Esso Goes to War

Most of the sound and fury in Britain's volatile gasoline war has come from the brash discounters who started it all in the early 1960s. By selling cut-rate gas under such names as Globe, Jet and V.I.P., the independents came out of nowhere to take over a heady 10% share of the country's $2 billion (including taxes) annual sales. For the most part, the major distributors have been loath to join the fray--until now. Alarmed at the shrinking size of its own tiger in the nation's tanks, giant British Esso, a subsidiary of Jersey Standard, moved to turn the market into what the London Observer called "a cold, inhospitable battleground."

To meet the discounters head on, Esso slashed prices by as much as 6 1/2-c- per imperial gallon, revamped its marketing so its lowest rates would be in effect in high-volume urban areas, reduced its gasoline grades from four to three, reshuffled their octane ratings. In London, for example, Esso's new premium-grade gas was cut by more than 3-c-, to 75 1/2-c- per gallon. Eventually, Esso's escalation of the war may cost the industry nearly $100 million a year in lost revenues, but it may also force many discounters to close up altogether.

Copycat. Determined to throw prying rivals off the track, Esso ordered press runs of phony price stickers and pumped the new grades of gas into its stations' tanks without even telling the dealers. Tony de Boer, marketing chief of Shell-Mex & B.P., the country's No. 1 distributor, fumed about learning of second-ranked Esso's move "in the papers," ruefully admitted being forced to do "some furious thinking." Jet, a leading discounter owned by Manhattan-based Continental Oil, promptly undercut Esso's new prices by 2 1/2-c- or more, sputtered the "tiger is just a copycat."

Esso's own furious thinking began last year. Its 1965 earnings had plunged 38% from 1964's $16.8 million. When a 1966 study showed that Esso's treasured 30%-plus share of the British market had slipped to 27 1/2% since the coming of cut-rates, Joint Managing Director Ted Choppen determined to push ahead with his existing plans to get "lean and fit."

On Their Feet. No one is yet ready to predict how the battle will turn out, but Choppen's preparations have been marvelously meticulous. To trim distribution costs, Esso quietly did some dredging to allow economical supertankers to reach its Fawley refinery, built Britain's longest pipeline, bargained hard for new low rail rates. It pulled out of many marginal stations, told its 10,000 remaining dealers to be prepared to take 1/2-c--a-gallon profit cuts, warned them to get their often outrageously relaxed attendants on their feet. And when Esso was finally ready to lower the price boom, Choppen was as good as his name.

This file is automatically generated by a robot program, so reader's discretion is required.