Ankit Thakur, Retail Country Manager – Mount Meru Group, Africa, tells Anish Malhotra, Market Research Associate at Ken Research Private Limited that the Lubricant industry of Uganda is in its very initial stage of growth and has the potential of doubling in sales Volume by next 5 years.
Question: When did Mount Meru Group start its operations in manufacturing and distribution of lubricants in Uganda?
Answer: Mount Meru Group has the following companies under its belt; Mount Meru Petroleum, Mount Meru Millers, and Mount Meru Logistics. The petroleum branch is primarily responsible for the maintenance of petrol stations and handles operations related to the selling of fuel/lubricants in the country. Recently, the company has opened a lubricant blending plant in Zambia which has significantly substituted its lubricant imports from the Middle East.
Question: How has the Lubricant Market of Uganda evolved over the last five years?
Answer: The lubricant market of Uganda is fairly large and has grown close to 3 times from the volumes in 2013. As of 2018, the domestic demand for automotive and industrial lubricants has been close to 40 million liters. The market has largely been captured by players like Total Uganda, Vivo Energy (Shell), Caltex and Enoc, as they are the most renowned and constitute majority bestselling lubricant under their brand name. The quality of the product and the brand value created over the years has played a significant role for these companies to maintain market dominant positions in the overall space.
Question: How has the local production contributed to the overall domestic demand of lubricants in Uganda?
Answer: The domestic production has seen a lot of development especially in Kampala region, which is economically booming at present. Many local blenders have started blending the lubricants domestically. In the last 5 years the domestic production of lubricants has surged six times, but the market is still constitutes to be import driven. The domestic production of recycled lubricants has also impacted the market as now sellers have started selling recycled lubricants in the country.
Question: What is your take regarding the distribution channels for both Automotive and Industrial Lubricants in Uganda?
Answer: The automotive lubricants are mostly sold via the petrol stations and service workshop as they are the face of the market. Business to consumer (B2C) channel, which includes the service station, retails dealers, petrol stations and other retail network is having approximately 3/4th mark share when it comes to distribution of automotive lubricants in Uganda. This is because the numbers of automotive OEM’s in the country are very limited in number and do not have high demand as compared with the volumes sales via B2C channel.
On the other hand, the industrial lubricants have a higher market share when it comes to direct sell, as they are procured directly from the OEM with an advantage of getting discounts on bulk purchases. In 2018, the direct sell of industrial lubricants captures a lion’s share of 80% and above. Only Micro Small & Medium Enterprises (MSME) are required to approach dealer network for procurement of industrial lubricants as their demand volumes are comparatively lower.
Question: Which are the best selling products in Uganda automotive & industrial lubricant Market in 2018?
Answer: The bestselling automotive oil for Petrol engines is Motor Oil SAE 40, followed by 20W 50 which is mostly bought in a container with a pack of 4 units of 4 Liter each. For diesel engines, the most demanded variant is 15W 40 in both 5liter pack 208 L pack. The most selling gear oil variant is SAE-90 in a 5-liter pack followed by SAE 85W 140 in the same size. In break fluids, DOT-3 is the most fast moving in a container of 24 pcs of 250 liters each. The most selling 2 stroke and 4 stroke engine oil is 2T SAE 20W 50 in 500 ml and 4T SAE 20W 50 in 1-liter pack respectively. For automatic transmission fluids, ATF Dexron III is the most demanded in a 1-liter pack. Extreme pressure gear oil SAE 140 is the most fast moving grease, mostly demanded in a 5-liter pack. Industrial Gear oil 220 has been consistent in being the highest selling in a drum size of 208 liters. Hydraulic oil ISO 46 followed by ISO 32, mostly used in factory and industries is demanded the most. Uninhibited Transformer Oil IEC-292 Class II captures the major demand in 208-liter drum. Total, Vivo energy, Caltex and ENOC have been identified as the most popular companies specializing in both automotive and industrial lubricants.
Question: Which are major upcoming brands in the space?
Answer: There are a lot of companies which are playing very silent as of now, however they would be creating noise in the years to come with their expansion in service stations, petrol stations, better prices and equally good quality. Just to name a few, brands like Habib Oil, Mount Meru, Ravoline, Potenza, Uni Oil, GASCO United Limited Black bull and BE oil might come out with strong volumes in the near future.
Question: How have the price trend movement been for lubricants on the basis of origin?
Answer: The average price of a mineral, semi synthetic and synthetic based lubricant/ liter is close to UGX 12000, UGX 22500 and UGX 30000 respectively. With changing times people are realizing the fact that it is quality that matters the most. Due to usage of cheaper lubricants the cars broke down within 2 years.
Question: What has been the market split between industrial and Automotive usage of lubricants?
Answer: The Automotive lubricants at present has a relatively higher market share by 4-5% than the Industrial lubricant, however it is expected to be at par five years down the line because rigorous construction and manufacturing activities in the country. Industrial sector is going up as petroleum pipeline is also coming in Uganda through a town named Hoima. So eventually the market share of industrial lubricants will surge due to the booming industry economy.
Question: which are the major end Users of Lubricants in automotive and Industrial space?
The Major End User of Automotive are-
Answer: Passenger Cars and Two Wheeler, Commercial Vehicle, Marine and Aviation.
The End Users of Industrial Lubricants are–
Answer: Construction, Power Generation, Manufacturing, Others (Agriculture, Mining, Mass Roadway Transport)
Question: what potential does the lubricant market of Uganda has in the medium Run?
Answer: The lubricants Industry has observed robust growth automotive lubricants. The developments that have happened around in terms of merger and acquisition, import of lubricants and expansion of petrol stations have proved to be quite a big leap and by 2023, the automotive and Industrial lubricant volumes will boom up and will be the double of the total lubricants demanded right now. Uganda is a free market where anyone can come and sell their products as long as they have the capacity to sell and market the products.
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Ankur Gupta, Head Marketing & Communications