During my conversation with Mike O'Brien, the new Growth Energy vice president of market development (See Meeting a Flex Fuel Challenge) we got into a conversation about building demand. As he noted more 80% of fuel is sold through convenience stores these days and more than half of those are single-store owners. So where do you come in?
For a smaller store owner to commit to any investment they need to know there's demand for a new product. The basics you can find at any convenience store are increasing. Recently there were press reports noting that fast-food operations were facing increasing competition from convenience foods at these smaller retailers. The rise in popularity of pizza, hot dogs and other items you can get quick at the local store make a difference in their per-store incomes.
Gasoline, however, is not in the top five money makers for those c-stores. So how do you convenience a single-store owner in a small town that a flex fuel pump might be a good investment? How about driving in with a your new Ford Super-Duty F-350 pickup with its flex fuel engine (the 6.2 liter engine if flex fuel capable) or your Chevy Silverado (three engine options are flex-fuel capable the 4.8-, 5.3- and 6.2-liter models) and asking for some flex fuel options?
BUILDING DEMAND: Rolling in with one of these big rigs, and its impressive fuel needs could be enough incentive for your local convenience store to invest in a next-generation flex fuel pump. (Photo from Ford Motor Company).
O'Brien notes that knowing there would be local demand for intermediate fuel blends - rather than the E-10 or E85-only choices would be good for farmers with their bigger trucks, and the convenience store owner would know the pump would get used. If it meant the local store would get more business from local farmers, which boosts the chances of getting flex-fuel pumps in more locations.
The beauty of capitalism is that the push-pull pressures of the marketplace really work. Customers who start asking for a service or a product get the attention of retailers looking for ways to add customers and business. Farmers pushing for flex fuel options at local retailers would create a pull for those pumps into the stores.
Just something to think about as the ethanol industry goes through an important change at the end of 2011. Creating local demand in your nearest town could make a difference.