- May 7, 2004
- Nokesville, VA
(Also old, also interesting to see what oil cost 20 years ago). The Oil Daily, March 17, 1986 pB3(2) Bottled oil sale prices 14.65 cents below canned. (Packaging) John A. Moore. Full Text: COPYRIGHT Oil Daily Company 1986 Bottled Oil Sale Prices 14.65 Cents Below Canned MOTOR OIL in plastic bottles is not commanding premium prices over canned oil, an Oil Daily survey indicates. For bargain concious consumers, bottled oil now is lower priced than the canned product. Sale prices, including discounts and rebates, for 10W-30 and 10W-40 oil in cans was found to average 14.67 cents higher than those for the same grades in bottles. The average sale price for bottled oil was 69.55 cents per quart. The average of canned oil was 84.22. The survey included a nationwide review of retailer newspaper ads, circular, direct mail promotions, and point of purchase research over the past two weeks. Discovered were cans marked to 90 cents higher than nearby bottles of the same grade. Only when the same brand and grade are offered in both kinds of package does the bottle seem to always command a higher price. The lowest after-rebate price noted last week was 29 cents a quart -- for Citgo motor oil in a plastic bottle. Highest advertised sales price observed was for Mobil 1 synthetic motor oil, at $2.99 a quart. Some Illogic Illogic seems to permeate retail pricing of motor oil. The product is viewed by many big retailers as a "loss leader" -- a low profit item which draws customers into their stores. Supermarket managers even gripe that it doesn't make up in volume its margin shortcomings. Car care products as a whole, including motor oil, accounted for only $25.7 million of $119.7 billion in U.S. supermarket sales last year, estimates Selling Areas Marketing Inc., prominent New York market research firm. Like supermarkets, the rest of the about 400,000 retailers selling oil consider it not a lucrative item but a handy money maker that isn't much trouble. The Oil Daily survey covers mass merchandisers ranging from K-Mart and A&P to Pep Boys and Thrift Drug. When plastic bottles hit the market full force during 1984, after Quaker State began switching from composite cans to plastic quarts, bottled oil was expected to command a better price. Many conusmers expressed a preference for its convenience features, while "extra thrifty" and "grease monkey" types stuck with cans. The thrifty now seem to be buying bottled oil. During Quaker State's initial switchover period, it was speculated that plastic containers were being subsidized. Can proponents insisted that the basic processes affiliated with bottles were inherently more costly. 55 Cent Limit? Some packagers theorized then that there was a limit to which the price of motor oil in plastic containers could fall. They believed that at a certain point, then considered to be 55 cents, the plastic bottle would become uncompetitive with the traditional composite can. Cited were presumed inherent raw materials, manufacturing and filling economies which would give a competitive edge to composite cans. When reminded of this, such theorists now respond with wisecracks like: "Did I say that?" and "Yes, somebody said that, but I forget his name." After retailers in New England and Midwest markets sold plastic quarts of popular brand motor oil in the 40 to 45 cents per quart range last year, that theory became highly suspect. If the theory was tru, then oil marketers are: (1) pocketing the favorable cost differential and higher average sale price from filling cans, (2) swallowing the greater costs of using plastic containers and suffering from expensive promotional sale prices and rebates, or (3) finding the differential non-existent or unimportant. some basic cost factors have changed. Sagging crude oil prices have alleviated ethylene feedstock and polyethylene resin costs. At the same time, forest product prices, an important aspect of composite can costs, are showing strength. Cost cutting and efficiency improvement have been occurring in the bottle field. Previously, experience and efficiency were on the side of can makers and users. Three years ago, for all their background in other fields, many people working with plastic motor oil bottles were novices. Since 1983, bottle production machinery and methods have improved, and machine operator skills have increased. Molding and filling processes are faster and more efficient. Design and mold modifications have reduced how much polyethylene goes into each bottle and into scrap, for further economies. No Difference The latest Oil Daily survey of retailers finds that the material from which the container is made has virtually no bearing on current retail pricing. Mass merchandisers have been bargain pricing on a kind of "revolving" basis. They feature one brad one week and another the following week. It's Valvoline in cans at 89 cents, then Quaker State in bottles at 79 cents, etc., etc. Other than bargain pricings, they like to keep the remaining brands on display at a reasonable reduction from list prices. However, most retailers resist pricing all non-sale brands