Fesco aiming to triple cooking gas market share in months

In the three months since its soft launch into the household or liquid petroleum gas market, Future Energy Source Company Limited, which trades as Fesco, says it has secured 2.5 per cent share of the $25 billion market.

It is bullish on pushing that to seven per cent by year end.

Fesco, a petroleum products supplier and operator of a network of 18 service stations, entered the cooking gas market in April when it acquired Wilson Beck LPG and branded the business as FESGAS.

“We were able to secure 2.5 per cent of market share with our little dabble in the market, without no advertising, and so our team is confident and humbled by the support,” said Fesco CEO Jeremy Barnes at the formal launch of FESGAS on Thursday.

The cooking-gas market is dominated by the IGL and GasPro brands, both of which are owned by Trinidad & Tobago-based conglomerate Massy Holdings Limited.

Massy Gas Products (Jamaica) Limited, distributor of the GasPro brand, has, since 2006, supplied the residential and commercial markets with LPG, butane, commercial fuels, industrial chemicals, commercial lubricants, marine fuels, lubrication, petroleum products, and propane.

Meanwhile, IGL Limited, which was recently acquired by Massy, has operated in Jamaica for six decades as a top distributor of cooking gas. It is also in the business of medical gases.

But the nimble and fast-growing Fesco is confident that it can take on the established brands. Its cylinders are currently sold in three sizes – 25, 30, and 100 pounds – but it will also be rolling out a 120-pound cylinder specifically targeted at small restaurant operators.

The petroleum marketing company’s plan to win another four to five per cent of the market by year end starts with ‘no BLEVE’ gas cylinders, made of high-strength and low-thermal materials.

BLEVE stands for ‘boiling liquid expanding vapour explosion’. If a tank containing liquid is subjected to external fire, the heat may lead to boiling of the liquid. This, in turn, increases the pressure in the tank, and the boiling liquid and expanding vapour may cause tanks to rupture, resulting in a fire or explosion.

FESGAS cylinders have a relief valve, which controls pressurisation of the tanks and helps to prevent rupture and damage.

“So worst-case scenario is the cylinder burning, but it won’t explode like other cylinders do,” said Barnes.

“Additionally, you can also see the level of the gas in these cylinders, and if you have marble or ceramic tiles, it won’t leave you with rust stains,” he said.

On the retail front, Fesco is tying down arrangements with cooking gas distributors for door-to-door delivery.

To date, Fesco says it has spent $200 million on building out capacity, which is three times that of Wilson Beck’s operation pre-acquisition, and on the purchase of trucks, cylinders, and storage tanks.

“Later in the year, we will be coming with technology for both our retail and commercial customers to access their accounts online, but we will be making announcements as we get to each step to make the public aware of what we are doing,” said Barnes.

At current capacity, FESGAS could “easily” serve 20 per cent of the LPG market before signing off on more capex projects, he added.

“We aren’t restricted. Everything is in place to do further growth once we are ready,” he added.

It is partly why the company chose to enter the market via acquisition of an existing player rather than through a start-up business, he explained.

For a new business, “the timeline on building out all of that would be at minimum eight months, but we didn’t want to wait until then”, Barnes said.

Fesco plans to add another 15 staff to the 82 it now employs to facilitate both the LPG business and its still-expanding network of service stations that is projected to grow to 21 by September.

The three service stations being added are located in May Pen, Clarendon; Kitson Town, St Catherine; and Port Maria in St Mary.

karena.bennett@gleanerjm.com

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