More Than One Way to Skin a Cat

ACE's senior vice president writes about the irony of the big chains adopting E15 because of the success of the small retailers in the Grassroots Voice column in EPM's June print edition.
By Ron Lamberty | May 25, 2017

“There’s more than one way to skin a cat.” When I hear that cliche, I wonder, how does anyone know that? Why does one need to know even ONE way to skin a cat, much less a demand for multiple cat-skinning techniques? But, I digress. We know the cliche means there are many ways to address a challenge, and since I have zero cat-skinning expertise, let’s talk about ways to increase retail availability of E15 and other higher blends of ethanol.

From its inception, the market development program at the American Coalition for Ethanol has focused on helping station owners understand ethanol as an easy product addition that can provide a competitive advantage and a healthier bottom line. Our message has resonated particularly with single-store and small chain owners looking for differentiation from large chain and big box competitors. They can make the move to higher ethanol blends more quickly without delays caused by bulky corporate structure. And when small independent retailers introduce new fuels into the marketplace and out-compete their larger and more well-funded peers, the competition takes notice.

While most of the industry’s current funding and attention is focused on large retailers, a recent study by the Fuels Institute confirms the importance of the ACE approach. The FI study gathered sales information from 620 E85 retailers, primarily to study the effect of price on E85 volume. Its findings on the price/volume relationship were inconclusive (mostly due to inconsistency in using RINs at retail, in my opinion). However, what did come through clearly was the fact small retailers’ E85 sales dramatically overperformed those of high-volume retailers, and not just in percentage of E85 gallons versus unleaded (which one might expect). The study found the top quartile of E85 sellers are small retailers who, on average, sell two-thirds as much gasoline as the other 75 percent of retailers in the survey, but twice as many gallons of flex fuel.

In further stark contrast, the top five E85 retailers in the study sold an average of 2,641 gallons of gasoline per day while the bottom five flex-fuel retailers averaged triple the gas volume (7,642 gallons per day); but the small gas volume stations sold 10 times as much E85—600 gallons per day versus less than 60 per day for the high-volume pumpers. Many of us have seen similar results in the field: Small retailers embrace E15 and flex fuels and make them part of their image, and ethanol blends become a large part of their sales and profits. Meanwhile, a few (at least five) of the high-volume retailers seem to be treating higher ethanol blends as a favor they’re doing for the ethanol industry, in exchange for cheap or free fuel-dispensing equipment.

That isn’t meant to diminish the effort or importance of large retailers who are adding and aggressively marketing E15 and flex fuels. While it’s tougher to garner customers’ attention in a large, high-volume fuel location, many retailers are getting the job done with E15 and flex fuels. More importantly, the big retailers’ names add credibility to the marketing of new fuels like E15, and are key in convincing other retailers to give E15 and higher ethanol blends a try.

The irony is it’s unlikely those large companies would have considered the addition had they not seen the success of some early-adopting small retailers. And, when other single store and small retailers are inspired to add higher ethanol blends because companies like Sheetz, Kum & Go, RaceTrac, Quik Trip and Casey’s have added them, ACE will be there to help, using information we’ve gathered from retailers of all sizes.

Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol