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Manchester United sponsorship helps Gulf Oil build Chinese empire

英国曼切斯特——3月14日电:2016年3月14日,曼联和海湾石油公司合作项目启动仪式在英国曼彻斯特 Aon训练基地举行,海湾石油公司国际副总裁 Frank Rutten 在启动仪式上发表讲话。(照片由 Matthew Peters/Man Utd via Getty Images 提供)

  • Deal with Manchester United helped Gulf Oil gain recognition and trust in Chinese marketplace.
  • Plans to open 1,000 service stations in three years “impossible” without the partnership.
  • Gulf has relied heavily on sports marketing to increase growth over recent years.

In early 2016, Manchester United announced a partnership with Hinduja Group-owned fuel and lubricants retailer Gulf Oil LP.

Though notable for being the club’s first in the sector, the deal – signed for a three-year term and worth about $4m (€3.5m/£3.1m) annually according to SportBusiness Sponsorship estimates – was not particularly exceptional.

Two and a half years later, in September 2018, Gulf Oil opened its first Gulf-branded service station in China. A further 25 are already planned to open across the country within 12 months and, by 2022, that number is expected to exceed 1,000.

This ambitious project has, at its foundation, the deal with Manchester United. Gulf Oil vice-president (international) Frank Rutten is very clear on its importance to the process.

“Let’s choose the words very accurately: without the partnership with Manchester United, this would not be happening” he says.

“If we manage to deliver what we have promised, then in three years, we will be two and a half times bigger than British Petroleum and Shell put together in the retail fuel market in China.

“If we did not have an association with an organisation like Manchester United, that would not have been possible.”

‘Wow’ factor

When the call first came from Manchester United, Rutten was sceptical. Traditionally, he points out, oil and lubricants companies work in motorsport: “Because it’s your laboratory and your demonstration. You see a Formula One car going 360 kilometres per hour, there’s got to be good fuel in there.” But a major football team signing a lubricants partner was almost unheard of, and Gulf had little desire to spend millions of dollars on a partnership they were unsure would pay off.

“I agreed to a meeting, but I went with the absolute conviction that it would be the first and last,” he confesses. “I couldn’t see it, I didn’t understand it. What was the connection between Manchester United and oil? How were we going to leverage this?”

The first Gulf-branded service station in China opened in Guangzhou in September. The company is planning to open another 1,000 in the next three years.

Under the stewardship of chief executive Ed Woodward, Manchester United’s sponsorship team had identified lubricants and fuels as an under-exploited space in sports partnerships and took the proposal to Rutten to begin changing his mind.

“The presentation that they put together and the approach that they took was absolutely so professional,” Rutten says. Using the example of the club’s beer partner, Singha, they demonstrated how simply using Manchester United-branded packaging led to a first-month sales increase of 30 per cent for the brand in its home market, Thailand.

“They showed me the power of the brand, and also the power of the team that they have,” he adds. The club, he says, engages upwards of 80 marketers globally, counting both in-house and those at their appointed agencies, to work with their 54 commercial partners.

“An organisation like Manchester United have organised themselves to be able to create that ‘wow’ factor for their customers,” he adds.

“I look at the world through oil lenses. Manchester United looks at the world through football lenses but they also see the world through our customer’s lenses, and that is a magnificent added value that they bring.”

A constant presence in Asia – via the club office in Hong Kong – was also a decisive factor. “We’ve identified so-called ‘hero markets’, the markets where we wanted to pay special attention,” says Rutten.

“India and especially China are two of them, and it was clear that this would give us a fantastic platform. Marketers from Manchester United travel with our marketers and they go together, hand in hand. That level of dedication impressed me greatly.”

The benefit of these deals to Manchester United’s bottom line is widely acknowledged – the club generated £173m (€197m/$224m) in sponsorship revenue in 2018, the largest in world football and double the figure of £117.6m in 2012, the year before Woodward took over as chief executive. Less clear is precisely how the collaborations benefit their commercial partners.

Power of sports marketing

For Rutten, there is no understating how valuable the deal has been in helping Gulf into new marketplaces and gaining greater brand recognition. Oil products, he says, are not just low-interest products, “they’re no-interest products”, and marketing them, differentiating your brand from the rest of the field, requires creative solutions.

“You don’t go to the pub to say to your friends, ‘you know what I’ve done? I’ve filled up my car with petrol’,” he says. “You don’t come home and say to your girlfriend, ‘I put a special engine oil in the car’. You don’t. So you’ve got to have a way in which people want to see it, want to think about it.”

Sport, Rutten observes, is the only remaining traditional marketing platform in which interest is increasing, not declining. “‘Why did we do this?’ is a question I had to answer internally quite a lot,” he says. “So I say: What’s the biggest platform in the world? Is it Formula One? Is it the Olympic Games? Is it the NFL? No. It is football. If you use simple statistics, football is by far the biggest. If you ask what the biggest name within football is, there is again no doubt that it is Manchester United, especially in Asia-Pacific.”

The dual-branded ‘Gulf United’ lubricants packaging helped Gulf build its profile in China

Across the ‘hero markets’ Gulf Oil is targeting, Rutten says that 51 per cent of televised Premier League matches feature Manchester United. “No other platform could offer us that kind of exposure,” he says. “We found that it doesn’t even matter if people are fans of Manchester United, or if they know the current line-up – which often in these parts of the world they don’t. Manchester United often stands for English football generally, and it stands for quality.”

