The Differences Between Branded Vs. Unbranded Fuel
A major decision every fuel retailer needs to make is whether to go with branded or unbranded. It plays a major role in how the retailer runs the business and how the future may play out. Getting to know the differences between the two fuels is important for making an informed decision.
Gas sold under a major brand name like Shell, Phillips 66, Alon, or Valero are known in the industry as branded fuel. This kind of gas comes from terminals that handle that specific brand. The basic product itself is the same that goes to unbranded retailers, with one major difference: an “additive” package.
Branded fuels have additive packages added to the basic gas. Take Phillips 66’s Performance Fuel as an example. The EPA requires all gas to have a detergent additive added to help keep engines and emissions cleaner. Phillips 66 adds triple the required amount of detergent additive to produce a gasoline that cleans any deposits formed by the intake process. This branded gas makes the engine perform better, prolonging its effective life, and helps reduce emission levels, making for a greener car.
The additives are added in small amounts to the gas delivered to a retailer. For a consumer, this small amount may or may not have the advertised effect on a particular engine or fuel system. However, the fuel brand spends plenty on advertising to convince the consumer that it will.
When you become a retailer for branded gas, you are going to pay more for the product. This extra cost is to cover the additional advertising the brand does as well as the additives going into the mix. If there are fuel shortages, branded retailers get first priority over unbranded retailers.
Going with a branded fuel comes with certain benefits, such as instant brand recognition. Many consumers want to go with a brand they know and trust, meaning there is an instant consumer base for the business.
Gas sold without a brand attached to it is called unbranded fuel in the industry. Unbranded does not have the additives in it that the branded fuels do. The gas must meet federal and state regulations, which means it has a set level of additives already in it, and is not bad for a consumer’s car.
Unbranded gas can come from any terminal. With no additional costs for advertising and additives, unbranded fuel is usually $0.05 to $0.15 per gallon cheaper than branded gas.
There is usually no contract between the retailer and the supplier with unbranded fuel. With no contract, the retailer can switch between suppliers at any time without penalties and find the current best price.
The downside to the unbranded market is that, during a shortage, there is no guaranteed source of gas. Branded fuel stations get first priority due to their contracts. The unbranded retailers often have to scramble to find a supplier that has product available for the their market. This event can cause unbranded gas prices to go up, even beyond that of the branded fuels.
Making a choice
If you are debating whether your retail site should offer branded or unbranded fuel, you need to talk with someone who can help you weigh both options. Give us a call here at Kendrick Oil, (806) 250-3991, we offer both branded and unbranded gasoline. You can also connect with us via email on Contact Us. For more information, read more About Us.