Q: What is your overall view of the lubricant market
A: The lubricant market in
Nigeria has evolved over the years having experienced a steady and healthy
growth but not without its challenges. Initially, it was a market largely
dominated by the international oil companies (IOCs) such as Total, National
Oil, Agip and the African Petroleum, but the divestments in the downstream
sector of the petroleum industry paved the way for local players to make
inroads into the Nigerian lubricants market.
factor that is responsible for the increased importation of lubricants into the
market especially from Asia and Europe are the low barriers to entry which has then
put a lot of pressure on local manufacturers. As we speak, there are over 46
licensed manufacturers operating in Nigeria, some of whom are not known; and
with over 50 lubricant brands to choose from, the Nigerian customer is at risk
of buying adulterated or substandard products as he/she is not able to
guarantee the quality of the products that have been packaged.
these challenges, the industry has much potential. The industry is expected to distribute
annually about 400 million litres of lubricants. Of course, not all of
these are certified, as large volume are straight base oils that you often see
on our roadsides.
How are these issues of adulteration and counterfeiting being addressed?
A: What OVH Energy did in
2015 to address this particular issue was that it embarked on a project which
ensured it changed the look and feel of its packaging completely. This allowed
us to achieve two goals - to improve on the quality of the product and to
address the issue of counterfeiting and adulteration. From the design phase, we
made sure we included in-built security features that make it impossible for
anyone to adulterate the product. Also, our bottles have a tracking feature
that can flag any form of product tampering. We track our delivery chain
because we have registered distributors, so it is easy to follow the movement
of our bottles and it has helped us to curtail adulteration so far.
What is your expansion programme for the product like?
A: This year alone we have
installed two product filling lines in our Apapa Lubricant Plant from Adelphi
Masterfill which is the first-of-its-kind in Africa, to support the drive to
meet local demand and opportunity to export to the ECOWAS region. This
investment essentially reinforces our commitment to making our products
available to consumers in other markets and to support our growth plans.
So would it be right to say your company is working towards increasing your
market share in West African sub region?
A: Definitely. Taking a
share of the market is something we are very big on. Our strategy was very clear
following the launch of our new product packaging. It was to reposition
and grow our market share and we have seen steady growth in the last two years.
The opportunity to export to West Africa sub-region is there and we are tapping
into it. We already have a subsidiary in Togo that markets our lubricants brand
in that region and we are leveraging on this existing expertise to reach
consumers in countries along the ECOWAS corridor and we intend to go as far
as Niger and Chad.
Any reward for your loyal customers?
A: Just to show our
customers that we appreciate them, we have in the last two years made it a
point of duty to always reward them. Last year, we ran a 4-for-4
promo campaign for 3 months where we partnered with Coca-Cola and customers
enjoyed their favorite non-alcoholic beverage with lubricants purchased at our
outlets. This year we are taking it a notch higher. We have started the
Oleum ‘Awoof Scratch & Win promo’ where every buyer is a winner. This promo
runs till end of September and there will be many prizes for the winners at the
end of the promo when the raffle draw takes place.
Your market share?
A: If you look among the
major marketers, we used to have seven per cent share. This was in 2016. But in
the last two years, we have grown to about nine per cent.
What is the worth of the Nigerian lubricant market?
A: There is hardly any
verifiable data published to this effect, but if we are to estimate by the
volume sold annually and the average cost of a litre of lubricant which is
about 400 million liters and N550/ litre respectively, then we could say that
the industry is worth about N220 billion.
Do you see the potential for the country growing more than 400 million litres?
A: I don’t see that
potential right now but if the industries work at optimum capacity, then we can begin to think along that line. Many
of the factories in the country are at their sub-optimal performance. Some of
them are as low as 30 per cent capacity utilization. As they improve
their output and more industries come on stream, then we can begin to notice
movement in the numbers. If you look at the gross domestic product (GDP) of the
country, you will see that agriculture is the greatest contributor but not much
of lubricants is used in the sector because our mechanized farming level is
still very low.
if there is more movement of finished farm products and improved road network,
more produce can be harvested and moved to the cities for sale. The more the
movement, the more engine oils will then be consumed by both machinery and
passenger vehicles. Even then, some analysts have posited that the industry is
expected to grow by three per cent annually based on the yearly estimated
number of vehicles imported into the country.
What is the contribution of lubricant to your company’s bottom line?
A: Lubricants have always
been complementary to our fuels retailing business, but that focus has shifted.
With the downstream sector experiencing thinning margins, liquefied petroleum
gas (LPG) and lubricant businesses are basically the only source of reasonable
margins. Today our lubricants fetch us the highest margins on a per litre
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