McCALLA, Ala. -- Experts said that Sunoco's announcement yesterday of deals with Quality Petroleum of Alabama and Chattahoochee Oil, which will bring 13 newly branded Sunoco sites in the Birmingham, Ala., market into the oil company's network through the rebranding of several BP locations, could be a sign that BP's competitors are taking advantage of a chink in that company's armor after last summer's oil spill in the Gulf of Mexico.
Bob Robicheaux, retail and marketing professor at the University of Alabama at Birmingham University of Alabama at Birmingham, Ala., told The [image-nocss] Birmingham Business Journal that BP is facing a competitive challenge in Alabama, Louisiana and Florida right now, where many consumers have elected not to do business with it in connection with last summer's spill. And that can open the door for new companies to enter the market and help drive down prices, Robicheaux said.
Sunoco, with its reputable brand, will make for a formidable competitor in the Alabama market, he said. "The one force that keeps prices in check is competition," Robicheaux said. "Where competition intensifies, prices fall and companies are forced to operate more efficiently."
As reported in a Morgan Keegan/CSP Daily News Flash yesterday, Sunoco announced Tuesday that it has added 13 new Sunoco-branded sites located in the Birmingham, Ala., market and result from agreements reached with Quality Petroleum and Chattahoochee Oil.
The 13 sites complement more than 250 new retail locations that Sunoco has added to its network of more than 4,900 retail locations since the beginning of 2010. Sunoco has made significant progress in growing its presence in the Southeast in recent years with large expansions in Florida, Georgia, Kentucky, North Carolina, South Carolina and Virginia.
Sunoco has also grown its company-operated business recently with the acquisition of 32 retail sites in upstate New York, as well as signing long-term contracts to sell fuel along the Garden State Parkway in New Jersey and Ohio Turnpike.
The first Quality Petroleum location, in McCalla, Ala., held its grand opening yesterday. The remaining sites are under construction and will be converted to Sunoco's brand by the end of the third quarter.
"I am thrilled that Sunoco fuel can now be purchased in Alabama near the historic Talladega Superspeedway," said Bob Owens, Sunoco's senior vice president of marketing. "Our recent success in winning over new distributors has helped Sunoco enter new markets such as Alabama and expand our presence along the I-95 corridor, and in the Midwest and other Southeastern states. We remain focused on building the brand's reputation in all of our markets."
David Melton, Quality Petroleum's vice president, said, "We are excited about the opportunity to sell Sunoco's quality fuel in the state of Alabama. Sunoco's NASCAR connection is generating tremendous interest. We've been providing quality fuels to a great customer base for many years, and we look forward to expanding that base with Sunoco by improving not only our service, but our fuel offerings."
Melton told the Business Journal that his company will invest $1 million to transform at least nine of its BP gas stations to Sunoco, which will match it with a $1 million investment of its own for the transformation.
He said the first station to be rebranded will be the highly visible BP store in McCalla off Interstate 459, which is slated to open next week under the Sunoco brand with new signage, high-tech pumps and upgraded equipment. "What we do in Birmingham is their spring board for the rest of the state," Melton told the newspaper. "They are looking to do similar things in Huntsville and the rest of the state."
The more than 40-year-old Quality Petroleum of Alabama owns or leases 18 gas stations and c-store properties in central Alabama. Nine to 11 of its local stores will be rebranded to Sunoco, while the remaining will continue to carry the BP brand and the Quality Petroleum brand in small areas.
Sunoco and Quality Petroleum share the same growth interests and vision for Alabama, Melton said, making the transformation a good fit for both companies, said the report.
"We are looking for growth opportunities in the central Alabama market, but that's not limited throughout the state," he said. "Within five to 10 years, we hope to double our sales and hope to double our existing number of locations."
Philadelphia-based Sunoco is a leading transportation fuel provider with operations located primarily on the East Coast and in the Midwest. It sells transportation fuels through more than 4,900 branded retail locations in 24 states. APlus convenience stores are operated by the company or independent dealers in more than 600 of its retail locations. The retail network in the Northeast is principally supplied by Sunoco-owned refineries with a combined crude oil processing capacity of 505,000 barrels per day. Sunoco is also the general partner and has a 31% interest in Sunoco Logistics Partners LP, a publicly traded master limited partnership that owns and operates 7,600 miles of refined product and crude oil pipelines and approximately 40 active product terminals. Many of Sunoco Logistics' pipelines and terminals and storage facilities are integrated with Sunoco's retail network and refineries.
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