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Every day consumers are faced with the choice of buying the high profile brand-name fuel and the unknown unbranded gas. What is branded fuel? How is branded better or worse than unbranded fuels? For retailers in this industry, you must weigh the pros and cons of branded gas to determine your business plan.
Branded fuel is gas sold under a major company name. In the U.S., some of the most recognizable fuel brands are Shell, Chevron, Texaco, Phillips 66, Exxon, Mobil, and BP.
The main physical difference between branded and unbranded is the additives that the major brands put in their gas. All fuels sold in the U.S. must meet strict quality standards as mandated by the government. Those standards mean all gas sold, branded or unbranded, must meet guidelines on octane, sulfur content, lead content, quality, etc.
For the retailer, there are definitely some advantages to selling brand-name fuel. Unlike unbranded, this gas has a recognizable logo. Some consumers actively seek only those brands for fueling, they have a name that consumers trust.
Retailers that sell brand-name gas have a contract for a guaranteed supply. When supplies of gas get low, unbranded retailers receive product after contracts are fulfilled.
Many major fuel brands will help their local branded retailers in improving the look of their store. This improvement helps the brand while also helping the independent retailer.
While the advantages of brand-name gas are significant, there are disadvantages as well. For instance, the contract that guarantees supply to branded retailers can also have minimum sales requirements. A retailer in a small town might have problems meeting contract minimums.
A retailer selling brand-name gas has no room for fuel price negotiation. The price is set by the brand and the retailer has no choice.
The major brands require their retailers to meet strict image requirements. A retailer that fails to meet those image requirements may lose the brand franchise or face financial penalties.
Branded gas is usually 5 to 10 cents higher per gallon than unbranded. With higher gas costs these days, consumers use price as a primary factor to determine where they buy gas. Also, most major fuel brands have an additional credit card fee for processing consumer payments.