A New Big 5 Has Just Cornered The Quebec Gasoline Market

What do Sobeys Quebec (Shell), Couche-Tard, Suncor Energy (Petro-Canada), Harnois (Esso) and Parkland (Ultramar) have in common?

According to the Régie de l’Énergie (which does not go so far as to name them but their identity is obvious), these five companies control three-quarters of the gasoline market in Quebec, a concentration that has been intensifying in Quebec over the past decade.

This is one of the conclusions that emerges from the most recent Survey of Quebec Active Gas Stations (June 2017), a study (available in French only) that is published only once every three years with lots of insightful data on the Quebec gasoline market.

Thus we learn that the market share of the five most active companies in the retail and gasoline distribution has increased from two-thirds (68%) to three-quarters (72%), but also that there has been a rotation of these Big Five. In other words, they are not the same five companies anymore!

In fact, while large oil companies like Shell, Imperial Oil and Ultramar used to be vertically integrated (from extraction to refining to retail), most of them left the retail sector except Petro-Canada (Suncor), leaving some room for newcomers.

The current members of the Big Five are therefore in all likelihood the following:

• Alimentation Couche-Tard with about 500 gas stations (62 with its brand and the rest with other major brands);

• Sobeys Quebec with approximately 325 gas stations (Shell for most but also other gas brands) plus the independents it supplies;

• Parkland with about 300 gas stations (Esso and Ultramar), half corporate and half dealer operated;

• Suncor Energy with its 170 Super Relais corporate gas stations and its Petro-Canada gas brand used by more than 200 independents;

• Harnois Groupe pétrolier with 79 corporate gas stations and depanneurs and supplying 200 independent ones with its many brands (Esso, Petro-T, Harnois, etc.).

According to the report, these five companies control or supply 1,754 of the 2,876 gas stations in Quebec (61% of the total) and sell 6.3 billion liters of the 8.8 billion sold each year, or 72% of the total volume.

Other information and insights from this report are of interest.

Quebec still has a lot of low volume gas stations. The majority of gas stations, or 60.6% of them, sell less than 3 M liters of fuel per year. This proportion increases to 93.5% for sales volumes of less than 7 ML per year. – Régie de l’Energie

Indeed, most gas stations are considered to be in the low volume category. High volume gas stations, with 7 M liters or more, are only 6.5% of the total, but their proportion is increasing.

As for the number of gas stations, it has changed very little since the last report: Quebec has lost only 19 gas stations since 2013, or 0.7% of the network.

The biggest change of the last few years is the sale of Esso’s Marché Express gas stations as well as that of CST Brands Dépanneur du Coin to Couche-Tard and Parkland and, above all, the arrival of Alberta’s Parkland on the Quebec retail market.

We will soon see how all these changes will affect the market dynamics but with so many low-volume gas stations, the future seems easy to predict.

It is to be expected that the consolidation trend will continue, resulting in fewer gas stations, but with each more volume.

Because it is in the intrinsic nature of a free market to seek an optimal balance between a profitable offer and a demand that, in addition, is highly mobile!