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Russian lubes industry majors and independent players: strategy and challenges

CIS BASE OILS AND LUBRICANTS

Russian lubes industry majors and independent players: strategy and challenges

How do independent players feel today in the Russian lubes market? What strategy do they choose to win business?
We posed these questions to Pavel Kirichenko, Director of Industrial Development from Obninskorgsintez, one of the key independent lubricants producers in Russia.

Let’s take Obninskorgsintez as an example – we have commercialized two new brands in the sub-premium price segment over the past three years. The attractiveness of this particular niche stems from higher margins. It must be understood, however, that this approach is conditioned by the production technology, selection of advanced raw materials, substantial investment in obtaining car manufacturers’ certificates of approval, competent marketing and technical support functions as well as other modern attributes of premium lubricants and process fluids.

Market players are challenged by the persistent need for equipment modernization both in the retail segment (PVL) and in the B2B segment (CVL/IND).

We should seek to coordinate with the market trends, hence the changes in our product portfolio. We see now that oils produced under obsolete technology are all but done for. It is why we are pivoting from GOST (USSR State Standard) oils to new high-tech products in line with the latest industry trends.

We strive to be as flexible as no one else in Russia in selecting our raw materials in order to achieve this goal.

Our company has long been importing and using significant volumes of high-tech components such as foreign Group III, IV and V base oils, components of multifunctional additives, thickeners and other raw materials for its products.

We are equally supplied by local producers, needless to say. It is worth noting that the Russian commodity market has markedly changed for the better, re-entering arguably long-forgotten areas.

And above all, a prudent approach to price positioning is our decided advantage. The recent years’ stagnation in the market has clearly shown how quickly former leading players can lose market share. Increasingly competent and technically aware consumers are progressively drawn to the product quality rather than to icon brands.

Thus, when we produce high-tech oils and commercialize them at reasonable prices it inevitably puts competitive pressure on the market leaders. This is equally true for the consumer market and B2B segment. Our products have certificates of approval from the leading foreign and domestic OEMs while extensive experimental industrial trials with commercial carriers, agricultural producers, miners and civil engineers, supervised by independent research laboratories as objective arbitrators, place our oils on top of the ratings.

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