• Texas, Mexico Retail Fuel Mkts Seeing Mini Phenomenon in Branding Strategies

  • Texas, Mexico Retail Fuel Mkts Seeing Mini Phenomenon in Branding Strategies

    A mini phenomenon is occurring in the U.S. and Mexican retail fuel markets
    involving Pemex-branded fuel.

    Mexicans in Texas have been flocking to the handful of Pemex branded retail
    stations stateside, proving Pemex's marketing strategy of targeting the Hispanic
    population in the U.S. to be on the mark. Conversely, many Mexicans in Mexico
    are making a beeline to buy fuel from the growing number of new international
    branded gasoline stations in Mexico, including Shell, Arco, Chevron and BP.

    Some industry sources told OPIS that the motivations behind the strong demand at
    Pemex-branded stations in the U.S. and the international branded fuel pumps in
    Mexico are different.

    Pemex opened its first store in the U.S. for the first time a few years ago in
    2015 to significant fanfare, completed with el mariachi performance and
    celebrations at the official opening of the first store at Pasadena, south of
    Houston. Since then, sources said that there is an increasing Pemex brand
    loyalty in the U.S. among Mexicans and the Hispanics population in Texas.

    Also, Pemex-branded stations in Texas are drawing in the crowd with authentic
    Mexican food and merchandise, and ultimately, fuel prices at Pemex stations are
    considered very competitive, sources said.

    On Friday, regular gasoline at Pemex station in Pasadena was priced at $2.63/gal
    if paid by cash, and payments by credit cards are 10cts/gal higher. This was
    compared with $2.69-$2.75/gal cash at two Shell stations and $2.59/gal for at a
    Murphy USA station nearby.

    Besides Pasadena, Pemex has four other retail stations in Texas, including
    McAllen, El Paso and Brownsville.

    OPIS reported earlier this year that the first Pemex retail branded gasoline
    station in California popped up in Hanford in the Central Valley as Pemex
    planned to expand its retail station network into California.

    Mexican sources told OPIS that Pemex's retail expansion into the U.S. was in a
    direct response to the expansions of U.S. and international oil companies into
    the Mexican retail and wholesale fuel markets amid the ongoing Mexican energy
    reform. Pemex's focus is now on expanding Pemex branded and possibly unbranded
    fuel sales in the U.S. It is noted that Pemex does not have a presence in the
    U.S. unbranded wholesale fuel rack markets so far, but that may change later.

    Pemex is targeting regional markets in the U.S. with a high concentration of
    Hispanics population, including California, Texas and possibly Arizona. In
    California, Pemex is aiming to have 20 Pemex-branded stations this year, and
    possibly another 20 next year. Unlike the five stations in Texas, Pemex will not
    own these retail stations, which will be on a 20-year branded fuel supply
    agreement with Pemex via a third-party marketer in the U.S.

    Over in Mexico, international retail fuel brands are slowly adding more
    stations, aiming to break Pemex's monopoly of that downstream market. The
    growing expansion of foreign brands in Mexico may represent a significant and
    symbolic change, but it is unlikely to make a large dent on Pemex's market share
    anytime soon, sources said.

    International retail brands offer an assurance of fuel quality and services as
    well as accountability in fuel volume purchased, sources said. In Mexico,
    consumers, retailers and wholesalers have been grappling with ongoing issues of
    fuel thefts. Sources had said that consumers expect not to receive the full
    volume they pay for at the pumps, and this shortchanging of fuel supplies is
    prevalent in the entire supply chain from the refineries to the pumps.

    International branded retail prices in Mexico are expected to be slightly more
    expensive than Pemex brand gasoline, but international branded retailers
    maintained that they would stay competitive on the streets. It is possible that
    some consumers in Mexico could be willing to pay a price premium for branded
    fuel and better services.

    --Edgar Ang, eang@opisnet.com