Rutten recalls the initial resistance to the partnership from the head of Gulf Oil Bangladesh, who protested that Bangladesh is “a cricket country” and claimed Manchester United could not help sell any products there.

“Within four weeks, he doubles his number of storefronts and points of sale in the country, all because there was a little logo from Manchester United on the pack and shopkeepers suddenly wanted to stock this product,” says Rutten. “Normally to double your windows, you need to put another 20 salespeople on the ground, you need to do I don’t know how many campaigns. Through sports and what it means to people, we have seen we can massively accelerate this growth.”

Gulf had witnessed the potential of sports marketing after a successful campaign involving Indian cricketer MS Dhoni. When Dhoni first became an ambassador for Gulf in 2011, the company was the 11th biggest fuel and lubricants supplier in India; five years later, they were the third, and at current growth levels are on course to overtake Shell within the next year.

“We can’t put our entire growth down to sports marketing, of course,” says Rutten, “but through that campaign we saw how powerful it can be”.

Gulf had created a new oil product which only needed to be changed every 60,000km, where the average in India was 10,000km. Getting Indian truck drivers to change their habits was proving difficult, until Gulf involved Dhoni in the advert for their product.

“In the course of six or seven years, not only did we move the industry average [for changing oil] from 10,000km to 60,000km entirely through sports marketing, we also boosted our oil sales in India by several factors,” says Rutten.

“If we can change consumer behaviour like this through cricket, how much more powerful will Manchester United be?”

The spate of similar deals involving United’s – and Gulf’s – rivals since 2016 is a particularly satisfying measure of the success of the partnership, he adds. “Before our deal, we never saw oil and football as natural partners.” In the past two years, Manchester City, Liverpool and Barcelona have confirmed tie-ups with Valvoline, Petro-Canada Lubricants and SK Lubricants respectively.

Building an empire

While Gulf has sold its products in China for the past 20 years, Rutten says it was always a difficult market for an oil and lubricants company to crack, due to the highly-regulated marketplace and the presence of the effective duopoly of PetroChina and Sinopec. Those Western brands which did make an impact were the far bigger competitors with greater brand recognition, such as BP and Shell.

That has been changing over the course of the last half decade, largely thanks to the growth of ecommerce services delivering across China, where consumers will turn to Alibaba for the majority of their needs. This evolution alone has helped Gulf grow sales of its lubricants in China “by almost 250 per cent in the last five years”, says Rutten, “a lot of that coming since we began selling the Manchester United co-branded packs”.

Prior to the Manchester United deal, Gulf had tried different tactics to boost their status in China. When Gulf lubricants first began being sold on Alibaba, the company offered a promotion which would see the first 10,000 litres of oil given away for free.

“We still have those 10,000 litres,” says Rutten. “Because people didn’t trust it, they didn’t know what Gulf was. And even when it was free of charge they didn’t take it, because if it isn’t working for your car then you damage your car. So that was the moment that we realised we have to do something significant with the brand.”

It is difficult to put a reliable number on how much of the company’s growth can be accounted for by the partnership, he says. But in the three years before the deal was struck, Gulf’s overall revenue growth in China was around 10 per cent. In the two years since, that figure has been nearer 20.

The two years from the signing of the deal until the opening of the Gulf-branded station involved an exercise in brand-building and establishing Gulf in the Chinese market, selling co-branded ‘Gulf United’ packs. But service stations remained “the real challenge”, and a space Gulf needed to enter to achieve its ambition of becoming one of the top ten downstream oil players in the world.

That became significantly easier in April of this year, when the Chinese government relaxed the rules around the operation of service stations. Previously, all stations were required to be at least 51-per-cent Chinese-owned – and this usually meant the involvement of either PetroChina or Sinopec, leaving little incentive for other suppliers to get involved.

Manchester United legend Dwight Yorke (centre) signs a shirt for a fan at the opening of the Guangzhou station

The new regulations still require a partnership with a Chinese company – as is the case in most sectors in the communist country – but foreign companies can now be the majority owner and establish their own branded outlets.

Partnering with Beibei Energy, and now with two years of growth and association with Manchester United behind it, Gulf Oil threw a launch party to open the first of its Chinese service stations – a former BP site – in Guangzhou on 18th September, 2018. Dwight Yorke, the treble-winning former Manchester United striker, was in attendance to cut the ribbon and officially open the outlet.

A typical service station in China would expect to move 18 million litres of fuel in a year; the Guangzhou Gulf Oil station sold “something in the region of two and a half million” in its first 24 hours.

Rutten acknowledges that not all 1,200 of its planned service stations will be like this; not all will be able to rely on what he dubs “the Manchester United show” to draw a crowd. But it nevertheless demonstrates the journey Gulf has taken in China in partnership with Manchester United – from being unable to give away free products online, to a queue “still 100 metres long at midnight” for its station.

“The excitement because of the presence of Manchester United is unbelievable,” says Rutten. “And this reinforces what we believed in: that without the partnership with Manchester United, we would not have been able to give the Gulf brands the colour and flair and status that would enable us to open these stations.”

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