Gulf: Then & Now

Growth plans expected to refresh brand, Petrowski says

Greg Lindenberg, Editor, CSP

NEWTON, Mass. -- Gulf Oil LP CEO Joseph Petrowski has big plans for the New England oil company. Those plans recently hitched a ride on the Massachusetts Turnpike, where Gulf is rebranding 11 gas stations with the debut of its new Gulf Sunrise Gasoline & Retail Centers concept featuring the Gulf Express convenience stores.

Yesterday, Gulf senior vice president and chief marketing officer Rick Dery, the executive behind the concept, detailed that conversion process and new image for CSP Daily News. Today, Petrowski puts that deal in the larger context [image-nocss] of the company's past, present and future.

The Massachusetts Turnpike switch from Exxon to Gulf was driven first because Gulf in New England is the stronger brand name, and a brand name that will have some permanence. Our right to use the Exxon name was going to expire in 2010, which is not that far away, and there is no indication that ExxonMobil will re-license the use of that name to us beyond 2010, so we thought it prudent at this time to switch to Gulf, he told CSP Daily News. Because we don't have to pay a royalty, we're able to lower our costs on supplying gasoline to the turnpike locations. That's always a good thing. And then this was an opportunity in concert with the Turnpike to refurbish the stations.

He added, We've been in the process of reimaging Gulf, but we haven't changed the orange disk. We've got over 100 years of equity in it, but it's a question of brightening up, of freshening up the image.

Many of Gulf's marketers are now facing the challenge of developing an alternative to the traditional two-bay service station, which is becoming an endangered species. We think there is a lot of value long term in developing a brand name and developing a slate of services to deliver a convenience-store format to our customers that will make them strong competitors, less reliant on gasoline margins.

Petrowski noted the importance of having a clean image at the turnpike sites. The Massachusetts Turnpike locations are very visible marquee locations going along Route 90 from the New York state border all the way to Boston, he said. We're going to put a lot of money and a lot of effort into making those as nice a shopping experience and fueling experience as possible.

Gulf's strategy is to grow its current network of about 1,800 Gulf-branded and about 600 Exxon-branded locations to well over 2,500 and close to 3,000 stations over the next five years, Petrowski said. Not only are we going to grow the number of sites, but also we're hoping to have better sites.

Although the company has removed its flag from locations in specific areas or because they are not up to the standard it wants, it has also sought out tremendous operators with great locations such as Christy's Markets. In mid-July, Gulf announced that Christy's of Cape Cod LLC would begin rebranding its 15-station portfolio from CITGO to Gulf Oil this summer.

It's a lot better for our image --- more than just the number of sites, but having those sites and having a person of higher quality like Christy's give you a stamp of approval, helps the brand, said Petrowski. It was somewhat coincidental with Christy's and the Massachusetts Turnpikethe two weren't relatedbut it's a concerted effort on our part to say, 'We're going to get more sites, and the sites we're going to get are going to be excellent locations, strong businesses on the property, run by businesspeople that we know and trust. We're proud of the Christy's [deal], and there are more to come. We're working all the time to convince the better locations to come over.

Current plans for branded sites call for the company to stay from Ohio in the West to Delaware in the South, up to the Canadian border. Petrowski said there are areas in Pennsylvania, Ohio and Upstate New York where there is a lot of room for growth. There will be less growth in areas that already have a concentration of Gulf stations, such as Massachusetts and New York. But it only has 52 sites in Rhode Island; he expects that can rise, but no more than 20 to 25 locations.

The company has 73 Gulf sites in Vermont, and he hopes to grow to 100. It has 275 in Massachusetts and 265 in New Jersey, with less room for growth. For those areas, it's more about working with the facilities that you've got to pump more gasoline and have ancillary businesses on site that really carry the property and make the owner successful and make Gulf successful.

He explained some of the history of the company, from what was once the fifth-largest U.S. corporation and an integrated oil company to being a brand-name licenser. Chevron bought Gulf and kept its drilling and refining and kept the downstream assets west of the Mississippi and in the Upper Midwest. It sold the southern part to BP.

Gulf had a tremendous concentration in the Southeast in the Atlanta region alone. Those all became BPs, including the terminals. The Northeast portion, including the brand name, is what we purchased, so Gulf today --- we're a substantial corporation with $6 billion in sales, but we are regionally limited and not vertically integrated.

He added, We're not the same Gulf from 1985. Do we hope some day to grow to those levels? That would be unrealistic, but I think we have a considerable amount of growth, and we have expanded our operations on an unbranded basis.

He said the company is now in Maryland, and soon will be in the Carolinas. So we'll have product and supply and possibly terminals down into the Southeast, which is our next target area of expansion, he said. But we are not owners of the brand name in that Southeast region, so today we could not market under the Gulf brand name; we would use our unbranded Great Island Energy or lease or distribute under a competitor's brand name.

Gulf Oil --- owned by the Haseotes family, which also separately owns the Cumberland Farms chain (one of Gulf's biggest customers) --- is a totally downstream company that distributes motor fuels through a network of more than 2,400 branded stations, 12 proprietary oil terminals and a network of more than 50 other supply terminals.

Click here to read Dery's interview in CSP Daily News.