'Marketing expenditure': Union Gas CEO on how Cnergy is drawing petrol queues even as prices climb
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SINGAPORE - As the global oil shock pushes pump prices at major petrol retailers well past the $3-a-litre mark, Cnergy’s stations continue to undercut the competition in what its management says is a calculated move to gain market share.By keeping its price'Marketing expenditure': Union Gas CEO on how Cnergy is drawing petrol queues even as prices climb
SINGAPORE - As the global oil shock pushes pump prices at major petrol retailers well past the $3-a-litre mark, Cnergy’s stations continue to undercut the competition in what its management says is a calculated move to gain market share.By keeping its prices significantly lower than the market average – up to S$1 lower than the competition when excluding discounts – the upstart Singapore brand has triggered localised traffic jams, gained social media fame, and generated a surge of about 40 per cent in the share price of its parent company, Union Gas Holdings.But Union Gas is not relying on hedging strategies, where companies lock in oil prices months in advance to protect against market shocks, to keep pump prices down.Instead, it is absorbing the rising wholesale costs directly, engaging in an aggressive customer acquisition play that relies on volume to offset tight margins.“We make a very, very marginal profit... there are days that we really go without profits,” Union Gas chief executive Teo Hark Piang told The Business Times in an interview on Friday (Mar 20). Read more
