One year after choosing to get rid of one of the world’s biggest brands and replace it with an "entirely Kiwi" identity, Z Energy says its commitment to the Shell-less strategy is already paying dividends and offering it a competitive advantage. And the new brand is tracking very well with New Zealanders.
The Z brand was launched in a pilot programme on 11 May 2011, with comms, design, branding and retail assistance from Assignment Group, Cato Partners, RCG and Marque. Kicking it all off was what owners Greenstone Energy said was the largest piece of industry-specific consumer research in the past decade involving 17,000 people, comprised of customers and competitors alike, and scanning a raft of opinions about what exactly it meant to be Kiwi.
Youtube VideoThe big launch ad was fairly polarising, but it followed that up with constant messaging around the brand's points of difference, such as local ownership, local suppliers, support of local charities and forecourt service. And it was obviously pleased with the results, because it committed to the full roll-out of the Z brand in November last year and the full rebrand of the company’s commercial and retail networks will be complete in June.
Youtube VideoZ chief executive Mike Bennetts says the first full year of the brand, which coincided with the company’s financial year, had been one of maintaining performance while building a foundation for growth and the brand tracking shows Z is already a strong preference for Kiwis, with respondents more likely to recommend Z than any competitor.
"Our commitment to bringing service back to forecourts, being locally owned, and contributing back to local neighbourhoods is resonating well with customers, despite the fact that the brand roll-out is only two thirds complete," he says. "We have areas to improve, such as better promoting our new food and coffee offer but customers are giving Z a chance, are expressing a clear preference for local ownership and what Z stands for and we’re committed to continuing to earn their loyalty."
He says the 12 months to 31 March 2012 were all about building a new brand and implementing the company’s strategy.
"These two elements in partnership are the cornerstone of being a local company and have already enabled us to post a strong result in very competitive market conditions ... Already our strategy projects are delivering improved performance and enabling future growth opportunities, while we have been very pleased with the way the Z brand is landing with our customers."
As for the finances, Z posted earnings before interest, depreciation, amortisation and financial instruments of $177 million for the full year, up from $167 million for the previous corresponding period. Net profit after tax was $77 million, down from $203 million for the 2011 financial year, although that included the effect of a $121 million revaluation of the company’s assets.
“The full year result is at the lower end of our guidance but our performance highlights the resilience and momentum we have in the business to manage volatility. In the last quarter refining margins were the lowest they have been since we bought the business and there has been significant price discounting across the retail fuels market.
Bennetts said with 91 octane fuel consistently above $2 per litre, ongoing public scrutiny on fuel prices was to be expected.
“We are very aware of the impact of our prices on consumers and business so we’re committed to being straight up and as transparent as possible on prices and margins. When you boil it down, if you take all of the money we made—including our shop sales—and divide that by the total litres of fuel sold, we made a bottom line profit of about 2.1 cents per litre. That’s a return on capital employed of 9.6 percent."