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Oil Companies Look to Food for Profit

2021-01-20 foodprocessing

Tag: food profit Oil Companies

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As gasoline prices continue to languish, oil companies are increasingly turning to food and beverage sales in their gas stations to shore up profits.

BP and Shell both plan to add thousands of outlets to their global networks of gas stations, with additional sales of food and other convenience items being the major motivation, its executives say. These plans come during a pandemic that drove down the price of oil 63% last spring.

Food and other non-gasoline items have typically been a strong profit center for gas stations, due to their higher profit margins. Gasoline has a margin of about 9%, while food margins range from 50% for candy to 63% for hot drinks, according to information gathered by the Wall Street Journal.

“We believe we can more than offset the impact of fuel volume declines in established markets to 2030 through growth in convenience,” a BP executive told investors last year.

The “marketing division” of Shell, which includes non-gas items sold at stations, reported earnings of $1.8 billion in the third quarter. This amounts to more than half the company’s earnings, compared with 20% to 30% before the pandemic.

Both Shell and BP have especially ambitious plans for food sales in stations outside the U.S., including delivery from some stations in the United Kingdom.

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