committed to convenience stores

A look at the Fina brand 16 Years (200 CSD Issues) Later

By Jeff Morris President and CEO, Alon USA

Jeff Morris, president and CEO of Alon USA, reflects on the growth of the Finabrand since the company was profiled in the inaugural issue of ConvenienceStore Decisions 16 years ago.

After reviewing the article about Fina Mart stores in the inaugural issue of Convenience Stores Decisions, I was struck by the old adage that “the more things change, the more they stay the same.”

I enjoyed the discussion on the monthly store gasoline and merchandise sales, which are comparable to what we have today. I enjoyed the discussion about building a 2,500 sq. ft. footprint, which is very similar to what we have today, and I enjoyed the discussion around growing Fina Marts from 11% of the companies’ overall gasoline sales to up to 80% of gasoline sales. In 1990, we had 150 stores; today we have 167 and sell about 20% of the gasoline we make.

Nevertheless, the journey from 1990 to today has been circuitous, and we area much different company. In 1990, we were Belgian owned. We are now Israeliowned. Then, we had two U.S. refineries as part of a multinational oil company.Today, we operate one refinery and are an independent oil company in the U.S.—partof a much larger Israeli enterprise.

In 1990, our fuel brand was Fina and our store brand was Fina Mart. Sixteen years later, our fuel brand remains Fina, but we are the largest 7-Eleven licensee in the U.S.

But perhaps the most striking part of the article in 1990 was the discussionthat centered around our customers. Much of the dialogue could simply be reprintedtoday—the concern about the percentage of gasoline customers who comeinside the store, the design of the gondolas, the design of the fountain andcoffee offering, the relative location of the checkout counter in the store,the debate on the relative advantages and disadvantages of fast food and thenumber of cooler doors are all issues still among our key concerns.

This discussion reinforced to me the strength and stability of our business model in the convenience industry. Our model is very sound. Our customers have proven over and over again, against all competition, that they value convenience. Thus, if we continue to listen to our customers and gradually adjust our product offering to meet their changing desires while staying focused on the fundamental of convenience, we will continue to stay very successful as an industry.

The proof is that the number of convenience stores in the U.S. continues to grow and we continue to grow market share even more than a decade after the introduction of the hypermarket.

The same applies for Alon USA. Our company has never been stronger and I havenever been more optimistic about the convenience retailing portion of our business.I think the biggest change for us over the last 16 years is the move from ownershipby a petroleum-based company to being owned by a retailer. What a wonderfulrevelation. Nowadays, when a convenience retailer introduces themselves as apetroleum marketer, I become concerned because it shows a commitment to an integralpart of the business that wasn’t a focus of traditional operators.

Today’s convenience store, as was discussed in CSD’s inaugural issue, is primarilyabout what goes on inside the store while offering a wonderful fuel presenceoutside to further enhance the concept of convenience. Congratulations to CSD.I look forward to another update 200 issues from now. I am sure that, althoughmany things will have changed, the fundamental value of convenience will remainthe same.

Jeff Morris took over as president and CEO of Alon USA six yearsago after serving as a chemical engineer with the company for nearly 20years. The oil company is a subsidiary of Alon Israel Oil Co. formed in2000 to acquire Fina Inc.’s downstream assets. The refiner-marketer sells97.5 million gallons of gasoline a year, primarily through its networkof 1,300 Fina branded stores throughout the Southwest. It also directlyoperates 167 7-Eleven stores making it the largest 7-Eleven licensee inthe U.S. Alon’s core refinery, in Big Spring, Texas, has a productioncapacity of 70,000 barrels per day.

Morris has developed a reputation forbeing a shrewd, highly-skilled executive that has Alon, and the Fina brand,on the fast track for growth through acquisitions thanks in part to twostrategic decisions that yielded high financial returns and settled virtuallyall of the company’s outstanding debt. First, in January 2005, he orchestratedthe sale of three product pipelines and three product terminals to HollyEnergy Partners for $118 million in cash. Six months later he took thecompany public with Initial Public Offering (IPO) of 11.7 million raisingnearly $190 million.

"We didn’t need to do the IPO," Morris says. "But we didit to create a public currency that makes it easier for us to increaseour borrowing capacity. Now we have the maneuverability to do large-scaleacquisitions of stores or a refinery and duplicate the successful modelthat we’ve created in Texas and New Mexico in other markets in the U.S."

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