Lubricant Packaging Study: It’s A Gusher

LITTLE FALLS, N.J.--Kline & Co. is reporting “a high level of attention from lubricant marketers and packagers on a global level” toward its study on issues related to lubricant packaging.

(The recently released report was profiled on this site in December at: http://aftermarket.theautochannel.com/articles/2000/12/21/011914.html.)

Based on the number and nature of inquiries about the study, Lynn Gillette, Kline’s sales and marketing manager, notes that “Lubricant marketers and packagers are hungry for information on what types of packaging sell, particularly in commercial and industrial accounts.” She also points out that “major oil companies and packagers tend to be somewhat insulated from the wants and needs of these accounts, due to the role of distributors in the value chain.”

There has been strong agreement that packaging will be a major issue in lubricants over the next five years, Gillette says. “Lubricant marketers and packagers are well aware of the power of packaging.”

The original piece as posted here on the Aftermarket Business site follows below:

Packaging Greasing Lubricants Aftermarket

LITTLE FALLS, N.J.--While e-commerce, GF-3, PC-9, hydrocracking, globalization, megamergers, and other “hot” issues are stealing the spotlight in the lubricants business, packaging is quietly yet very effectively providing lubricant marketers with a genuine opportunity to gain market share, improve margins, and grow their business, according to Klein & Co.

A study currently being marketed by Kline, entitled “The Outlook For Packaging In Lubricant, 2000,” reports that the rapidly growing importance of packaging in North America is partly due to the reality that it is increasingly difficult to differentiate lubricants based on performance.

To understand this paradigm, Thomas F. Glenn, an associate with Kline, notes that “performance specifications continue to level the playing field in the lubricants business and challenge marketers to find ways other than performance claims to differentiate products.”

It is increasingly difficult to make meaningful claims about performance advantages in such products as passenger car motor oil (PCMO) and heavy-duty motor oil (HDMO) because these products must meet very stringent performance specifications in order to gain approval from the American Petroleum Institute, he says. Although blenders can exceed these performance specifications, the costs to do so are relatively high, and consumers tend to be indifferent to improvements that can only be realized in laboratory testing and long-term durability.

Performance specifications are also leveling the playing field in such products as automatic transmission fluid (ATF), hydraulic fluid, gear oil, and several other industrial lubricants. Like it or not, Glenn says, “Some segments of the lubricants market are being commoditized, and in these segments, it is not necessarily about what is in the package that sells lubricants; rather, it is about the size, shape, color, and what is on the label that makes the difference.” Glenn points to four-color, consumer-oriented cases; label technology and quality; Quaker State’s clear motor oil bottles; Valvoline’s niche marketing to high-mileage vehicles (MaxLife); Texaco’s label makeover; Pennzoil’s addition of a silver bottle to its signature yellow bottles; and others as examples of how packaging alone can capture market share in motor oil.

In the commercial and industrial market, one needs only to look at the growing demand for industrial bulk containers (IBCs), multiwall bags, pail liners, 5-quart jugs, and steel and plastic drums to appreciate the importance of packaging. In addition, Glenn notes that “smart packaging choices can result in reducing the cost of goods sold and improved margins.” Most importantly, he points out that we are really just at the beginning of what can be done with lubricant packaging, and packaging manufacturers have only recently started to “think outside of the drum and bottle.”

Glenn cautions, however, that it would be wrong to paint too positive a picture of packaging in the lubricants business. Overall demand for lubricants in North America is relatively soft, and the industry is facing several market developments that could have a very significant negative impact on lubricant demand.

Topics in the study include:

• Packaging material suppliers

• Demand for lubricants by package type

• Forecast demand for lubricant to 2005 by package type

• Market development and agents of change influencing demand for packaging

• Business opportunities in lubricant packaging

For more information, contact www.klinegroup.com.