Consumers are always on the hunt for the cheapest gas around, but so are independent gas station owners. The lower the owners’ cost, the better margin they can make and the more competitive they can be in the marketplace.

When selecting fuel, a gas station owner must make the important choice between partnering with a brand or going the unbranded fuel route. Branded fuel is more expensive but comes with brand recognition and trust that can draw customers in. Unbranded fuel tends to be cheaper, and it could be the right option if you have confidence in your own brand and fuel supplier.

MAJOR OIL COMPANIES AND BRANDED FUEL

Many consumers can recognize the ‘major’ players in the oil industry. Exxon Mobil, Shell, BP Amoco, Marathon and others are vertically integrated and operate in all three sectors of the industry. Upstream is the crude oil exploration and production, midstream consists of the transportation and storage of the product, and downstream is the refining and retail distribution of this newly refined product.

Things get blurry when you drive past a gas station with the name and logo of one of these brands. There’s a good chance it’s owned and operated by an independent person who just partners with the brand in exchange for exclusively selling their brand of fuel. Some major oil companies are getting back into owning their own retail sites, but for the most part, these are small business owners benefiting from selling branded fuel.

The increased consumer recognition comes with a price for the station owner, and not just in the form of compliance with strict brand standards, long supply contracts and little flexibility with product supply points. The biggest consideration is the ongoing cost of the gasoline, which can reach 7 to 10 cents higher per gallon than unbranded sources.

DO C-STORE CHAINS USE BRANDED FUEL?

There’s another kind of c-store you’ll see when traveling: the major chains. These aren’t branded with an oil company but operate as their own identities, like Kwik Trip, Holiday and Casey’s in the Midwest. The large chains have 500 to 1,000 stores or more, so they have direct supply agreements with the refiners in their regions. They also have advanced in-store offerings, like hot food and specialty coffees and a lot of marketing behind them.

A major retail chain will also spend big bucks on retail media, as they look for solutions to help them unlock the value of shopper data, to get the most out of the impulse snacker or fuel buyer. Retail media encompasses in-store advertising, online ads, sampling, loyalty cards and phone apps. This media will further widen the divide between the big fish and the smaller ones who can’t afford that sophisticated marketing approach.

IS ALL GAS THE SAME?

Because of the nature of the shipment of gasoline on a pipeline, it is a fungible product. If it meets specifications, such as 87 octane, then it is interchangeable with any other 87-octane gasoline.

Then why does a retailer of a branded gas station pay more for their fuel? It’s because proprietary additives and detergents are blended in at the terminal to differentiate the product. Major brands can market the benefits of their ‘blend’ to the consumers and their particular engines and fuel systems.

You’d think the government would step in and ensure that all the gasoline you put in your car is up to par and won’t hurt your engine. Don’t worry; they do. All gas meets federal and state regulations, which set a baseline for the minimum level of additives that need to be present. The brands just developed their own blends that exceed the baseline.

THE CASE FOR UNBRANDED FUEL

If all gasoline on the market complies with government standards, and a c-store owner doesn’t feel like the extra advertising and promotion of a major brand is worth the extra fuel cost, there is the option of going unbranded.

For example, Pam’s Corner Convenience in Rushford, MN, recently decided that saving money day in and day out was a better business decision than having a nationally recognized brand on her pricer or canopy. The long-time owner, Pam Brand, knows her clientele in the sleepy town of 1,800 people, in most cases by name.

A close, personal relationship with her customers is far more valuable than brand recognition. Her customers already trust her and her business, so there’s no need to rely on the trust and additional cost of a big brand name to draw them in.

She identified fuel price and supply flexibility as her top two criteria when she decided to go with her own image on her c-store signage. The decades-long relationship with Venture Fuels gives her the peace of mind that she’ll get the lowest-price gas for her customers, whether it’s from a terminal down the road or 200 miles away.

CAN UNBRANDED FUEL BE RIGHT FOR YOU?

Every business and situation is different, and it’s wise for any c-store owner to carefully consider the options in their area. Analyzing local competition and having a clear understanding of branded requirements and programs is essential for success. If you have confidence in your fuel wholesaler and don’t need to rely on the national advertising or promotion of a major brand, there are unbranded options to explore.

Contact Venture Fuels to learn more about our branded and unbranded fuel options and discover the best choice for your operation.