The Caltex (ASX: CTX) share price is down 0.5% after the petrol giant announced a re-branding.
Caltex is a well-known Australian oil refiner and fuel marketer. The multi-billion-dollar company operates in the petroleum industry by buying, refining and distributing fuel products throughout Australia. It’s been in the business for more than 100 years.
Caltex’s Brand Change
Caltex has received a termination notice from Chevron Corporation about the current licence agreement for use of the Caltex brand in Australia. This is after 18 months of discussions with Chevron.
So, that’s why the company is going to implement existing plans to transition to the company-owned Ampol brand after a brand strategy review.
Caltex’s licence agreement allows for a three year transition period consisting of a six month notice period and 30 month work out period. Caltex has continued exclusive use of the Caltex brand for the notice period and first 18 months of the work out period.
The business will begin transition to Ampol after the six month termination notice period and will complete the transition across the full retail network within the next three years.
Managing Director and CEO of Caltex Julian Segal said: “Ampol is an iconic brand in Australia and reflects our deep Australian heritage and expertise. Our market research confirms that Ampol continues to be regarded as a high-quality and trusted brand by Australian consumers and resonates across our key customers segments.
“The transition to Ampol also supports our evolution into a growing regional fuels and convenience business and will allow us to invest and build equity in a company-owned brand as we continue the rollout of our retail strategy. This includes capturing benefits from cost synergies of rebranding during the rollout.”
Whilst this transition will cost additional marketing costs to relaunch, it will save annual trademark licence fees of around $18 million to $20 million, which will be in addition to cost saving initiatives previously outlined to the market.