Shell opens up market share lead over rivals

Vivo Energy —the retailer of Shell-branded fuel products— has widened its market share gap on rival oil majors, including Total Kenya and KenolKobil.

The latest data by industry lobby group the Petroleum Institute of East Africa (PIEA) shows that Shell increased its market share to 20 per cent in the nine months to end of September, up from 16.9 per cent in a similar period last year.

This entrenched its position as Kenya’s second-largest oil marketer, closing in on market leader Total whose market share declined to 21.1 per cent from 21.7 per cent.

The performance, which has seen Shell overtake Nairobi Securities Exchange-listed KenolKobil, has been linked to the company’s aggressive marketing and expansion of its distribution network in the country.

“The opening of more outlets has given customers more access to our brands,” said Polycarp Igathe, Vivo Energy’s chief executive.
“We are also seeing increased demand for our new products such as the Shell FuelSave.”

Shell last year opened 10 new fuel stations in major towns including Nairobi, Thika, Kiambu, Kakamega and Machakos. The oil marketer has opened another 19 fuel stations so far this year in towns like Kisii, Meru, and Embu; raising its total branch network in the country to 137.

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A wider footprint is seen as critical in driving sales of products like diesel, petroleum and kerosene to motorists and households. The bigger oil marketers having more retail outlets compared to their smaller rivals.

The absence of major price wars due to State price controls means market presence and strategic locations are key factors in winning customers who don’t have to seek bargains at various outlets.

The oil marketers’ profit margins are capped by the Energy Regulatory Commission (ERC).

Besides motor vehicle fuels, the other major market share driver is bulk sales to small independent oil and heavy consumers including emergency power producers and airlines.

A bigger market share boosts earnings through high sales volumes.

Kenol, which pulled out of unspecified “low-margin businesses,” saw its market share drop to 13.9 per cent from 14.7 per cent in the review period.

The oil marketer did not give details on the low-margin businesses it is curtailing. The retail segment enjoys less profitability compared to wholesale where sales are directed at large buyers such as emergency power producers.

KenolKobil is now ranked third in terms of market share, marking another step-down for the oil firm that for a period became the largest for the first time in 2011 after beating Total.

Oilibya also recorded market share loss at 6.1 per cent in the nine months to September, down from 8.2 per cent the year before.

State-owned National Oil Corporation (Nock) also saw its share of local sales fall to 4.7 per cent from 5.1 per cent. Smaller oil marketers were the biggest gainers including Hashi, whose share rose to 4.9 per cent from 4.3 per cent, beating Nock.

Gapco’s increased to 3.5 per cent from 2.9 per cent while Engen’s rose to 3.1 per cent from 2.8 per cent, indicating the changing market share structure in favour of Vivo and the smaller players.