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Cenex Growth Plan Gets a Boost

Midwestern refiner-retailer expanding branded store count, advertising plans

INVER GROVE HEIGHTS, Minn. -- Right place, right time. In the past year, Cenex's five-year brand expansion got a boost that was not included in the original strategyBig Oil's divestiture of retail assets.

In 2004, Cenex, the energy brand of Inver Heights, Minn.-based CHS Inc., announced plans to add 150 branded sites per year for five years. The plan's remaining three years will co-exist with the three-year multimillion-dollar multimedia campaign featuring The Cenex Guy. According to Cenex manager of brand product and marketing Doug Dorfman, both the [image-nocss] expansion and the campaign are going well.

Making the expansion easier has been the moves made by in particular ConocoPhillips, which announced in December of 2006 that it would sell its 830 direct-owned gas stations, many of which are in Cenex country: the Dakotas, Minnesota and Wisconsin (see the March issue of CSP magazine for more depth on major oil selloffs).

There's obviously been some opportunities within our markets that we feel we're in a great position to take advantage of, said Dorfman. There's probably been a little more upside than maybe was thought of two, two-and-a-half years ago. We're pretty well on track to push through (150 per year). I don't know if you can ever predict three years out what other suppliers are going to do, so I don't think anybody predicted it, but on the other side I don't think it's a total shock because five to seven years ago you started to see the majors retrench around their assets, looking to get out of their direct-serve facilities to go more to a jobber network.

Cenex, with its roots in agriculture and rural America, offer to retailers a buying groupC-Buying for Cenexand a retail software program, named C-STARS. According to Cenex spokesperson Ann Mann, 509 of the approximately 800 Cenex-branded sites are members of the buying group, while 250 are using C-STARS.

There are other companies looking at the same opportunities, Dorfman said. We just happen to be geographically in a good position. Some of the folks that have been with Big Oil for awhile are a little frustrated right now, so we're kind of a nice option; we're large enough where we'll be in this marketplace, we've got a history, but yet we're not too big where it's just a numbers game and we don't really care about the little guy.

In that context, the three-year advertising campaign begun in late 2006 targets potential retailers as well as consumers. The company is targeting both select markets with existing Cenex sites and growth markets within the watershed of Cenex's refineries in Laurel, Montana and McPherson, Kan. Designed to remind that Cenex is a brand of lubes and propane for home heating as well as automotive fuel and c-stores, it uses humor and will take a unique-for-Cenex approach with mobile marketingthe appearance of a Cenex vehicle and The Cenex Guy at Cenex sites. The TV ads can be seen at http://www.cenex.com/cenexguy.asp.

Through mid-March there had been over 60 million gross impressions of The Cenex Guy, according to Dorfman. Billboards featuring The Cenex Guy and a phone number for consumers to callAsk The Cenex Guyhave inspired more than 12,000 calls, more than half of which choose the joke option, according to Mann.

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