Seaoil sees itself as 'Jollibee' of oil industry

MANILA, Philippines - Seaoil Philippines Inc., the country’s first oil firm to compete with the big-three (Petron, Shell and Caltex/Chevron) since the oil deregulation law opened the downstream oil industry to other market players in 1997, just reached a number of milestones this year.  Last Sept. 16, it opened its 200th gas station in Mandaue City, Cebu, fortifying its stand as the largest independent oil firm in the country today. Shortly before that, it became an Exemplary Member of the Association of Filipino Franchisers, Inc. and got a special citation for consumer advocacy from Entrepreneur Magazine.

“Since the beginning, we’ve always envisioned our company as the Jollibee of the oil industry, which is dominated by huge multinationals,” says Seaoil president and CEO Glenn Yu. “We aim to be the company of choice in the entire spectrum of the market, serving all classes from A to D, through aggressive franchising.”

Like Jollibee, Seaoil has been elevated to the Hall of Fame of the Franchise Excellence Awards given by the Philippine Franchise Association, the Department of Trade and Industry, the Philippine Chamber of Commerce and Industry, and the Philippine Retailers’ Association. Seaoil was voted Outstanding Filipino Franchise of the Year for two years in a row in 2006 and 2007.

Seaoil posted revenues of P11.5 billion in 2010, reflecting a 30-40 percent annual growth rate since its inception in 1997. Yu said the family-owned company hopes to at least maintain this growth rate, as they are bullish on the economy, noting the continuous inflow of remittances from abroad.

Seeing yet a big room for growth, Yu says, “We feel that the Philippines is still under-served, with the country having more islands than gas stations.”

Yu disclosed Seaoil’s plan to open 60 more stations toward 2012, half of which will be located in Luzon and the other half, equally divided in Visayas and Mindanao.

According to the 39-year-old second-generation chief executive, what will drive this oil company to its goal are the same factors that have propelled it to where it is today from a mom and and pop gas station in 1967.

In a speech given last year to the Ateneo Center for Organization Research and Development, Yu related the transformations Seaoil has undergone through the years. He said his then newly wed parents first opened a gas station at the corner of Taft and Cuneta Avenues in Manila in 1967. But in 1977, the Arab oil embargo at the start of the Iran-Iraq war caused rationing and long lines at the pump, forcing his parents to shift to wholesale and oil storage business in 1978. Business became hard for the Yus in mid-90s, as the Asian Financial Crisis set in. But another door of opportunity was opened, with the advent of the Oil Deregulation Law in 1997. Seaoil Philippines was then incorporated by Francis and Josefina Yu, and opened its first petrol station in 1998.

Despite the dominance of the three giant oil firms, the new kid on the block soon made itself visible to the riding public, with more and more gas stations being built across the archipelago. 

Seaoil’s presence became even more felt with its pioneering moves, primarily its introduction to the market of biofuels or environment-friendly oil products. Seaoil was the first oil company to introduce ethanol-mixed gas to the local market, with its E10 fuels (G5 Xtreme and G5 Unleaded) in 2005. That’s more than a year ahead of the passage of the Biofuels Act of 2006, which requires oil companies to sell gas products mixed with ethanol to promote engine- and fuel-efficiency, less smoke-emission, and less dependence on imported crude.

Ethanol is a renewable fuel source, an alcohol made primarily from plants that get energy from the sun, such as sugarcane, corn, cassava, and wheat--crops that are readily available locally.

Seaoil was also the first to launch a Clean Air Act-compliant diesel product in 2004, with its Pure Diesel brand. The company was likewise the first to make available locally a coconut-blended diesel oil that complies with the more stringent standards used in the European Union, with its improved Bio-Xceed brand in 2008.

Its latest eco-friendly product is Extreme97, launched in 2009. This promises extreme engine performance at 97 octane at a price lower than other high-octane gasoline products in the market.

But Seaoil takes its competitive act another step further than just offering attractive products. Seaoil Marketing Director Arturo Cruz says the company treats its business as a service more than a product provider.

“We see to it that the services in all our stations are uniform and equally excellent,” says Cruz. 

He says the company’s so-called Seaoil Academy trains all the stations’ dealers, supervisors, staff and crew on the services of the business with customer satisfaction as the ultimate goal. 

So far, Cruz adds, the Seaoil Academy has a number of satellites spread in Luzon, Visayas and Mindanao, the latest one to be set up in the newly-opened gas station in Plaridel, Mandaue, Cebu.

In a market dominated by giant players, Seaoil’s efforts to give consistent, reliable, efficient, and readily available service appears to be a wise tack.

As of now, there are about 4,000 gas stations nationwide, owned and operated by the three big oil companies and some 800 independent players. Cruz explains that the new players are called “independent,” since all companies before the industry deregulation had to be somehow attached to any of the three oil companies--Petron, Caltex or Shell.

Currently, Petron keeps the lion share of the market, at 38 percent; Shell, 28 percent; Chevron/Caltex, 12.5 percent; and all others, including Seaoil, 21.1 percent. Cruz estimates that Seaoil gets about six percent of the total market share.

With its aggressive franchising stance, Seaoil’s market share getting bigger is not a far cry. For a franchising fee of P500,000 and about P10 million operational expenses, a Seaoil franchise dealer’s investment can be recouped and earn in less than four years.

But to Seaoil, business goes beyond the bottom line. “For Seaoil, it is not just the blind pursuit of the bottom line,” underscores Yu. “For Seaoil, the bottom line is a result of our being able to serve customer needs within the boundaries of our values, namely, integrity and trust.”

Seaoil is the first, if not the only, oil company in the country to come up with a price lock scheme, which protects consumers from fluctuating oil prices. This is with the company’s prepaid fleet card, which locks the price of the company’s oil products at a certain rate within a certain period.

The Seaoil executives said the company has so far issued the price-lock cards in four waves. The first time was in 2009, when the price of crude reached $140 per barrel. The last one was in March this year during the crisis in Libya.

Opposition Senator Francis Escudero reportedly lauded the scheme and challenged the big-three in the local oil industry to come up with a similar offer to ease consumers’ burden.

Yu takes lessons from the fate of companies like Enron, Barings Bank, and Lehman Brothers, saying that excessive pursuit of profits is a dangerous move that could push one to cross the boundaries of values. He says keeping these values makes it easy for him and the rest of his business organization to avoid unethical decisions.

“Our values essentially act as our corporate conscience,” says Yu.