In the Know: Focusing on more burner tips, propane appliance customers in 2019

Q: On what part of their business should propane retailers focus most in 2019?

A:

Propane retailers should focus on the part of the business they focus on least today: Marketing programs that expand the number of burner tips with current customers and developing new propane appliance customers.

We believe propane retailers will transform back to marketing companies instead of the operating/distributing companies of today. In the 1960s and into the ’70s, all multi-state and large regional propane companies had engineers and draftsmen reporting to a marketing department that was geared to develop more propane burner tips across the U.S. There was excess propane looking for a home and it was at a cost advantage.

In 1980, there were 36 large propane companies. Nine companies from the top 50 that year are still in business today. In 1980, 14 companies sold 100-plus million gallons per year. In 2015, seven did. In 2018, eight companies hit that sales mark. Over the next five to 10 years, we think there will again be 14 to 15 retail propane companies at 100-plus million gallons per year.

And how will these new larger companies do business? Much like retail propane companies did in the ’60s and ’70s: by marketing. They will sell, finance and install propane appliances, and will be paid for their services. These companies will partner up and support homebuilders and remodelers.

Why? Because propane has, and will for a long time, have a huge price advantage over its biggest competitor: electricity.

Marty Lerum is managing partner of Propane Resources.