Cenex is a brand of CHS, a Fortune 200 company with nearly eight decades in the refined petroleum business and three decades in renewable fuels. The company ranks as North America’s largest cooperative refiner and a significant wholesaler and reseller of refined fuels. The company sells more than 3 billion gallons of refined fuels annually, including gasoline and diesel. Its fuel products are moved via 1,200 miles of pipeline, 10 terminals, over 250 third party terminals, and a truck fleet logging nearly 35 million miles a year to more than 1,600 local cooperatives, independent retailers and Cenex-identified convenience stores from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. Its energy products include refined fuels, propane, lubricants and related equipment.
When NPN last profiled the Cenex brand, CHS was just about to undertake an ambitious reimaging program. That program is now nearing its conclusion.
“We're in our third year of our Generation Image renewal program, which is upgrading our retail facilities,” said Doug Dorfman, brand and retail development manager. “We're actually a bit ahead of schedule and we should be done with our entire network by the end of August 2010. It's been positively received by our stakeholders. Our marketers and jobbers have been very happy with the support we’ve provided to install the new image, and the programs we offer to support it. Retailers are also receiving a lot of positive comments from their customers.”
Changes to the Cenex identification at each site includes a new look for the canopy, signs and pumps. Most sites went beyond and added a fresh coat of paint, and installed new lighting and digital signage. In addition to funding the majority of the costs associated with the upgrade, CHS also supports its marketers through the entire re-identification process. Sites remain open for operation during construction. CHS also provides marketers with advertising and communication tools, grand re-opening plans and other initiatives to help stores introduce their new look to customers and community members.
Dorfman noted that a variety of their operators have also taken advantage of the timing to make upgrades inside the store or elsewhere on the facility.
Unlike the major oils, but in tune with many refiner-marketers, CHS is growing its Cenex branded network of stores. The company targets 100 to 125 sites per year, a goal that has been achieved in the past three years and one the company feels confident it can maintain over the next several years.
The company continues to focus its expansion in major metropolitan areas, while maintaining growth in many rural areas.
Dorfman outlined several points where he believes CHS and the Cenex brand offers an advantage as a partner. “As noted, we are different in that we are in growth mode right now,” he said. “Some of the dealers we hear back from, and it's kind of a generic term, is that they are tired of ‘big oil.’ They want more of a personal relationship that works to help them succeed. We got a nice new image up there. We provide a lot of value-added programs. And probably the key differentiator for us is that we really try to do things that help our retail partners succeed. If they're successful we are successful, and we really pay attention to what's going on down at the site level.”
According to Dorfman, this can involve assistance with local store marketing. CHS provides Cenex branded retailers with processes and templates that allow site operators to conduct local store marketing. The company also offers retail specialists who consult with retail operators. Training programs are available and offered both in person and over the Internet.
It’s been said enough to be a cliché, but the industry has proven to be at least recession resistant – lending sources aside. And, in this environment, CHS has experienced better than typical results with the Cenex brand. “If you look at the industry as a whole and you look at the market data you see a decline in margins and a decline in the average throughput per site, but we've kind of bucked the trend in both areas,” Dorfman said. “At the retail site level itself, you probably see more of a resistance towards long-term investments because of the economy and a greater difficulty in finding funding. The lending institutions are a bit more cautious now so it's making it a little bit harder for those that previously were a bit borderline to go out and get those dollars. But, as I noted, we've seen growth. I've seen numbers elsewhere of a 2 percent to 5 percent decline in throughput but we're running the opposite with a 2 percent to 3 percent increase.”
One hallmark for CHS and the Cenex brand is its strong focus on biofuels. CHS is an agricultural cooperative in the energy, grains and foods business. Support of biofuels adds value to crops grown by producers as well as its Cenex network footprint that, to a great extent, serves rural markets. This eases both supply and product awareness issues. Biofuels have been under some attack recently, both from a price perspective and, ironically, an environmental perspective relative to CO2 reduction. Cenex is not moving away from its early commitment in this area.
“We'll continue to be a strong supporter of biofuels,” Dorfman said. “I believe we were the first branded marketer that allowed ethanol blended fuels (E85) through a branded dispenser versus a stand-alone or generic offering like some of the other suppliers promote. That's going to continue. It's a big part of our network and as you see more states looking at mandates on biofuels it is going to become a bigger issue throughout the entire industry. So I think we're way ahead of the curve compared to other suppliers. Our locations offer us some advantages, but I think nationally the consumer is going to drive a process at retail based upon their expectations.”
In fairly recent news, CHS launched a partnership with Cabela’s (a major “big box” retailer of outdoor sporting goods products) for a cobranded Cenex® Cabela’s Visa Card that allows a 2 percent rebate at Cabela’s on purchases at Cenex locations. “It's an excellent fit for both Cabela’s customers who tend to be outdoorsman and the markets in which we have our facilities,” said Dorfman.
The arrangement is also linked to the Cabela’s loyalty program, and customers earn double Cabela's CLUB points when filling up at Cenex branded retail locations.
On the fuels side, Cenex offers Cenex Roadmaster XL ® premium highway diesel fuel that combines a specially balanced additive package with a high-quality base fuel and Fieldmaster B2 ®, a soy premium biodiesel fuel. The CHS network of Cenex branded retailers is also the nation’s largest retailer of E85 ethanol and/or other alternative fuel blends.