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Reaping the harvest

31 August, 2011
Signings for Harvest Energy are gaining momentum as more dealers - including Top 50 groups - appreciate its merits. MERRIL BOULTON reports
Page 19 

From slow beginnings, the Harvest Energy brand is now the fastest-growing fuel brand in the UK, according to Simon Davis, the company's head of sales and logistics.

A significant recent signing was the 16-site Cornwall Garage Group, a Top 50 Indie. But other Top 50 groups include Sectorsure Ltd (seven sites); and Bishop Retail (nine sites). Another Top 50 group, Kent-based WJ King (13 sites), is coming on board in November.

Harvest Energy also supplies a number of own-branded sites belonging to Petrogras, branded Applegreen; Park Garage Group, branded Park and Shop; and MRH, branded Torq.

"It's all very encouraging," declares Davis. "By mid-September we'll be up to 55 Harvest Energy-branded sites, with a further 16 signed up and ready to go before mid-November.

"The momentum is definitely building for us. At the beginning of 2010 we had six sites, so this year has seen huge change. When we first came on the scene many people were sceptical about our longevity. It was a leap of faith for retailers initially, but we have demonstrated that we're genuinely committed to this business."

In terms of continuing to build the network, Davis and his team wasted no time in racing down last month to the West Country, where Jet dealers were still reeling from the shock of receiving six months' notice from ConocoPhillips.

"It's ironic that the one area of the country that we haven't historically been able to supply is the one area where suddenly there's an opportunity," says Davis. "What's interesting is that having realised there's this opportunity and also the position that some of those independents find themselves in, we've actually gone out of our way to say 'okay, fine', we therefore need to provide an offer down there.

"The issue we've always had with that part of the country is chicken and egg we didn't have any business, therefore we're not competitive because we didn't have any business!

"But if you can suddenly go down and say, actually there is an opportunity here to put on a reasonable chunk of business, suddenly you can make that work sensibly for everybody for the retailer and for us. It also covers off one of those issues that people have raised in the past that people don't know the brand. If you suddenly get maybe 14 sites all with the same brand, that mitigates that issue.

"We've seen that with some of the growth we've had elsewhere, where we've picked up one or two sites, and then other retailers in the area have come on board because they've spoken to the Harvest Energy dealers who have had a good experience with us."

Harvest Energy has persuaded dealers away from major fuel brands such as BP, Esso, Shell, Total and Texaco. "How much value do you put on a major brand?" questions Davis. "Undoubtedly there are some strong brands out there, but is that worth paying 1-2ppl extra for the privilege of having that brand on your site? Are you effectively paying for a European or worldwide marketing programme that actually bears no relation to your location whatsoever?"

The reason for Harvest Energy's growing popularity, according to Davis, is down to a combination of factors. He explains that Harvest Energy is Britain's largest independent motor fuels manufaturer and supplier with refinery status; it has national coverage and flexible supply arrangements: ex-rack; it can deliver into own/symbol brand; the deal could include credit card support, pump maintenance and so on; and bunkering (Key Fuels and UK Fuels) too; terms can be one to five years.

For Harvest Energy branded dealers he describes the contracts as "fair and transparent". They are Platt's related, with no "hidden charges"; no "product premiums" over Platt's leading to savings compared with other supply deals; no "winter quality" add-ons; no monthly charges for credit card scheme or hidden recharges; and full seven-day cover on pump maintenance arrangements.

Harvest Energy can also offer weekly lagged pricing currently a much-discussed topic among dealers which Davis says avoids the lottery of daily pricing and matches the independents' pricing to that of the supermarkets.

"We think it's the fairest way," says Davis. "It irons out the peaks and troughs." There is also no arbitrary add-on for RTFO Davis says it's calculated "correctly" straight from Platt's every week.

The deal even includes an annual spring clean of the distinctive blue, white and green Harvest Energy branding, to keep it looking fresh and bright. "You can't expect a dealer to clean a five-metre pole sign," says Davis. Membership of RMI Petrol is also part of the contract Davis says it's important for the dealers to be part of the trade association and it gives them access to other benefits.

"Clearly we've got to be competitive we want the business,' explains Davis. "But also the dealer has got to make money out of the deal and the only way dealers are going to be able to compete at some sort of level with the other players in the marketplace is to have a reasonable buying-in price which allows them to invest margin in terms of volume, or take extra margin, or mix it up, according to how they feel. They're calling it they're the retailers. They know their site and know what impact the volume has on their shop. Turnover, at the end of the day, is where most people make their money."

The deals are very site-specific, says Davies. "It depends on volume, the location of the site how cost-effective is the supply to that site; how far we'll have to truck it; what load size the customer can take; how flexible the customer is on delivery times; and credit terms.

"We can be very competitive in certain areas particularly the south east. We're also very competitive in Scotland and the north east. But there are a whole raft of factors which form the 'cake'. The cake can be cut up lots of different ways, but essentially the cake ends up still being the same size. It's all about the details. This is a very thin-margin business and you've got to get it right."