identically. Each brand is kept a few cents to a dime or two different from the others. Retail prices have continued to erode, regardless of the container's material or style, particularly where promotional campaigns of oil companies are involved. At ShopRite markets in New Jersey, Exxon 10W-30 and 10W-40 motor oil in a new and attractive rectangular plastic quart with an off-center spout sold a few weeks ago for 79 cents. Nearby were quart cans and bottles of other brands for 89 cents through $1.17. At many supermarkets, neither can nor bottle pricing fits a logical pattern. Off-brands sometimes are prices higher than some big name brands and lower than some others. At this particular ShopRite market, cans marked with the Quaker City independent name were priced higher than those with the famous Quaker State logo. 39 Cent Quart Last October, Oil Daily found cans of a popular brand of motor oil selling for 39 cents a quart in the Detroit area. A sign at a Shorts Auto Parts store there proudly proclaimed that this was the base price, not an after-rebate one. In this instance, the additional application of a 40 cents per quart rebate, such as the one advertised by a mass merchandiser in the Boston Globe last week, would have created a ridiculous situation. It would have meant an end price where the buyer received one cent more than he paid for each quart purchased. The oil company would have to return 40 cents for every 39 cents spent by the consumer. Now, amidst an environment of plunging crude oil prices worldwide, even 39 cents has proven not to be the bottom. Last week, at 43 stores of the Osco Drug chain in New England, you could pay 29 cents a quart for a popular brand of motor oil in a plastic bottle. This was the after-rebate price. Osco Drug's base price for Citgo 10W-30 or 10W-40 was 69 cents a quart. Limited to five per customer, the oild was packaged in a S.A.Y. round one-quart plastic bottle. A Citgo manufacturer rebate of $2 per each five-quart purchase brought the actual price to 29 cents a quart. There was a stated "one rebate per household." Las autumn's finding of a 39 cent price at Shorts Auto Parts made it the lowest retail price found in 1984-85. Now, thanks to Citgo's rebate, the dubious distinction of lowest price for a quart of motor oil now goes to the Osco Drug chain. But the Michigan auto supplies chain retains the honor of selling at the lowest non-rebate price found by our surveyors. Specials Galore Special deals, rebates, discounts, retailer allowances, contests and even cents-off coupons have hit the auto care product market over the past several months. Mostly, these have affected motor oil. But they also have involved automatic transmission fluids, synthetic motor oils, fuel and lube additives, oil filters and other items. The situation reached the extreme where one manufacturer (Valvoline) gave promotional rebates on auto care items of other manufacturers. The survey suggests that almost nowhere are list prices being applied. But pricing at 50 cents and below was found to be rare -- and always promotional. At many mass merchandisers, retail base prices for 10W-30 and 10W-40 motor oil generally ranged from 69 to $1.69 a quart. It is not unusual to find the same grade of oil in different brands with price tags across a 50 cent variance range. As more oil company price promotions come, retailers are beginning to find they don't have "room" to feature one a week. So they have started loss-leading two at the same time. The nationwide True Value hardware store system is promoting Valvoline and Mobil motor oil alongside one another. In a circular for Hardware Week (last week) a case of Valvoline 10W-40 in cans is shown at 89 cents each. Next to it is pictured a quart bottle of Mobile 1 at $2.99 and a quart can of Mobil 10W-40 at 95 cents. Quaker State and Pennzoil have been relatively quiet lately. The big noise in supermarket and discount store newspaper ads, circulars and point-of-purchase displays features such brands as Exxon, Texaco, Shell, Valvoline and Citgo. Texaco vs. Mobil For example, Jamesway's nearly 100 discount department stores in the Middle Atlantic states featured a case of 12 Texaco Havoline 10W-40 plastic quart bottles las week for $10. Texaco sweetened this with a $3 rebate, bringing the consumer's end price to $7, or 58.3 cents a quart. At a Jamesway store in New Castle, Del., cans of oil sat nearby at nearly twice that price. More than two dozen Jamesway stores are in the New York state, where it faces competition from a variety of retailers. Unlikely as it might seem, in the motor oil market one of them is the Rickels lumber yard chain. Rickels and Mobil teamed up last week to offer Mobil 10W-40 at the same end price as Jamesway and Texaco. But they reached this by a different formula. Rickels priced a case of 12 plastic quarts at $9.40 and Mobil sweetened this with a $2.40 rebate. That came to exactly $7 a case, or 58.3 cents a quart. Image Change Over a very short time span, Quaker State has almost totally wiped out the image of motor oil as something that comes in a can. Some high schoolers now identify the