Rising Star: The Resurrection of an American Icon
Shariq Yosufzai, Acting Co-President, North America Products
2003 Outlook Conference
San Diego, California
Good afternoon, ladies and gentlemen. I'm delighted to be here for a couple of reasons -- first, because I enjoy reminiscing about the past, and second, because I like to talk about the future. Being here with you today has given me the opportunity to do both.
But first, let's take a look at Texaco's advertising history. It might bring back some of your own memories.
Those were the days. I still get chills when I see the old commercials with Milton Berle, Jack Benny and the great Bob "Texaco" Hope. As hard as we tried, we may have never sold Jack more than one gallon of gas at a time!
To tens of millions of American motorists, these and other Texaco commercials are the stuff of legend. They are part of what made the Texaco Star nothing less than an American icon, calling forth images of trusted service, Route 66 and mobility as a way of life.
Now, nearly three years have passed since a Texaco gasoline ad last appeared on American television. But, despite rumors to the contrary, I am here to tell you that in parts of the United States the Star will rise again, because you just can't keep a good brand down.
I'll get back to the Texaco story in a moment, but first I'd like to make a few general comments, including my expression of thanks to Paul Reuter [president/editorial director of CSP Information Group, Inc. and co-chairman of the Outlook Conference Advisory Council] for inviting me to speak today.
"The Winds of Change" is a good theme for this Outlook Conference because it's clear the convenience store and petroleum industry are facing an emerging set of tough competitors.
There will be a lot of conversations over the next couple of days about the "big box retailers," their extremely efficient supply chains and the threat they pose to our industry. The threat is real, and the "big boxes" are a wind of change.
And yet, I believe the best way to ride those winds is through powerful brands – historic and iconic brands that still speak volumes to customers and, in a flash, convey deep meaning about products and services. This is why ChevronTexaco intends to market gasoline under three separate but equally legendary brands.
- There's Caltex, the product of a joint venture started more than 60 years ago by Chevron's Standard Oil of California predecessor and Texaco, which is found primarily in Asia, Australia and parts of Africa.
- There's Texaco that we currently market in Europe, the Caribbean and Latin America.
- And then there's Chevron, the premium brand that's predominantly on the U.S. West Coast, the Sunbelt over to Florida, and halfway up the Eastern Seaboard.
This brings me back to the story of the Texaco brand in the United States and why I believe you can't keep a good brand down.
When Chevron merged with Texaco, we recognized that, for the Federal Trade Commission to approve the merger, Texaco would have to divest itself of some of its retail and marketing assets. At the time, Texaco and Shell were linked in a pair of joint-venture refining and marketing operations in the United States.
To make a long story short: The Texaco U.S. gasoline brand went to Shell under a licensing agreement from ChevronTexaco. We get back the nonexclusive use of the brand on July 1, 2004, and it fully reverts to ChevronTexaco on July 1, 2006.
Shell has chosen to de-emphasize Texaco, which is why you haven't seen any commercials. We, on the other hand, intend to ensure the Texaco Star rises again and shines bright to the American motoring public.
- One reason is simple corporate pride. We hold a true reverence for our Texaco heritage – just as we do for Chevron – and all that it has meant to employees, stockholders and customers.
- Secondly, we think that allowing an American icon to fade into oblivion would be sheer folly. After all, the story of powerful brands is also the story of some of the most successful enterprises in this nation's history.
Back in the late 1930s and early 1940s, Ford Motor Co. was in chaos. They had lost enough market share to General Motors to make Ford an unthinkable No. 2. Even small automakers like Nash, Plymouth and Oldsmobile were offering car-buyers new technologies like radios, automatic transmissions and safety glass.
But old Henry Ford was rooted in the days of the Model T, and it got so bad that, with war coming, there was talk in government circles about putting Ford Motor under the direction of Studebaker or even nationalizing the firm.
Before the government could step in, Henry Ford II took control of the company and used Ford Motor Co.'s brand strength to work with suppliers and dealers to bring the brand back from near death.
Today, the distinctive flourish of the Ford logo represents one of the most respected brands and one of the largest corporations in the world.
Then there's IBM [International Business Machines Corp.]. Between 1940 and 1980, IBM's stock rose by 22,000 percent!
