Shell makes huge gains as Kenol loses ground

Oil marketer Vivo Energy, branded in Kenya as Shell, has continued to chip away at rival KenolKobil’s market share while closing in on the leader Total Kenya.

Data for the first three months up to March shows that Total Kenya maintained pole market share position controlling 21.7 per cent of the sector, a 0.7 per cent improvement from the first quarter of last year.

The Petroleum Institute of East Africa (PIEA) data shows that Vivo, which distributes and markets Shell-branded fuels and lubricants, was ranked second with 18.9 per cent share, a growth of 4.4 percentage points compared to 14.5 per cent posted during a similar period last year.

KenolKobil — which was in 2011 the leading marketer in the country — recorded a drop of 3.6 percentage points to end quarter one at the third position with 13.9 per cent market share.

“The investments we have made in building the brand and proactively improving the quality of our products are bearing fruit in the form of increased sales and hence market share,” said Ezan Djan Pierre, the finance manager at Vivo Energy in a telephone interview.

Vivo’s market share gain of 4.4 percentage points was the highest of the top 10 oil marketers.

Engen, which was ranked seventh, also had a notable growth, gaining 1.6 percentage points to close the first quarter of the year with a 3.6 per cent market share, edging up from 10th on the table.

Vivo first achieved the runners up position in the full year to December when it posted a 17.2 per cent market share, relegating KenolKobil to third position with 13.8 per cent.

Total Kenya was at pole position with 21.4 per cent.

For Total Kenya and Vivo, this performance was similar to that of the previous year, but for KenolKobil, it represented a sharp drop from 20.8 per cent in just one year.

KenolKobil, which raced to the top of the pile partly driven by discount pricing, has seen fortunes change in the past three years impacted heavily by changes in managerial and State policies.

READ: KenolKobil H1 profit jumps to Sh531m on cost-cutting

The government in June last year suspended Kenol from buying products either through the Open Tender System or through the Kenya Pipeline Refineries (KPRL), while the management made a decision to exit certain “low-margin” businesses.

The oil marketer’s sales subsequently suffered in the interim period as it struggled to source supplies from rival oil marketers to fulfill orders, a setback that it seems not to have recovered from.

To grow its 2014 half-year net profit to Sh531.1 million from Sh147.3 million the year before, KenolKobil resorted to asset sales and aggressive cost-cutting to make up for sales that reduced by a third to Sh43.1 billion.

With KenolKobil seemingly backpedalling, Vivo is now turning its sights on Total Kenya which, despite having maintained top position, has recorded marginal share growth. Vivo, which has a storage capacity of 85,200 cubic metres and 132 retail stations across the country, is expanding.

“We have opened a total of 25 outlets across the country in the past one and a half years and several more are planned to be opened before the end of this year,” said Mr Pierre.

Vivo entered the Kenyan market in November 2012 after Shell sold 80 per cent of its downstream assets in 14 African countries including Kenya and Uganda for about $1 billion.

Vivo is part-owned by Swiss company Vitol Oil and London-based PE firm Helios Investment Fund, each with a 40 per cent holding, while Shell holds the remainder.