The first Rompetrol-branded filling station in France will be located on a highway, with future targets for development being underserved areas and areas generally avoided by hypermarkets.
However, the petroleum company's expansion largely depends on French consumers' initial reaction to the Romanian brand.
"For now, we are just testing out the brand in France. We have to see how the French consumer goes into a Rompetrol filling station. We can only make a bet, and nothing more than that. If we can mentally go beyond the fact that we're a Romanian brand, we'll achieve success in penetrating the market," says Eric Kish, marketing and retail vice-president with the Rompetrol group.
Last year, the group announced the biggest move for a company, with Romanian roots at its core, by acquiring a European company and entering a western market. Rompetrol took over the biggest independent petroleum operator in France, Dyneff. This year, post EU integration, Rompetrol will decide on the way it will operate on a completely atypical market, particularly in terms of the retail.
According to the Rompetrol representative, the French fuel retail market is 35% controlled by hypermarkets. Their policy is to win as many customers as possible by pushing margins derived from fuel retail down towards zero. As a result, underserved areas have become Rompetrol's main target.
Though Rompetrol took over more than 200 filling stations when it acquired Dyneff, the retail part is insignificant compared to the other assets it gained as part of the deal. "When we bought that firm, the retail part was minuscule. The big business consists of 3 terminals on the Mediterranean and 3 on the Atlantic. The retail part came with the acquisition.
We are a wholesaler there that owns 30 filling stations, while the rest of them are franchises, with margins remaining very low. Retail development is a long-term task. What we own there is something we inherited," says Rompetrol's representative.
Though retail margins are appealing, the licensing process is cumbersome. For all branding operations related to the retail segment, Rompetrol will earmark 12 million euros for this year, with 1 million euros to be used for the re-branding of 5 filling stations of France. There will be no separate marketing campaigns targeting the French market in 2007, as the network is too small to justify the costs.
Rompetrol intends to continue its foreign expansion campaign this year.
"This year, we will enter the Serbian market, through some 50 franchises. It's in our area of strategic interest and we submitted a letter of intent for the privatisation of NIS, the Serbian Petrom," stated Eric Kish.
Rompetrol has also shown interest in the Ukrainian market. The plans to enter this market were revealed last year, but will materialise in 2007, when the group estimates it will generate sales exceeding 86 million dollars (69 million euros).
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