bottle as symbolizing motor oil, with the can now symbolizing a CocaCola, just the opposite of what people perceived, years ago. You still can find signs of Quaker State in cans. A big billboard on Route 40 not far from the Jamesway store in Delaware mentioned above shows a big can of Quaker State oil. A team of inspectors is traveling the entire United States to ferret out such signs. A retired couple, they are supposed to make sure the signs are kept in good condition and that they display bottles and not cans. Since there are thousands of such signs it might take longer for Quaker State to convert its signs than its containers. But in places like the 22 stores of the Auto Works auto parts chain in the St. Louis area, it's strictly bottles they think of when handling Quaker State motor oil. Incidentally, Auto Works was selling Quaker State 10W-30 and 10W-40 last week for 79 cents a quart last week. As with other brands, Quaker State is priced somewhat erratically from place to place. In the Philadelphia area, for instance, and Eckerd drug store across a shopping center parking lot from a Murphy's Mart on the same day were offering Quaker State motor oil for 77 cents and 89 cents a quart respectively. How much a shopper might pay thus might depend on which store was entered first. Automatic transmission fluid has hit the bargain road, both in cans and bottles. Some two dozen Western Auto stores in the St. Louis area last week offered Type F Dexron II for 66 cents a quart. Think that's cheap? Hi-Gear stores in the Baltimore area were selling Citgo ATF at 79 cents a quart. And a Citgo rebate brought it to 40 cents. A snowbound Jamesway store in Messena, N.Y., where it was one degree above zero two weeks ago, had various auto chemicals for 94 cents each, up to 65 cents off list. Thy included: Gunk brake fluid, Transeal automatic transmission sealer, and Snap power steering fluid. Farther east at the ShopRite store in Middleton, Conn., it was 10 degrees warmer and Shellzone antifreeze was sale priced at $3.49 a gallon. Also on sale was Shell Fire & Ice 10W-40 in a 12-can case for $9.48, or 79 cents per quart. Within a week Connecticut's temperatures soared into the high 60s, testifying to the wisdom of shell marketers who gave the oil that name and why they refer to their antifreeze as all-season coolant and boil-over preventer. A check of Sears Roebuck & Co. ads in newspapers across the country show its auto center managers and stocking people continuing to favor composite cans. Last week Sears advertised one-quart cans of its Spectrum house brand of 10W-30 and HD 30 motor oils at 69 cents a quart. This was promoted as being "50 cents off." Sears does sell motor oil in mutli-quart plastic containers. Montgomery Ward, which for a long time has resisted plastic quarts, has just sold 18 of its Jefferson Ward Department stores to the Bradleed chain. So ward stores will probably be displaying plastic quarts soon. Last week Bradlees sale priced STP's foaming engine degreasere in a 13-ounce aerosol can for $1.59. With a $1 manufacturer rebate from STP, the end price is 59 cents. Bradlees applied the same pricing to aerosol cans of STP Carb spray cleaner. For STP oil treatment, in a pulltop 15 ounce aluminum can, the price was $1.39 with a 50 cent manufacturer rebate bringing an end price of 89 cents. STP gas treatment, in an attractive and utilitarian long-necked 8-ounce red plastic bottle, was priced by Bradlees at 89 cents. A 50 cent STP discount brings the end price to 39 cents. The 44 stores in the Philadephia area of Thrift Drug, a J.C. Penny Co. subsidiary, last week sold its Treasury 10W-30 in plastic S.A.Y. quarts at 88 cents. Penn Jersey, with numerous discount auto product stores in the Northeast, offered irs Trax 10W-30 and 10W-40 in a plastic 5-quart container for $3.45. A manufacturer rebate of $1 was attached, bringing the end price to $2.45. The $2.45 price was in rather small type in a Philadelphia Inquirer ad run by Penn Jersey. About ten times as large, in big black numerals, was the price after rebate of 49 cents. Penn Jersey also priced two-stroke Castrol brand cycle oil at $1.33 a quart. Specialty oils such as chain oil and two cycle engine oils are appearing more frequently in mass merchansider promotions. Generally, 5W oils contain somewhat higher tags than 10W grades. A Trak Auto store in Richmond, Va., for instance, last week had Valvoline 5W-30 in cans for 86 cents a quart, featured alongside Quaker State 10W-30 in bottles for 79 cents a quart. Over in Virginia Beach, A Zayre discount department store sold Valvoline 10W-40 in cans for 79 cents a quart. A nearby Dart home center had a circular clip-out coupon deal on Shell Fire & Ice in cans. With the coupon, it went for $9.96 a case, or 83 cents a quart. For those who would rather not change it themselves, there were special prices last week too. Hoe special depended on where you were. In Washington, D.C., where do it yourself isn't too popular, Goodyear tire stores through March 22 will do a lube job, oil change and filter replacement on most cars for $15, including five quarts of generic oil.