SAN ANTONIO -- In the vast 700-store network of Susser Holdings Corp., Valero Energy was an afterthought. With lots of brands crowding for space, Valero's flag waved at a mere 10 dealer locations. Last Thursday, everything changed. Valero went from bit player to the player.
In a celebrated announcement at corporate headquarters in San Antonio, Valero said it had reached an 11-year agreement to be the primary supplier at Susser's 320-plus company-run outlets, replacing CITGO. Valero will remain a small player within Susser's 350-store dealer network, [image-nocss] which taps a half-dozen oil brands.
The contract is a coup for the nation's largest refiner-marketer. Only six years into a formal wholesale branding program, Valero has rapidly emerged as an elite brand, not only in Texas, where it now becomes the largest rack fuel marketer, but in growing swaths across the United States, from the Southwest to the East Coast.
In an interview with CSP Daily News, two top-level Valero executives who spearheaded the Susser deal credited Valero's robust refining presence in Texas and its decision one year ago to retire the 34-year-old Diamond Shamrock brand and streamline the fuel and retail programs under the Valero flag.
Taking down the Diamond Shamrock image and putting up Valero was a factor, said Lee Rahmberg, vice president of regional wholesale marketing, who was joined by Ken Applegate, Valero's vice president of wholesale marketing.
Susser has had a very long affiliation with CITGO, he said. When they were looking at going elsewhere with their corporate-operated [sites], we were a natural option to at least be considered because we have a very strong refining presence in the Texas market.
Rahmberg and Applegate said they entered into serious discussions with Susser last fall. A strong brand image and ample supply backed by a strong infrastructure were keys to synching what becomes the largest supply agreement Valero has inked with a single retail chain.
We're seeing very good growth in Texas and in the states around Texas, said Applegate, citing Oklahoma, Arkansas and Louisiana. The deal brings the Valero flag to 1,900 stations across Texas and 5,500 in the United States, Canada and the Caribbean.
For Corpus Christi-based Susser, the deal continues its realignment since it filed with the federal Securities Exchange Commission to become a publicly-traded company. In the past six months, Susser has ended its longstanding relationship as the largest Circle K franchisee, rebranding its retail network to Stripes.
So, as it pursues $115 million to finance its growth, Susser will take to market a Stripes-Valero combination to its core markets of Texas and Oklahoma. And don't be surprised to see that combination in more locations.
With approximately 20,000 convenience stores operating in Texas, Arkansas, Louisiana, New Mexico and Oklahoma, we believe there are significant opportunities to further penetrate our existing markets and selectively expand into new markets, Sam Susser, president and CEO of Susser Holdings Corp., said in the IPO filing.
According to Valero, Susser plans to convert its gasoline brand at company-owned stores to Valero over the next few months, even though it has one year to complete the turnover. Because of its application with the SEC, Susser is barred from commenting about its deal with Valero.
[To learn more about Valero's fuel branding program, click here to register for the On Demand of CSPNetwork's How to Sell Me Valero CyberConference featuring Ken Applegate. To learn more about Susser Holdings' plans post-IPO, watch for the October issue of CSP Magazine.]
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