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BRAND UPDATE Brand Update: Chevron Taking a Look at Chevron's Downstream Focus in the Current Economy BY KEITHREID senior staff. A private meeting with Colin Parfitt, vice presi- dent of Americas Products, West, and Adam Sparks, general manager of Chevron's company-owned company-operated (COCO) stores in the United States allowed for a more detailed question and answer session. N NPN: You got new CAFE fuel standards out there, biofuel mandates, alternative fuels and alternative fueled vehicles— what do you see happening in the United States with gaso- line demand in the relatively near future? Parfitt: We think we are about at peak gasoline demand in the United States. So could it go up post recession? It could. If fuel prices go down, yes, it could. So we're not sure we're exactly at the peak, but we believe as we go forward that there are sufficient alternatives coming in—hybrids and natural gas and plug-in electrics—that they will all start to take some gasoline demand. It's not clear to us that any one of those is going to be a win- ning technology, but what we think is that they will all generally erode gasoline demand. However, we do think we see an increasing trend in distillate demand—diesel, jet fuel—relative to agriculture, trucking, industrial and even station forecourts. It's another one of those growth wedges that is not huge, but is in that mix of things. And at Chevron, we are fairly well-positioned because of our diesel to gasoline ratios so we're looking at that and work- ing on growth strategies. NPN: With the Texaco pullback, how are the two brands (Chevron and Texaco) working in your network strategy? Parfitt: In parts of the Southeast, Texaco has a very strong brand as well as in a few other areas. But were not working aggressively to expand the Texaco brand and we pulled out of 14 states in the Northeast. We really see Chevron as our growth brand. NPN: As a brand partner, how are you working with mar- keters and retailers to enhance the value of that relationship in current economic times? Parfitt: We have a number of different things and one of the most significant is our Extra Mile (retail offering). We 14 SEPTEMBER 2011 PN took part in a media availability at Chevron headquarters in San Ramon, Calif, Aug. 8-10, and enjoyed the opportunity to speak with a range of have 270 company-run stores doing Extra Mile and we have our franchise proposition. We feel this gives our partners a professional way to run the store with merchandising and procurement at a scale they could not get individually and a back-office system that's beneficial not only to the single site retailer, but to chain retailers. Our goal is to help them with that profit center and make better economics out of that plot of land. NPN: What are you looking for from a marketer or retailer partner? Parfitt: From a dealer you're probably getting to class- es—individual dealers with the single-site and chain dealers – both work. Some of it gets back to the quality of dealer and, of course, the quality of the corner and the quality of the sites. There are some units you would love to see Chevron branded; there are some that you would not. So, if you really distilled it down, the quality of the sites they are bringing in is probably first criterion. Location is king. And of course, we have a range of incentives to help with the rebranding new sites. NPN: Compared to most of the majors, Chevron still oper- ates an impressive network of company operated sites. What is the philosophy behind that? Parfitt: We think we're different from the competition. We have a large network, and we want to grow because we want to create that value chain from crude through to customer and to monetize our refinery barrels through our retail network. So we have a different message – we're staying and we're growing. And we see the company-owned network as actually being quite an important part of that. Sparks: It comes back to the question you asked earlier, "What can we add for our partners?" Still being in the company operated business lets us add value on two fronts. First, we actually are in the retail business, so we can empa- thize with retailers over what it takes to run those sites. Whether it's dealing with tax changes or credit card fees or changes in the marketplace from a supplier standpoint, and we can take that into things to help them run their busi- ness better. Second, it also gives us a touch point with the consumer. We have our hands on that consumer, and we understand the changing currents and what they are look- ing for as customers. NPN Magazine n www.npnweb.com