Need To Know


Private label motor oils will continue to be one of the leading issues major oil companies wrestle with, while others in the lubricants business see them as opportunities. They continue to chip away at the market share of the big motor oil brands and are gaining momentum in the process. Further, in a market where quality is often simply defined by meeting or exceeding an American Petroleum Institute oil specification, it can be a challenge to explain why a high-profile, marquee brand costs more than a private label product, particularly when the private label is owned by a well-known and trusted supplier.

Many retail chains, including big box stores, auto parts stores and convenience stores, fit this bill and carry API-licensed products with private label brand names to which they own the rights (See my October 2018 column.) When taken together, there are nearly 40 retailers with products directly licensed by API and close to the same number with their own brands who have licenses through an independent lubricant manufacturer. Expanding on this, there is a smattering of retailers with unlicensed private label products.

Adding to concerns some have about private label and the opportunities others see is the growing number of lubricant distributors with their own brand of API-licensed motor oils. The significance of this issue becomes clear when one looks at the makeup of the population of the 275 motor oil companies in the United States with API licenses. Although the lines defining the differences between classes of trade are somewhat blurred, close to 30 percent are lubricant distributors, lubricant and fuel distributors or pure-play marketing companies with limited or no direct distribution assets.

And the number of such API-licensed suppliers is growing. To illustrate this, consider that over a dozen lubricant distributors have licensed products within the past three years. The number of recently licensed products in this class of trade is even higher when counting private label products licensed to distributors and marketers under the umbrella of independent lubricant manufacturers.

In addition to the inroads private label has made in the retail market, its also important to note that lubricant distributors and marketers are also chipping away at major market share in the commercial automotive and industrial market segments. And beyond that, Walmart and a few other retailers also offer commercial and industrial lubricants in an assortment of package sizes, including drums and totes.

So, there is little doubt that private label lubricants are a hot topic. But where there is doubt is when claims are made that the major brands are dying or dead, in the words of what might be considered a few overly exuberant purveyors of private label.

Private label will continue to rattle the cages of the majors and grow, but it is important to consider that the major brands are also effectively private label products that were born decades ago. They had to slog it out for many years on product, price, promotion and place (the four Ps) to capture major market share and earn the honor of being named a major brand, and not all major oil companies have. Whereas technology (e-commerce) requires adjustments to the four Ps and some thinking outside of the box, todays private label brands will require a similar and sustained effort to rise to the level of a major brand. There will be competitive responses along the way, and some could be unexpected.

Oil majors can make major price adjustments to compete with the new generation of share-hungry private label lubricants, but with few exceptions, they are not. Instead, they appear to be maintaining pricing distances and focusing on their target market of buyers who place higher value on brand than price and link quality to brand, service and support.

At the same time, they may be weighing the costs and benefits, as well as strategies and tactics, to compete in the private label space at this time or any other, by assessing if the trends will continue or top out and by looking at the leaders and laggards in private label. You can be sure there will be winners and losers. The number of private label brands in the business will reach a plateau and likely even retreat as some succumb to financial anemia and wither away.

That may be the time when majors make more definitive and possibly unexpected moves to address the private label competition. They could do so by forming unique partnerships with or acquiring the big winners. And among the winners, some appear to be those building companies that are starting to look like the majors used to. They market fuels, lubricants and other petrochemical products; own and operate convenience stores; and in some cases have refining, blending, warehouse and distribution assets, and nationally recognized brands.

With that, maybe the majors will someday be back in the business of manufacturing, marketing and owning or controlling distribution of lubricants. If not, while the major brands, by definition,will always enjoy the largest share of the market, the names of the major players in the lubricants business could very well change over time, as could ownership of some of the major brands now in the market.

Tom Glenn is president of the consulting firm Petro­leum Trends International, the Petroleum Quality Institute of America, and Jobbers World newsletter. Phone: (732) 494-0405. Email:

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