In an exclusive interview with the Budapest Business Journal, Alexander Sokolov, managing director of URT Oil Trade Kft. talks about the firm’s five-year relationship with Russia’s Gazpromneft-Lubricants, bringing its products to the Hungarian market and the goal of achieving more than 5% market share.
BBJ: How would you categorize the lubricants market in Hungary today? How is it evolving?
Alexander Sokolov: The Hungarian lubricant market is overstocked. Annual calculated national market capacity is 84,000 tons, but the actual figure for 2018 was around 100,000 tons. International majors cover around 30% of the market share, Hungary’s MOL holds another approximately 50% and the rest is occupied by local no-name private brands.
The lubricants’ market in the country is heavy and highly competitive, thus it is unlikely to grow in the near future. The major challenge here is product quality control, given that the local small private brands tend to present the market with poor products. A government regulatory initiative might highlight the difference between the responsible players that produce lubricants in accordance with the requirements of equipment manufacturers (automotive and industrial), possess the latest approvals and the rest, actors that should be banned from the market due to the substandard products quality. This would increase the quality of average lubricants and provide customers with the most relevant product.
BBJ: Who are the biggest players in the market?
AS: On the global market, the major players are Exxon Mobil, Shell, Total, and Gazpromneft-Lubricants. On the Hungarian market it is MOL, Shell, Total, Eni.
BBJ: How was your 2018 business year?
AS: 2018 was a good year: Gazpromneft-Lubricants market offer was increased with a large range of industrial and fully synthetic automotive products. One of our customer campaigns brought in some 6,000 participants from around Hungary competing for a new passenger car. The winner was announced in late December. This campaign helped us increase premium products sales and scale up brand awareness. Its success is proved by our market competitors starting similar projects this year. Still, there’s a lot to come in 2019 and we hope for a further boost in sales.
BBJ: URT Oil Trade is the official distributor for Gazpromneft-Lubricants. How and when did this relationship come about?
AS: This decision was undertaken on the basis of Gazpromneft-Lubricants’ international performance awareness. We put our trust in the brand when one of the company’s current partners offered us this opportunity. Starting from scratch, we’ve built Gazpromneft-Lubricants product awareness across the country and hope to achieve 5-7% Hungarian market share in five years.
BBJ: What plans do you have for the future?
AS: On the way to our 5-7% market share, we plan to introduce to the market new products and services. One will be the launch of our first Technical Competence Center, in cooperation with Gazpromneft-Lubricants. It will provide technical support for enterprises and fleet owners that use Gazpromneft and G-Energy products. The technical center will allow us to provide clients with a service that is in high demand: express oil analysis. Such type of analysis is important for clients as it helps them to cut costs: they can change oil when it really needs to be changed. It can also monitor what is going on inside the engine and thus prevent engine troubles that may even have no connection with lubricants.
BBJ: Could you share some of the history of both Gazpromneft-Lubricants and URT Oil Trade?
AS: Gazpromneft-Lubricants was established in November 2007; our company, URT Oil Trade – a little bit later. But we signed the cooperation agreement in 2014, when both companies already had sufficient expertise. Since that time we have worked very closely and now I can say that over five years of collaboration we gained high results in sales and marketing projects. Gazpromneft-Lubricants products have become well-known and we can see the loyalty of our consumers. We are proud to present Gazpromneft-Lubricants products to such famous retail chains as Tesco, Auchan and Praktiker.
I would also like to underline one special project we have launched: in 2016 the first G-Energy Service Station was opened in Hungary. G-Energy Service is a rapidly growing international chain of more than 170 service stations in 16 countries. Since Hungary has joined the project not only can our car owners enjoy car maintenance services at international standards and for a reasonable price, but independent workshops owners can join the chain, get marketing support and attract additional clients to their business.