the fragmentation across markets. An integrated approach with two or three production facilities across several Latin American countries comes with many more trade obstacles and regulations than [in] Europe, the U.S., or Asia, Rutten said.

Another issue, he continued, is that some of the regions currencies are weak, while others are relatively strong. Its almost a technical fragmentation that exposes us to the risk of possible devaluation in investment due to exchange rates, he said. And thats a very real issue.

Even so, Gulf puts a lot of hope in its Argentina blending plant. The facility is positioned just off the Acceso Oeste highway outside Buenos Aries to provide direct routes to the other four Mercosur member countries – Brazil, Paraguay, Uruguay and Venezuela.

Gulf expects to maintain a production capacity of 9,600 tons per year of finished lubricants for the next three years in Argentina, with the goal of reaching 15,000 t/y in five years. If that volume is reached, Gulf officials figure the plant will allow the company to hold 5 percent of the nations lube market, which is currently around 300,000 tons per year.

Its definitely a more challenging business climate in Argentina, and not a day goes by that we dont sit down and have a brief conversation about the impact of the exchange rate, Rutten said. How-ever, he claims that Gulf succeeds by not speculating on fluctuating raw material costs and currency values. Instead, we leave that to our internally-sourced experts, and we focus on steadily producing the best quality product for the markets demands.

Products supplied to the Argentine market include semi-synthetic 10W-40 Gulf Tec and Gulf Pride 4T for motorbikes, along with top-tier synthetics in the near future.

Growth Strategies

While Gulfs typical growth strategy is to make slow and steady inroads into local markets by focusing on regional demands, the company also relies on bold moves and wide, sweeping takeovers. That is how Gulf positioned itself for instant access to the international customer base of one of the worlds dominant metalworking fluids companies, Houghton International.

In December 2012, Gulf completed a $1 billion acquisition of the industrial fluids manufacturer, which it now operates as a separate company. There was virtually no overlap between the two companies portfolios, Rutten said, so the link was a synergetic match.

Houghtons customers are serviced with the best industrial and automotive metalworking fluid quality…in the market. Obviously, for those customers to get other lubricants from the same company is a very logical approach. He explained that Houghton has an excellent presence outside the U.S., and its international customers typically need products that Gulfs other divisions provide.

Rutten cited the marine lubricants market as one where Gulfs business is growing, claiming almost exponential growth despite a period of distress in the shipping industry, noting that ships often operate at a loss due to increased operating expenses and restrictive legislation. Its been a rough time in the international shipping market, and the rates are lower than theyve ever been. If you dont earn as much money running the ships, then you have to try to cut costs everywhere else.

One of Gulf Oil Marines growth strategies is to strengthen its relationships with local blenders. Weve made fundamental changes to our business model in Singapore – by far the worlds largest marine lubricants supply point, said Keith Mullin, head of Gulf Oil Marine. Mullin, who is based in Hong Kong, said Were now much more of a partner than a customer with our blender in Singapore, and were looking to replicate this [model at] other key supply points.

Gulf Oil Marines value proposition is being recognized, Rutten said, because after recently celebrating its five-year anniversary, Gulf Oil Marine products are now in over 1,000 ports worldwide.

Concerning organic growth, Rutten said that geographically, Gulf is looking east toward China for additional opportunities. China is, of course, seriously exciting – such a big market and such a big opportunity for growth. Gulf has focused on the north of China, where its existing presence includes an office and lube oil blending plant, in Yantai, in Shandong province.

It is a natural inclination to look at the area around Yantai for growth, Rutten noted. However, we are now rapidly looking into China [nationally] to make sure we have complete coverage and that we grow rapidly there. If it means we have to consider investment, we would definitely consider investment. The first step is to make sure we have national coverage, that we have the right route to market, and that we have the right customer value proposition to grow dramatically in China.

Some Struggles Remain

Despite its successes, Gulf is still struggling for a foothold in in some arenas. Two examples where its business is yet to fully flourish are oils for the two-wheel market and grease.

Grease is a proposition that fits very well with Gulf, because it can be a very complex portfolio with sometimes demanding customers, Rutten said. But, at the moment, we are underrepresented in the grease market. If you look at the total global demand or the demand per sector, typically 3 percent [of] lubricants demand should be grease. And we sell less than 3 percent of our typical lubricants volume as grease, [and because of that], we know that someone else is selling grease to Gulf customers.

Gulf opened a 10,800 metric t/y grease plant in Ras Al-Khaimah, U.A.E. earlier this year, which the company says will open doors to automotive and industrial markets in the Middle East, North Africa, Pakistan and Eastern Europe. Gulf hopes that in conjunction with its existing grease manufacturing facility in Saudi Arabia, this plant will help position it to provide its lubricants customers with grease as well.

At the end of the day, it is convenient for a customer to get all the products from the same supplier. So we do the customers a favor by not sending them to another grease supplier. And it increases our market share, so it makes both sides happy.

Gulf is staying focused on growing in the grease sector. Rutten said that if Gulf is to continue growing, another grease facility will likely be added.