A taste of Italy from Oil&nonoil in Modena, Italy – PetrolPlaza on the roadAudio version
Oil&nonoil considers itself to be the only European fair gathering all sectors of the market under one roof, linked to the distribution of fuels, oil & gas depot and transport industry, from the warehouse to transportation, from service stations to non-oil activities, like car wash. This year’s Oil&nonoil, taking place from 13th to 15th May in Modena, attracted around 200 exhibitors and also featured conference programs, many organized by the 18 associations that sponsor Oil&nonoil, ranged from the entire day dedicated to natural gas fuels, an independent survey on the behaviour of carwash customers, the future of biofuels, electronic payment systems to hazardous fuel transport, the future of the non logo independents and the future of retailing fuel in Italy.
With such a non-sounding Italian name, Graham told us that he is in fact English, having lived in Italy for 33 years. He arrived on a motorbike tour back in 1979 and eventually settled in a picturesque town called ‘Terni’, 100 kilometres from Rome. There he established a business in the process, which eventually led to helping Angelo Meola, the owner of Tandem Comunicazione to create the Oil&nonoil fairs.
Since they started the show in 2004, Graham seems to have become one of the well-known characters in the Italian retail petroleum equipment industry. Reason enough for us to use the opportunity to speak to him and learn more about the Italian market.
More information on Oil&nonoil 2012 and some interviews with the exhibitors can be found in our video review, sponsored by Tandem Comunicazione srl.
[FOLLOW THIS LINK] to watch the video on PetrolPlaza TV.
Bruno Boroewitsch, PetrolPlaza: In the 60’s there were around 40,000 service stations operating all over the country. How many stations are there now and who are the most important players in the retail sector?
Graham Hunt, Oil&nonoil: Today the Unione Petrolifera, the Italian Union of Oil Company Majors, says in Italy there are 22,500 stations and growing, bouncing up from an all-time low of 20,000 a few years ago. Comparing the number to the rest of Europe you would say there are double the number of stations that are necessary in Italy. The average annual sales last year was only one and a half million litres per station.
The big oil companies own about half the stations with independents owning the rest. The state-owned ENI still has the lion’s share of the market followed by API/IP, Q8, Esso, Total/Erg, Tamoil and Shell. Lukoil has recently entered the market and there is growing activity by privately owned no-logo stations, sometimes called white pumps in Italian.
Bruno Boroewitsch, PetrolPlaza: In many European countries, the major petrol stations have large convenience stores. Why is this not the case in Italy? Is it because in Italy money can still be earned just with fuel? As I understand it, the fuel prices in Italy are the highest in Europe.
Graham Hunt, Oil&nonoil: Actual fuel profit margins are the same as elsewhere and when divided by the excessive number of service stations, the current concept of the service station as it is today in Italy is probably not sustainable. Fuel prices in Italy are the highest in Europe because the Monti government decided to use fuel as an easy money cow to start reducing Italy’s dangerously high state debt.
Logic would push the profit-strapped service station sector to open new forecourt profit centres but apart from carwash this is difficult to see happening in the short-term. All motorway stations have large stores and refreshment areas but stores are rare in the thousands of ordinary stations that pepper Italy from top to bottom. If you can believe it, there isn’t even a ready translation of “convenience store” in the Italian language! With dramatically declining fuel consumption (minus 10% since the beginning of the year) this should put pressure on Italian service stations to seek out other profit centres as they have done in the rest of Europe.
The speed bump in the future profitability of the sector is Italians keep building service stations like pit stops - fast in, fast out, with payment at the pump while the rest of the world has understood you have to slow the customer down, push him into park and pay mode with payment in a convenience store environment. Perhaps the fundamental problem is too many service stations in Italy are run by people pumping petrol and not by businessmen.
Bruno Boroewitsch, PetrolPlaza: Where do you see the focus for investment in the next few years in the Italian market?
