Sweating out slow sales

February 1, 2007 By    

The early February deep-freeze that had propane sales across the country jumping should be a godsend to marketers squeezed by the lowest weather-driven propane demand in the last four years.

Patrick Hyland
Patrick Hyland

Sales data supplied for our annual LP Gas Top 50 retailer ranking this year confirms that 2006 was a struggle. A whopping 70 percent reported a decline in retail gallons sold compared to 2005. Just 27 percent said sales were up. The remaining 3 percent did not report last year’s numbers for us to compare.

The industry giants took big hits. Top-ranked AmeriGas, which sold more than 975 million gallons, fell almost 60 million gallons short of its 2005 numbers. Number two Ferrellgas was off more than 88 million gallons. In fact, only one company in this year’s top 10 – number three Heritage Propane – saw sales growth.

Despite the drop in sales volume, half of the 50 largest retailers say they added customers in 2006. One-third reported no change, while just 16 percent said they lost customers.

Those numbers jibe with recent industry studies that say we are reaching more households yet pumping fewer gallons due to increased appliance and home energy efficiencies.

Sales alone don’t dictate profitability, of course. And with propane retailers charging anywhere between $1.44 and $2.06 per gallon during the year, many marketers have maintained higher margins as wholesale propane prices followed crude back down to reality.

As long as weather continues to drive residential and commercial heating activity, however, gallons sold remains the industry bellwether.

Heritage leaped over Inergy, Suburban and Cenex to claim third place in this year’s Top 50. GROWMARK System remains at the seventh spot, while MFA Oil, Southern States Cooperative and Blossman Gas round out this year’s top 10. See the full listing on this issue.

This is the 14th consecutive year we have offered this popular directory as an invaluable source of information about the largest retail companies and the people who lead and manage them.

While we strive to make these rankings as comprehensive as possible, our information is only as reliable as the folks who take the time to submit the data each year. If you or someone you know should be on the list, please let me know or go to our website so we can include you in next year’s listing.

Patrick Hyland

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