Quaker State Secures Market Share amid the PandemicBy Alejandro Enríquez | Tue, 12/08/2020 - 18:11
Q: What is the nature of Quaker State Mexico’s joint venture with Shell?
A: Quaker State Mexico has experienced a transformation after 90 years. We operate under Quaker State’s license, which 16 years ago became the property of Shell after certain acquisitions in the US. Two years ago, there was a stronger collaboration toward approaching the industrial sector for lubricants in the country to strengthen Shell´s position in this segment. The result of the collaboration is our joint venture that started in late 2018. We are now exploring the opportunities in the Mexican industrial lubricants market, including mining, energy, logistics, manufacturing, and automotive OEM operations. We have a special solution for each segment when it comes to lubricants.
As a result of our joint venture we have been really successful in both B2B and B2C businesses and all stakeholders are very satisfied. Quaker State lubricants were traditionally related to the automotive industry but we did have a product portfolio for other industries. When we started to offer Shell products, companies easily recognized the brand. Shell as a global leader has different lubricant brands and solutions for different applications, but the common denominator is that they are all developed by a technology innovator.
Q: What were the strategies that helped Quaker State achieve good results despite the pandemic?
A: Prior to our joint venture, Shell imported most of its products from the US. Afterward, we started to manufacture those products at our plant in Mexico. Our company facilities have been authorized to manufacture Quaker State and Shell-branded products. When the COVID-19 pandemic began, we were legally labeled as an essential industry due to our chemical-related activity. April and May were indeed complicated months as the industry remained shut down but in June, we reached pre-pandemic levels. We are gaining market share as small or medium competitors lose their footing due to the pandemic and the lack of capabilities to react accordingly.
Q: Is Quaker State planning to expand its manufacturing capacity in the country?
A: Even before the joint venture, our plant was designed to allow an expansion of its capacities by up to 40 percent. After the joint venture, we increased our capacity by 20 percent, and year after year, we plan to continue to invest based on demand.
Within a four-year period, we are expecting to double our sales. We have three main segments: transportation, industry, and PCMO. While in PCMO we have a market share of around 30 percent; in transportation and industry, we are far from the level we aspire to. We are looking forward to increasing our share of the synthetic product's market in all three segments, as well. To achieve this, we will foster our participation in those segments while increasing our installed capacity more efficiently. Having a plant in Mexico makes us efficient in cost terms and we are flexible to what the industry actually demands. Our local infrastructure, our plant, our labs, and our technical capacity with international standards have played a key role in our success and will continue to shape our strategies.
Q: How has Shell helped you attract new clients?
A: Our joint venture with Shell, facilitated a portfolio which in addition to feature compliance with international specifications and certifications are further recommended to be used in certain equipment validated and certified by manufacturers of engines and machinery. Shell is often an innovation partner for large OEMs, which is a unique advantage as certain machinery exhibits an optimal performance when using Shell products.
Another relevant aspect is that our distribution network in the country has more than 40 years of experience, giving distributors a unique scope and providing us with a faster penetration for Shell products. A third element that has helped us to advance in the market is the fact that companies that provide services to the industry need to provide analysis about the lubricant they are using to improve efficiency. For most of our competitors’ products, sample validation can take weeks. Our local lab takes only days and is the only certified lab for lubricant manufacturers by competent authorities based on international industry standards.
Q: How is Quaker State coping with the reduction in mobility levels in the country?
A: Our strategy is to focus on vehicle maintenance in different channels: gas stations, dealerships, spare parts shops, and workshops. In these channels, the final customer has easy access to our products. We are the first company to have SP technology in the country, which adds value for our customers at the highest level of international specifications. In addition, we are focusing on synthetics and taking our best-selling high-mileage products to the next level by targeting ride-sharing vehicles.
Our brand maintains a close and personal relationship with customers through all channels. During the pandemic, we strengthened this relationship with loyalty programs at spare parts shops and workshops.
Q: What are Quaker State’s short-term strategies?
A: We need to remain cautious about how the pandemic evolves. The impact on Mexico’s GDP is considerable. The effect on SMEs has been negative as well, so we need to evaluate how quickly the Country will recover. Having said that, we will continue to gain market share as we maintain our operations and support our customers through loyalty programs. Without a doubt, 2021 seems brighter than in 2020 and we will strengthen our share in the market.
Quaker State Mexico is focused on lubricants for transportation, industrial and passenger car motor oil (PCMO). The company started a joint venture with Shell in late 2018 to manufacture and sell its products in the country