Branded lubricant companies and their distributors should be asking themselves whether Amazon’s entry will succeed. But more fundamentally, lubricant companies should be using the moment to look critically across their entire value chain—not just sales—both to stress-test their operations in the face of potential disruptive competitors and to check for potential opportunities. 

The prospect of producing high-quality base oils was always a secondary consideration for GTLs. There were high hopes of an industry with production of perhaps 1 million barrels per day. The investment case was boosted by its “green” credentials and an expectation that crude prices would stay high relative to gas.

Demand has been weak or falling

in nearly all mature markets for

years, and it has been a long time

since lubricant company CEOs have

been rewarded for simply growing

with the market. Success is measured on the bottom line, which means growing a profitable business by capturing and retaining lucrative market segments with the right product and service packages.

As relevant today as it has ever been!!

Lubes businesses haven’t relied on mature market growth for many years but now more than ever they must position themselves to build in segments where they can see profitable opportunities.

For historic reasons, there is a capability gap in many companies which needs addressing. It is not good enough to go after it as before. Going forward companies need to acknowledge that improving pricing capability needs to be tackled as a strategic project with focus on building longer term know-how and capability. 

We believe that the supply chain is important enough for us to debate how the next phase of manufacturing efficiency may arise.  Not least because there could be a significant prize for those who position themselves well to benefit and revolves around the longer-term role of in-house manufacturing.