'Best Lubricants in the World' May Not be Best For Latin American Market

Apr 27, 2001, 01:00 ET from Kline & Company

    LITTLE FALLS, N.J., April 27 /PRNewswire/ -- According to a study hot off
 the presses by Kline & Company, BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN
 LUBRICANTS MARKET, 2000, demand for lubricants in South America is forecast to
 reach nearly 850 million gal, valued at $6.6 billion, in 2004. Although demand
 in this region is not expected to skyrocket, there will be positive growth,
 and Kline's study points to a number of interesting business opportunities for
 lubricant manufacturers and marketers in Latin America. To pursue these
 opportunities, however, marketers cannot compete with the same paradigm used
 in North America or Europe.
     If marketers simply assume that the most advanced API or ACEA lubricant
 formulations can be marketed in Latin America based on superior performance,
 they will likely run headfirst into several harsh realities about the region,
 including vehicle age, fuel sulfur levels, and economics. Most are well aware
 that engine oil performance is generally tied to vehicle age, engine make, oil
 drain intervals, and severity of duty. However, Wes Cosgriff, a Kline &
 Company associate, notes that "The Latin American market reminds us that fuel
 sulfur also has a strong say in what makes a 'quality' engine oil." The fuel
 sulfur levels in Latin America are significantly different than those in North
 America and Europe; consequently, the definition of "quality" engine oil is
 also quite different.
     The sulfur content of diesel fuel in Brazil ranges from 3,000 to
 10,000 ppm, as compared to only 500 ppm in the United States in 2000.
 Argentina's average sulfur content in diesel fuel is 2,500 ppm, which is five
 times higher than that of the United States. Therefore, API-specified
 lubricants are designed to handle a much lower sulfur/acidic combustion
 by-product contamination level (i.e., engine oil total base number
 requirement) in the U.S. market. According to Cosgriff, "Although these
 API-approved lubricants-for example CH-4-may appear to hold a competitive
 advantage in a country such as Argentina, where a few of the major lubricant
 marketers are not API-licensed, the API products may not actually perform as
 well on the acid neutralization issue, particularly when tested against
 products from such Latin American marketers as Petrobras, Ipiranga, Repsol
 YPF, and others."
     One of the most important distinctions that must be made about lubricant
 performance in Latin America is not a lubricant's ability to perform in the
 most advanced low-emission engines, but rather its ability to provide
 protection based on the quality of available fuel in the region. Lubricants
 must be able to protect both old and new engines that burn high-sulfur fuels.
 This issue applies to both gasoline and diesel engines but is certainly more
 pronounced in diesel engines.
     Cosgriff is also quick to note that "Although fuel sulfur levels can
 redefine what 'quality' means, certain regions of Latin American do ascribe
 quality to brand names." In fact, BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN
 LUBRICANTS MARKET, 2000 reveals that such multinational brands as Castrol,
 Pennzoil-Quaker State, Havoline, and others are considered to be superior in
 quality to some domestic engine oils and are the products of choice in newer
 vehicles.
     Established in 1959, Kline & Company is a leading business and management
 consulting firm serving the lubricant industry. Kline & Company assists
 clients in achieving growth and diversification goals and enhancing business
 performance. For information on how Kline can assist your firm, or to
 subscribe to BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN LUBRICANTS MARKET,
 2000, contact Lynn Gillette directly at Kline & Company, Inc., Overlook at
 Great Notch, 150 Clove Road, Little Falls, NJ 07424, at (973) 435-3448, or via
 e-mail at Lynn_Gillette@klinegroup.com.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X06474414
 
 

SOURCE Kline & Company
    LITTLE FALLS, N.J., April 27 /PRNewswire/ -- According to a study hot off
 the presses by Kline & Company, BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN
 LUBRICANTS MARKET, 2000, demand for lubricants in South America is forecast to
 reach nearly 850 million gal, valued at $6.6 billion, in 2004. Although demand
 in this region is not expected to skyrocket, there will be positive growth,
 and Kline's study points to a number of interesting business opportunities for
 lubricant manufacturers and marketers in Latin America. To pursue these
 opportunities, however, marketers cannot compete with the same paradigm used
 in North America or Europe.
     If marketers simply assume that the most advanced API or ACEA lubricant
 formulations can be marketed in Latin America based on superior performance,
 they will likely run headfirst into several harsh realities about the region,
 including vehicle age, fuel sulfur levels, and economics. Most are well aware
 that engine oil performance is generally tied to vehicle age, engine make, oil
 drain intervals, and severity of duty. However, Wes Cosgriff, a Kline &
 Company associate, notes that "The Latin American market reminds us that fuel
 sulfur also has a strong say in what makes a 'quality' engine oil." The fuel
 sulfur levels in Latin America are significantly different than those in North
 America and Europe; consequently, the definition of "quality" engine oil is
 also quite different.
     The sulfur content of diesel fuel in Brazil ranges from 3,000 to
 10,000 ppm, as compared to only 500 ppm in the United States in 2000.
 Argentina's average sulfur content in diesel fuel is 2,500 ppm, which is five
 times higher than that of the United States. Therefore, API-specified
 lubricants are designed to handle a much lower sulfur/acidic combustion
 by-product contamination level (i.e., engine oil total base number
 requirement) in the U.S. market. According to Cosgriff, "Although these
 API-approved lubricants-for example CH-4-may appear to hold a competitive
 advantage in a country such as Argentina, where a few of the major lubricant
 marketers are not API-licensed, the API products may not actually perform as
 well on the acid neutralization issue, particularly when tested against
 products from such Latin American marketers as Petrobras, Ipiranga, Repsol
 YPF, and others."
     One of the most important distinctions that must be made about lubricant
 performance in Latin America is not a lubricant's ability to perform in the
 most advanced low-emission engines, but rather its ability to provide
 protection based on the quality of available fuel in the region. Lubricants
 must be able to protect both old and new engines that burn high-sulfur fuels.
 This issue applies to both gasoline and diesel engines but is certainly more
 pronounced in diesel engines.
     Cosgriff is also quick to note that "Although fuel sulfur levels can
 redefine what 'quality' means, certain regions of Latin American do ascribe
 quality to brand names." In fact, BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN
 LUBRICANTS MARKET, 2000 reveals that such multinational brands as Castrol,
 Pennzoil-Quaker State, Havoline, and others are considered to be superior in
 quality to some domestic engine oils and are the products of choice in newer
 vehicles.
     Established in 1959, Kline & Company is a leading business and management
 consulting firm serving the lubricant industry. Kline & Company assists
 clients in achieving growth and diversification goals and enhancing business
 performance. For information on how Kline can assist your firm, or to
 subscribe to BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN LUBRICANTS MARKET,
 2000, contact Lynn Gillette directly at Kline & Company, Inc., Overlook at
 Great Notch, 150 Clove Road, Little Falls, NJ 07424, at (973) 435-3448, or via
 e-mail at Lynn_Gillette@klinegroup.com.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X06474414
 
 SOURCE  Kline & Company