Lubricants(Engine Oil): A Closer Look At a Competitive, Growing Market in Tanzania and Africa
Cars, lorries, motorcycles, tricycles, and machinery continue to be imported into Tanzania and East Africa.
The need for regular maintenance of these imported vehicles and machinery drives the lubricant market’s expansion.
The consumption of lubricants in Tanzania has continued to increase at an average rate of 12% per year, and it will most likely continue to grow.
Lubricant consumption continues to increase in almost all African countries due relative increase in machines that use lubricants, especially in the automotive and manufacturing industries.
Lubricants are either sourced locally or through direct importation. In all East African countries, lubricants are either blended/manufactured locally through imported feedstock materials or imported as finished products.
In Tanzania, for example, in 2021, 85% of the consumed lubricants were locally blended, and the remaining was imported as finished products.
The lubricant industry in Tanzania and East Africa is divided into four sub-sector. The retail segment that markets lubricants products at petrol stations.
Resellers target vehicles, spare parts shops, and garages.
The commercial segment focuses on marketing lubricants to commercial customers, including factories, agriculture, mining, logistics, and transport companies.
The aviation sub-sectors sell products to airlines. And marine segment sells lubricants to marine vessels.
Opportunities in Lubricant Sector.
1. Produce your own lubricants/Small Blending plant
In this option, you will buy bulk base oils from abroad, create your own formulation, and pack them in your brand package. You will need to have storage facilities for stocking base oils. It requires expertise, technology, and massive investment capital.
The second option you can reach out to an existing blending facility in the country. You will buy back products from them, and they will pack on your behalf on your chosen label. This will allow you to sell only finished products to consumers using your label or brand name.
2. Start Lubricating Oils Retail/reseller Shop
This is easy to start a business in the lubricants industry. If you can secure a place and set up a shop nearby garages, you can build a profitable business. This is because vehicle drivers visit garages for regular maintenance.
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3.Set up Lubricants wholesale distributions business
Eligible investors or entrepreneurs can apply to become a significant oil marketing company’s super dealer who will work partly with them to sell their lubricants in the market. Your supplier(large oil marketing company) will supply you with a wide range of lubricants in bulk at a fair wholesale price, and in turn, you will sell and earn a modest profit margin, and you may decide to sell at a retail price double profit.
As a super dealer, you will have to make sure that you have enough warehouses to keep the lubricants products.
4. lubricants oils importation
The importation of lubricant is a thriving and lucrative business in Tanzania and East Africa. As an oil importer, you can dictate your own price in the market and have the power to introduce your own packaging and new brand.
You need to rent a warehouse secured enough to house your products. With sufficient investment capital, good distribution channels, and high-quality lubricant products, new investors can win in this competitive market.
Five High Demands Lubricants Products Range to Distribute in Tanzania and East Africa.
Selling the right products is key to your business success. Although the demand for lubricant products differs based on location, some mainly consumed lubricants range in Tanzania and East Africa.
- Diesel Engine Oils: The first big volume seller of lubricant oil in Tanzania is diesel engine oils. Diesel engine oils reduce engine friction, mainly in heavy trucks, tankers, and stand-by factory generators. The high-demand package is 1 liter, 5 liters, and 20 liters. The grades most used diesel engine oils are number SAE 40, SAE 15W-40,
- Petrol Engine Oils. The next high volume selling lubricants products is petrol engine oil. The most used package of petrol engine oils is 1 liter, 4 liter, and 20 liters.
- Stroke Motorbike Engine. This is mainly used in motorcycles and try-cycles. The high-selling package for stroke motorbike engine oils is 1 liter.
- Brake fluids. The next high-demand lubricant product is brake fluids. It plays a crucial role in vehicles. The most used package in Tanzania is 0.2 liters.
Five Start-Up Steps For Investors and Entrepreneurs
Don’t rush into the petrol station business; examine all aspects. You will save money if you go into this business methodically.
Consider the following steps, and you will increase your chance of success.
Four steps will lay the ground for success.
1. Study the industry. Understand the fuel consumption, the foreseeable demand and supply within the industry, growth trends, and the top fuel providers in Tanzania. This encompasses their standing, market strategies, strengths, potential growth areas, and other metrics such as market share, annual growth rate, monthly/annual metrics
2. Customers and Competitors: Analyze the type of products your target customers wants in your trading area. Analyze competition and their customer behaviors
3. Government Agencies: Check out with all regulatory agencies for licenses and permits, their fees, steps, and procedures.
4.Lubircants Oils Providers: Find reliable lubricants providers who will supply you with high-quality products at competitive prices,
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