Graham Hunt, Oil&nonoil: Alternative fuels are gaining momentum in Italy as you saw at the Oil&nonoil show. The use of natural gas and LPG is growing by leaps and bounds. These fuels make economic and environmental sense and Italy has many companies that are leaders in the technology and production of the storage and dispenser equipment. The distribution networks are growing.
The experts claim we are heading toward a multi-fuel future with also electric vehicles and liquid natural gas joining the other fuels. Perhaps even hydrogen. Beside this investment in innovative fuel distribution, Italy as mentioned before, is overdue for a major revolution in non oil profit centres. The profit crunch on diminishing fuel sales must inevitably push investment in non oil, but we have been saying that for the last 20 years and it doesn’t seem to have happened yet.
You could say that the one strong non-oil activity in Italy, the carwash market, is reaching maturity in the north of Italy but this has spawned the famous Italian creativity and as you will have seen at our show there were many container coin-operated laundromats designed to attach to carwash cabins. The growth of non-carwash profit centres is to be watched. But lots of opportunities still exist in the South of Italy. And we have to say that the reason for the growing success of our Oil&nonoil Sud Show in Naples is the strong potential for modernization in all of our show’s sectors in the under-developed south half of the Italian peninsula.
Bruno Boroewitsch, PetrolPlaza: In former times Italy had some laws which might seem a bit strange, for example, petrol stations were obliged to close at noon. Is that still the case and do you know of any other laws which appear a bit odd? In a recent press release it says that there have been some ‘game-changing commercial freedoms for the fuel distribution sector’. What does that exactly mean and can suppliers maybe benefit from these new liberalized laws?
Graham Hunt, Oil&nonoil: The new laws have loosened the quota system for many commercial activities in Italy such as the selling of tobacco and newspapers but the monopolistic lobbies are fighting back. The growing strength of the independents and the non-logo service station chains could spear-head the long-awaited entry of the sector into the bar and shop. Shopping centres which have a very small part of the service station market in Italy at the moment could also take advantage of the financial vulnerability of thousands of Italian stations on the brink of non-profitability.
Bruno Boroewitsch, PetrolPlaza: How did this year’s show go? Are there going to be any developments for next year? Were you happy with the attendance?
Graham Hunt, Oil&nonoil: The organization of a complex show like Oil&nonoil and Fuel Storage & Transport requires our constant contact with the market leaders. We run the national edition in Modena every two years and the smaller regional show in Naples in the south in the off year. We can truthfully say the show was a resounding success when measured against the difficult economic climate.
Nobody expected the show this year to be sparkling but the visitor figures nevertheless are close to 2010, almost 6,000. We actually had more exhibitors by number than in any pevious edition, over 200 this year. Service station equipment was up, carwash was down a bit and tanker trucks and storage were up. The exhibitor questionnaires confirm that they did business, they appreciated the focus and the scope of the event, all the way from the refinery to the pump. They confirmed that professional visitors were at the show from all over Italy and abroad and the conferences were very high quality, fuller than in other years.
Tandem Comunicazione (the organizer of Oil&nonoil) spends an unusually large part of its budget communicating with its visitors with its 80,000 copies of its news magazine Oil&nonoil News and its electronic newsletters, this often surprises other fair organizers but this is the strength of Oil&nonoil. We are in touch with our sector, we invest in the sector along with its exhibitors. We have 18 national and international associations backing the show and 19 national and international media partners among which we are proud to include PetrolPlaza. Oil&nonoil has become an international meeting place at the cutting edge of a sector critical to the growth of countries everywhere - and that takes us to the direction the show is going to take with the southern regional edition again in 2013 and the next national edition in 2014.
We can say that as we are one of the leading service station equipment shows in Europe today, international interest is naturally growing. So we shall see an increasing internationalization of the event with increasing numbers of international visitors. We are working to make that happen. Oil&nonoil is where the future of the fuel business meets.