Total, Shell and Kenol cede more market share to small dealers

What you need to know:

In the nine months ended September, Total saw its share drop to 20.4 per cent from 21.1 per cent while that of Vivo declined to 18.1 per cent from 20 per cent. Kenol’s fell slightly to 13.8 per cent from 13.9 per cent.
This opened an opportunity for smaller oil marketers to grow their market shares, with Oilibya’s rising to 6.3 per cent from 6.1 per cent while that of Gulf nearly doubled to six per cent from 3.1 per cent.

Kenya’s top-three oil marketing companies saw their combined market share in Kenya drop in the nine months ended September, benefiting smaller rivals such as Gulf and Nock.

The market share of Total, Vivo and KenolKobil stood at 52.3 per cent in the period compared to 55 per cent a year before, according to statistics from the Petroleum Institute of East Africa (PIEA).

Market leaders Total saw its share drop to 20.4 per cent from 21.1 per cent while that of Vivo declined to 18.1 per cent from 20 per cent. Kenol’s fell slightly to 13.8 per cent from 13.9 per cent.

This opened an opportunity for smaller oil marketers to grow their market shares, with Oilibya’s rising to 6.3 per cent from 6.1 per cent while that of Gulf nearly doubled to six per cent from 3.1 per cent.

State-owned National Oil Corporation (Nock) also saw its share of local petroleum sales jump to 5.7 per cent from 4.7 per cent.

While some firms are racing to extend their market share in a market where petroleum prices are controlled, others are cutting back to focus on high margin segments.

Vivo, for instance, has been the most aggressive recently with the expansion of its distribution network.

The company in 2013 opened 10 new fuel stations in major towns including Nairobi, Thika, Kiambu, Kakamega and Machakos.

The oil marketer opened about 20 fuel stations last year in towns like Kisii, Meru, and Embu, raising its total branch network in the country to 137.

READ: Total, Shell cede market share to smaller oil firms

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 have 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 had risen to edge out Total in local fuel sales, has, however, scaled back on market share growth.