Then the bottom fell out with a little thing called the personal computer, which caught IBM by complete surprise.
By 1990, the company was hemorrhaging money – it lost a staggering $16 billion in 1993 alone – and the death of IBM was expected for the next day's headlines.
But then a guy named Lou Gerstner stepped in and demonstrated his commitment to the IBM brand and what it stood for. He wore his IBM lapel pin like a badge of courage everywhere he went. And by the time Gerstner retired in 2002, IBM's product line was reborn and its stock price had risen 1,000 percent.
Today, IBM is once again a leader in the computer market it did so much to create in the first place.
Indeed, you can't keep a good brand down. The winds of change, however, are always with us.
Many of you probably remember seeing Milton Berle on a black and white television and laughed at Jack Benny's miserly ways when you were kids. You may remember when roads weren't crowded and that when you stopped for gas, you stopped for gas. If you got lucky, maybe the gas station had a Coke machine or sold a Little Debbie cake.
Even when I was at Texas A&M in the mid-1970s, convenience stores were still just mini-grocery stores with gas pumps – places to pick up milk and beer when you paid for the fuel.
I don't need to tell you folks that "stopping for gas" has turned into a euphemism for so much more. It means a place for a quick-stop high-quality something that's easy to find and where you won't have to stand in a long line to get it.
Mind you, gasoline still matters, and so does the brand name that is attached to it. Putting a value on a gasoline brand is not always the easiest task, nor does it tell the complete story of a specific business strategy. As important as fuel sales might be at a Chevron, Caltex or Texaco outlet, total site revenue is probably the most critical measure of a specific location's success.
A pair of recent reports suggest that both the Chevron and Texaco brands in their U.S. markets hold an appeal that supports brand value pricing that other major competitors cannot match. This was the conclusion of a July Lundberg Letter story about Chevron's expanded price premium.
This highly respected publication looked at the general "price personalities" of 13 gasoline brands. From January of 2002 through last July, Chevron's premium ranged from roughly 2 cents to 4 cents per gallon.
Of course, other analysts cut data in different ways.
In a recent Retail Gasoline Report, the Oil Price Information Service ranked Texaco as the No. 1 brand in the United States for 2003. The report says "the Texaco brand was able to fetch the best return relative to its competitors in markets across the country." The report also concluded that "retail sales of Texaco gasoline yielded prices an average of 2 cents per gallon above direct competition."
As a legacy Texaco guy, I'm proud of that finding and I look forward to bringing the value of the brand home to where it belongs. Starting this July in the southeastern portion of the United States, we intend to add the Texaco brand power to the strength of the Chevron brand.
The stories of Ford and IBM and our plans for the Texaco brand have a couple of common themes that I believe are essential to any brand comeback.
- First, you have to have an unbending will and an ability to partner based on brand strength.
- Second, if it's going to work, you need management's total commitment to the brand.
While the Texaco brand has attracted premium sales for as long as anyone in this room can remember, Texaco didn't build its good name all by itself. It took good-quality investors and marketers to help build the brand into what it is today. We cannot – let me say it again, we cannot – sustain the Texaco legacy without the help of top-quality fuel and convenience marketers.
By being here today and by promising to you my unwavering commitment to the Texaco Star, we are hoping to attract the kind of quality partners we can grow with together.
You know, a good partnership occurs only when the whole is greater than its individual parts. That greater sum is what the Texaco brand was all about.
Berle, Benny and Hope were just part of a constellation of star power that appeared on its behalf. Among others, Ethel Merman sang its praises, and Don Adams of Get Smart fame did his "would you believe" routine as a station attendant.
But the Texaco brand was doing business nearly 50 years before Uncle Miltie rode on stage as Lady Godiva. The Texaco Star has a legacy that goes back a full century, which is why I am so pleased to be able to say that the Texaco Star is going to be part of the American motoring experience well into the next century.
You know, it's great to revel in the past, but the future is a lot more exciting because that's where the promise resides. That's where the growth is found.
And with our total commitment and with the help of our retail partners, maybe some 50 years from now, somebody will begin their talk at an Outlook Conference with an old digital CD of some bright red Texaco pumps in front of a brand-new convenience store and say, "Now, those were the days!"
Thank you very much.
Updated: November 2003