With this IR News Letter, we are honored by the esteemed Mr. Chokchai Atsawarangsalit, Executive Vice President, Marketing Business and Oil Terminal of Bangchak Corporation PLC. Here to give us an overview of the retail business, market shares, and BCP’s strategy, including current competition in the retail business.
Q: What is the nature of competition in this business and what is Bangchak’s market share rank?
A: For the overview picture of sales volume in gas service stations in this year, the market did not grow as much as the year before. In 2016, the market grew 10% while first nine months of this year sale volume grows only 3%. The underwhelming growth was mainly attributed to the increase in oil price. For example, the diesel retail price in gas station increases more than 5 Baht per liter from the beginning of this year and group of gasoline increases more than 3 Baht per liter. It causes car usage to decline. In terms of competition, big oil companies have been rigorously investing in the expansion of service stations in totaling of over 350 stations, an increase of 6%. It means that the percentage of the increment in new gas station is higher than that of increment in demand volume. It affects sales volume of the existing gas stations. Moreover, the intensifying competition in oil retail business, leads to more marketing investment and advertising budget, in order for the oil companies to gain market shares. For Bangchak, our market share increased from 15% to 15.3% (from January to September 2017), and remains the 2nd rank in retail sales market shares, despite in high competition, while almost all of other companies in the major oil group records a decrease in market share.
Q: What is Bangchak’s current service station expansion strategy and the strategy for the next 5 years ?
A: For Bangchak’s 5-year long term plan until 2022, we plan to increase the number of standard service stations by 340, excluding cooperative stations; which on average there will be 15 to 20 new cooperative stations opening each year. As such, the overall plan is to open about 400 new service stations in total. For this year, we expect to open about new 70 stations. In terms of location, BCP focus on North and Northeast area, which we currently have a relatively few service stations comparing to other oil companies, in order to expand our coverage on retail networks. Preparations have been made for new location along the main highways, including the Motorway and routes that are associated with AEC and EEC.
Investments for the new service stations will place greater emphasis on joint ventures and dealers investment at 70% compares to 30% for Company’s own investments. BCP also has a plan to expand number of gas stations in neighbor countries. Now, there are 2 gas stations in Myanmar.
Q: What is Bangchak’s strategy for increasing thruput per station?
A: Greenovative Experirence is a strategy which we use to increase our sales volume. It will create a new customer experience by focusing at innovation and digital technology to impress customers in Bangchak’s value.
Bangchak has been developing continuously in our fuel products quality to support new future engine standards and being a clean fuel, and also be environmental friendly. BCP has Green S Revolution products for new DIG system engine and Hi Premium Diesel for diesel vehicles.
In term of service stations, Bangchak improves BCP gas station image for a new, modern, convenient and comfortable looking. Bangchak applies technology and equipment to save energy consumption in gas station, such as using solar cells in our stations and SPAR convenient stores, to have our customers experiencing clean energy consumption.
For additional business in gas station, Bangchak still continues developing for customer’s different needs, we have Inthanin coffee shops, SPAR convenient stores, restaurants, and other various supporting businesses from our business partners, including COZXY BOX, the post box service with THAIPOST. Post box service can respond new generation lifestyle people who focus on convenience, as it provides a 24-hours service for ordering, sending or receiving products at BCP gas station,.
Moreover, Bangchak also gives priority to service by using 3-S principle. First S is Standard which Bangchak intends to provide same standard level of service in every gas station. The second S is speed, which BCP employees must be alert and be enthusiastic in providing services. Now Bangchak has “3 Minute Service” which is fast service program in more than 100 stations in city areas. The last S is smile. It is what Bangchak try to provide service with service mind and smile to customers.
Finally, Bangchak doesn’t forget about BCP value, which Bangchak will sustainably grow together with Thai society, by supporting Thai community products. Bangchak gives space areas in SPAR to sell and promote those products as a special promotion gifts in each period of the year. Bangchak does it continually, including CSR activities with foundations and public organizations via Bangchak Gasohol club member card and diesel club card. Bangchak and BCP’s customers have a chance to do activities for social together to send good impression to person who comes to use service in our gas station.
Q: Does BCP have any collaboration project with its Dealers to improve service station image and essentially, increasing sales volume?
A: Bangchak gives priority to both of gas station image and dealer development program. On the image development, Bangchak offers Refresh and Renovate Program to do together with our dealers. This joint effort will see to the rejuvenation of the service station image and each location cleanliness, and has similar standards between all service stations.
Bangchak always have a development program for dealer to push entrepreneur to exchange knowledge and management experience with sales team. This way we can push sale volume per station to grow sustainably. The example is the Triple M program, which organized with Faculty of Commerce and Accountancy, Thammasat University. Bangchak has a training course on fuel control which is licensed by the Energy Department for safety training to BCP’s dealers.
From long 25 years’ business between Bangchak and dealers, many dealers are in process of transferingt business to their next generation. So Bangchak started a course to provide basic management knowledge for next generation people. This program is in development process with the professionals.
Q: Can you talk about the new products from BCP such as the Hi Premium Diesel S that has just debuted, what kind of feedback Bangchak has received, and what product the market can expect in the near future from BCP?
The recently launched Hi Premium Diesel in May, it is a high premium grade diesel which has a high Cetene value at 70. It contributes to increase acceleration for the engine and help cleaning the nozzle better than 70%. Moreover, Hi Premium Diesel product is qualified by EURO 5 standard which has very low sulfur, less than 10 ppm. Low sulfur helps to protect environment. There were approximately 70 locations which has a Hi Premium Diesel product in opening period, however the number has gone up to 140 locations to cover more areas. Sales volume is 2.5 million liters per month whereas in the beginning sales was 1 million liters per month. It has received good feedbacks. Hi Premium Diesel is another choice to use high premium quality of Diesel for customers. In addition, Bangchak corporates with MANOR team to develop premium grade engine oil, named FURIO. MANOR is a world racing team in FIA World Endurance Championship (WEC). FURIO is designed for consumers who want a high grade product, product what helps to protect engine and support to new technology engine. FURIO will be official launched in the beginning of 2018.