A Fuel Brand to Call Their Own
ST PAUL, Minn. — What’s in a name?
For members of the Minnesota Service Station & Convenience Store Association (MSSA) who become Minnoco retailers, the answer is control, better cash flow and more competitively priced fuel offerings such as E15.
Minnoco — short for Minnesota Independent Oil Co. — is a gasoline brand developed approximately three years ago by the state’s service station and convenience store trade group. MSSA members who carry the brand are able to control their own brand of fuels, while offering alternative fuels such as E15, biodiesel and flex-fuels like E85 and E30, according to Lance Klatt, executive director of MSSA and the Minnesota Professional Towing Association (MPTA).
“We wanted MSSA members to have a brand of gas they could call their own and have no long-term contracts,” Klatt said.
So far, six MSSA members have become Minnoco stations, with up to 18 others soon to join them.
BENEFITS ABOUND
The opportunity to control their own fuel is just one of several benefits Minnoco stations enjoy.
According to Klatt, they can buy rack low pricing and save money by processing all customer credit card transactions through Chase-Paymentech, a leading petroleum industry processor that offers a rebate of .02 basis points and $.005 transaction fee rebates. One Minnoco station owner estimated he will save $23,000 a year in credit card fees alone.
“Retailers also receive their credit card deposits in 36 hours, rather than having the fuel distributor collect and disrupt cash flow for the operator,” said Klatt.
The credit card and payment perks were enough to convince 37-year Mobil station operator Rick Bohnen to convert his Minneapolis station from Penn Mobil to Penn Minnoco in October 2013.
“The credit card fees are cheaper and we are enjoying substantial savings,” Bohnen reported.
“The order of the money trail was also a big deal,” he added. “With Mobil, the money would go to US Bank, then to Mobil, then to the jobber, then to us. And if you did an amazing amount of business, and at the end of the day Mobil owed you money, they applied that to a future gas load that you might not have even ordered yet. That could really play [havoc] with your cash flow!”
For Jerry Charmoli, owner of Highway 10 Minnoco Car Care in the Minneapolis suburb of Coon Rapids, the lack of access to flex-fuels convinced him that Minnoco was the way to go.
“I had been a Mobil station since 1984 and was with other major oil companies from 1969 to 1983,” said Charmoli who, like Bohnen, switched to Minnoco in October 2013. “My last contract was up two years ago, but since contracts last 10 to 15 years, I went month to month [with Mobil]. I always kept hearing, ‘Better things are coming, new things are coming for you, just wait another year.’ Then Mobil made a contract with Tesoro's refinery last October and said they weren’t supplying our fuel anymore. That’s when I said, ‘We’re moving on.’”
Minnoco also offers a gift card program, fleet program, mobile app and a loyalty program called Patron Points that offers customers 3 cents per gallon cash back on all Minnoco blended gallons, plus a 5-percent discount on automotive repair work done at a Minnoco station.
“And all of the Minnoco retailers have a say in what the next steps are,” Klatt stressed.
CUSTOMERS RESPOND
Change, of course, brings challenges. Bohnen and Charmoli — whose stations carry regular 87 octane, 89 octane and 91 octane gas, plus E15 and E30 flex-fuel — admit there have been a few hurdles, albeit low ones, to clear.
“It has been a little difficult, especially selling the flex-fuel. I have to educate customers one at a time,” said Bohnen.
“There is a learning curve,” Charmoli agreed. “We have had to educate customers. They want to know, ‘What is Minnoco?’”
There also was some consumer resistance at first to E15. “Some people say, ‘I am not using that corn stuff!’ But we let them know there is 10 percent ethanol in all of the fuel sold in Minnesota and across the country so they are using it anyway and are unaware of it,” said Charmoli.
Thanks to the quality of the products they purvey, and the reputation they’ve earned in their respective communities, neither operator has lost business since becoming Minnoco retailers.
“Things are going good. I have seen sales go up across the board for regular and flex-fuels,” Bohnen said.
“I haven’t lost customers, and I’ve seen a lot of interest in E15,” Charmoli reported. “The perception of our new name is good. We have all new pumps and when we switched, we got all new dispensers. All fuels are blended at the pump because our pumps are compatible with ethanol blends.”
LOOKING AHEAD
The way new cars are being designed, combined with today’s political climate and what Bohnen calls “the going green movement,” all point to a bright future for alternative fuels and for Minnoco, these retailers say.
“When I look at the newer, bigger cars, they all need higher ethanol blended fuels,” Bohnen said. “For example, all Ford F150s have lighter, aluminum bodies. The engines are smaller, but they still need the horse power. You have to boost compression, so you need a higher octane and you get higher octane out of higher ethanol blends. And let’s face it, ethanol is a cheaper fuel. At the Growth Energy Summit, General Wesley Clark spoke and said they’re moving the Navy toward biofuels so we aren’t held hostage by the Middle East.”
“It is the right way to go for this country,” Charmoli echoed. “Growth Energy has been a very big advocate, along with the Minnesota Department of Agriculture and the Minnesota Lung Association, for what we’re trying to do. And I think we will see a lot of others out there pushing hard for E15 across the nation over the next 10 to 15 years.”
That is all good news for Minnoco, according to Klatt.
“Our plans for Minnoco are to continue growing by adding additional sites while offering more available fuels for the consumers,” he concluded. “We believe in choices and opportunities. We should see up to 25 Minnoco locations by next spring and hope to build the brand to a total of 50 locations by the fall of 2016.”