Petronas enters the market and Texaco makes a return, while Larco, Ale, and SIM vie for top rankings
12/09/2024
The entry of new brands into Brazil’s fuel distribution market, such as Petronas and Texaco—making a comeback after 16 years—along with the accelerated growth of medium-sized distributors, has shifted the balance of power in the sector in 2024.
While BR (Vibra), Shell (Raízen), and Ipiranga (Ultrapar) collectively hold over 50% of the market share, maintaining their positions in the rankings, the battle for the fourth spot has become more intense. Bahia’s Larco has overtaken Minas Gerais-based Ale (Glencore) in fuel volume sales after months of fierce competition, as Rio Grande do Sul-based SIM (part of the Argenta group) has closed in boosted by the acquisition of TotalEnergies’s distribution operations in Brazil.
As of October, and according to data from the National Petroleum Agency (ANP), Vibra Energia, formerly known as BR Distribuidora, leads with a market share of 21.7% in gasoline, diesel, and ethanol sales. Following are Shell/Raízen, with 18.6%, and Ipiranga, which signed a licensing agreement with Chevron to use the Texaco brand as well, with 17.2%.
In fourth place, significantly behind the top three, is Larco, with a 2.5% market share as of October, taking the spot that Ale Combustíveis held in recent years. The Glencore distributor, a giant in international commodities trading, accounted for 2.1% of the market during the same period, threatened by SIM, which licenses the Petronas brand in the country.
Growth strategies vary and target both individual consumers and large corporations, as well as TRR operations—Transporter-Reseller-Retailer, companies authorized by the ANP to purchase fuel in bulk and sell it retail.
Larco is advancing more rapidly in selling to unbranded gas stations (those without brand loyalty agreements), while SIM is investing in expanding its branded network and making acquisitions. Meanwhile, Ale aims to convert more unbranded stations to its brand and grow in the large consumer segment.
“Naturally, we will be the fourth largest. But our focus is not on volume; it is to offer a new proposal for branded stations, with an international brand, focusing on quality and good practices,” said Neco Argenta, CEO of the group that owns distributors SIM, Charrua, Querodiesel, and more recently, TotalEnergies.
Within the group’s ecosystem, there are about 1,000 branded stations, including Shell, Ipiranga, and Vibra, making it the largest network of fuel stations in the country. With the acquisition of TotalEnergies, SIM is accelerating its expansion into other regions, planning to convert the 240 stations acquired into the Petronas brand over the next two years.
Mr. Argenta states that in five years, the goal is to have 1,000 Petronas stations in the country, through conversions from TotalEnergies and new partner contracts, with an estimated investment of R$50 million. The first three Petronas stations in the country are in São Paulo, and the Malaysian group recently approved plans to speed up the network’s expansion.
With projected revenues of R$18.5 billion for the group in 2024, the fuel volume is expected to reach 3.5 billion liters.
Founded in 2000 by businessman Paulo Roberto Evangelista, who was already active in the transportation sector, Larco accelerated its growth from 2016 onwards, with the inauguration of its first fuel storage base in Candeias, Bahia. Today, it operates in 16 states and leads sales to unbranded stations, boasting over 4,000 registered clients.
CEO Alberto Costa Neto said Larco’s strategy is to grow both in distribution to unbranded stations and expand its network, aiming to end the year with 250 branded stations. “Larco grows by expanding its network, diversifying the market, and in B2B [business-to-business], especially where agribusiness is stronger,” he said.
In October, Larco set a sales record, reaching 357 million liters, but the goal is to reach 400 million liters per month by 2024. With revenues of R$11 billion in 2023 and 2.3 billion liters sold, the company projects R$17.5 billion in revenues this year, with 3.5 billion liters. “We don’t typically grow through acquisitions. Our focus is organic expansion, reinvesting in building new bases and ground logistics,” the executive said.
Ale Combustíveis, which has a larger station network than Larco, aims for R$15 billion in revenues in 2024. The strategy focuses on two pillars: converting stations to its brand and expanding the corporate consumer base through exclusive contracts.
The company plans to gain 360 new clients throughout the year, having already secured 165 in the first half, including 77 new Ale-branded stations and 88 major corporate clients (B2B). Additionally, the company anticipates a 200 million-liter increase in distribution volume, reaching 3.2 billion liters in 2024.
Last week, Rafael Grisolia was announced as the new CEO. He will need to seek greater efficiency in storage and distribution and better exploit certain logistical axes. In a segment with tight margins, below 4%, capturing new clients also involves retail operations and services, such as convenience stores.
“We have a strong brand in states like Minas Gerais, Rio Grande do Norte, Santa Catarina, Espírito Santo, and Maranhão, and our dealers deliver this brand value with a range of premium products, additives, and convenience stores […]. The B2B market is another opportunity to leverage the Ale brand’s strength. This combination of strategies will be essential to boost both volume and business profitability,” says Mr. Grisolia.
The sector has also seen new business models, such as the return of the Texaco brand through a licensing agreement with Ipiranga, an Ultra group distributor, with a portfolio focusing on fuel technology and appealing to car enthusiasts.
The first Texaco station operates in Palhoça, Santa Catarina, and plans to expand to Rio de Janeiro and São Paulo markets. Bárbara Miranda, vice president of marketing and business development at Ipiranga, explains that the return is linked to studies indicating the brand’s strong presence in consumer memory.
In this business model, the authorized entrepreneur sets up the point of sale, while marketing and expansion strategies are conducted jointly. The goal is for Texaco and Ipiranga to occupy distinct market niches to prevent brand market cannibalization.
“In the Texaco model, there is regional exclusivity, and the regional station investment is made by the authorized representative. From there, Ipiranga and the authorized representative, Rede Galo, work together on the network’s development plans,” she states. “Ipiranga will have two brands to cater to two micro-market profiles, which has more to do with which consumer segment is valued than social class,” she adds.
With nationwide reach and serving multiple audiences, Ipiranga’s outlook remains optimistic, as Brazil’s fuel business continues to grow, with an expected increase of over 5% in 2024. The Ultrapar fuel distributor aims to capture around R$400 million in logistics and distribution efficiencies over the next three years, including faster loading, fewer accidents, improved fleet productivity, and reduction of truck detention time.
Raízen, which licenses the Shell brand in Brazil, remains focused on customer service and expanding its branded network, ensuring “market share” and brand image. The company has been increasing both the number and duration of its contracts. Raízen declined to comment on the matter.
*By Stella Fontes e Robson Rodrigues
Source: Valor International