Shell-Mex and BP

Shell-Mex and BP was a British petroleum-marketing joint venture created in 1932 by Shell Transport and Trading Company and British Petroleum, commonly known as BP. Rather than combining the two companies’ worldwide businesses, the arrangement consolidated their United Kingdom marketing operations. The joint venture was established during difficult economic conditions and was intended to provide a more coordinated structure for selling, storing, supplying and distributing petroleum products in the British market. The company marketed products associated with both parent organisations, including motor fuels and lubricants, and operated as a major intermediary between the petroleum suppliers and the UK market. Its responsibilities extended beyond sales to include supply, storage, delivery and related services. Shell-Mex and BP also managed service-station activities, although the Shell and BP networks were handled by separate sales organisations within the joint venture from 1966 onward. This internal separation later became part of the process for restoring distinct Shell and BP marketing organisations. The scale of the business increased substantially during its existence. At formation, the company’s business was reported at approximately three million tons, compared with a total UK petroleum market of roughly seven million tons. By 1970, Shell-Mex and BP supplied about 40 million tons of a UK petroleum market of approximately 100 million tons. These figures illustrate the company’s importance in the post-war development of Britain’s fuel-distribution infrastructure, although they represent throughput or market supply rather than revenue. Shell-Mex and BP also expanded through acquisitions. The company acquired Dominion Motor Spirit in 1934 and the National Benzole Company in 1957. National Benzole continued to trade under its own brand and was later designated to form part of BP’s marketing organisation during the separation process. In 1976, Shell and BP announced that they would demerge their UK marketing operations. The decision reflected the fact that, outside the United Kingdom, the two groups generally marketed their products through separate organisations. The proposed transition used progressive brand streaming: Shell and BP service-station networks had already been managed separately, and the separation was to be extended to other products and market sectors. The supply, storage, delivery, computing and other shared services were subject to additional planning while the sales activities were transferred. Employees were expected to be redeployed within the two successor marketing organisations, with the announcement stating that the reorganisation would not itself create redundancies. Shell-Mex and BP therefore ceased to function as the unified UK marketing vehicle as Shell and BP re-established separate operations.

Shell-Mex and BP Limited was created in 1932 as a UK-focused joint venture between Shell Transport and Trading Company and British Petroleum. The arrangement brought the two groups’ British marketing activities into one organisation while leaving their operations in most other countries separate. Its creation took place against a difficult economic background and was intended to strengthen the efficiency and commercial reach of petroleum distribution in the United Kingdom. The company’s original role was to act as the marketing and distribution organisation for Shell and BP petroleum products in Britain. It handled a broad range of activities associated with the downstream oil business, including sales, supply, storage and delivery. Its business covered motor fuels, lubricants and other petroleum products sold through commercial channels and service stations. The company was headquartered at Shell Mex House on the Strand in London, a building that became closely associated with its corporate identity. Shell-Mex and BP grew substantially over the following decades. At the time of its formation, its business was reported to be about three million tons, within a UK petroleum market of approximately seven million tons. By 1970, the company supplied around 40 million tons in a market estimated at 100 million tons. The comparison indicates the scale reached by the joint venture, although the figures describe petroleum volumes rather than turnover or profit. The company also expanded its portfolio through corporate acquisitions. Dominion Motor Spirit was acquired in 1934. In 1957, Shell-Mex and BP acquired the National Benzole Company. National Benzole retained its separate trading identity, and the brand was subsequently associated with BP’s side of the planned UK marketing reorganisation. A degree of internal separation preceded the eventual end of the joint venture. From 1966, Shell and BP service-station networks were managed by separate sales organisations operating within Shell-Mex and BP. This arrangement provided a practical basis for a broader separation of the parent companies’ market-facing activities. In 1976, Shell and BP announced that their UK marketing operations would be demerged. The move brought the British structure closer to the model used in most countries outside the UK, where Shell and BP marketed products through separate organisations. The plan called for progressive brand streaming across products and market sectors, ultimately creating two viable marketing organisations and ending the agency arrangement represented by Shell-Mex and BP. Shared infrastructure required further decisions during the transition. Supply, storage, delivery, computer services and other functions were to be reviewed after the direct sales activities had been separated substantially. Authorised distributors and the continued use of common services also required detailed treatment. The announcement stated that employees would be redeployed within Shell and BP’s separate marketing organisations and that the reorganisation would not result in redundancies. Shell-Mex and BP consequently disappeared as the unified UK marketing vehicle as Shell and BP resumed distinct downstream operations.

• 1976

  Demerger of UK marketing operations announced

  [1]Shell-Mex and BPen.wikipedia.org

  Shell and BP announce a progressive separation of their UK marketing activities, leading to the termination of the Shell-Mex and BP agency structure.

• 1970

  Large share of UK petroleum supply

  [1]Shell-Mex and BPen.wikipedia.org

  The company is reported to supply approximately 40 million tons of a UK petroleum market of about 100 million tons.

• 1966

  Separate service-station sales organisations

  [1]Shell-Mex and BPen.wikipedia.org

  Shell and BP service-station networks begin to be managed by separate sales organisations within Shell-Mex and BP.

• 1957

  National Benzole acquisition

  [1]Shell-Mex and BPen.wikipedia.org

  Shell-Mex and BP acquires National Benzole Company, which continues to trade under the National brand.

• 1934

  Dominion Motor Spirit acquisition

  [1]Shell-Mex and BPen.wikipedia.org

  Shell-Mex and BP acquires Dominion Motor Spirit.

• 1932

  Joint venture is formed

  [1]Shell-Mex and BPen.wikipedia.org

  Shell Transport and Trading Company and British Petroleum combine their United Kingdom marketing operations in Shell-Mex and BP.

A large-scale United Kingdom petroleum marketing, distribution and service-station organisation jointly representing Shell and BP.

• Road fuels

  Petrol and motor spirit

  Shell-Mex and BP marketed petrol and motor-spirit products for the UK road-fuel market. These products were distributed through service stations and other sales channels under the Shell and BP commercial identities. The company’s role was primarily marketing, supply and distribution rather than the creation of a standalone consumer product brand.

• Commercial and transport fuels

  Diesel and bulk petroleum fuels

  The joint venture supplied petroleum products to the UK market at substantial scale, including fuels used by transport and commercial customers. Its supply, storage and delivery functions supported both direct sales and distribution through authorised channels. Specific product names and formulations are not identified in the cited reference.

• Automotive and industrial lubricants

  Lubricants

  Lubricants formed part of the petroleum products marketed through Shell-Mex and BP’s UK organisation. They were included in the company’s broad downstream portfolio alongside motor fuels and other petroleum products. The later demerger plan envisaged streaming lubricant and other product activities into separate Shell and BP organisations.

• Fuel brand

  National Benzole

  National Benzole was a separate fuel brand associated with the National Benzole Company, acquired by Shell-Mex and BP in 1957. The brand continued to trade under the National name and was designated to become part of the BP marketing organisation during the separation of the joint venture’s UK activities.

• 1976

  Separate Shell and BP UK marketing operationsStrategy

  Background

  Shell and BP determined that their UK marketing structure should be brought into line with their usual international practice, in which the two companies generally used separate marketing organisations.

  Action taken

  The companies announced a four- to five-year process of progressive brand streaming, extending the separate management of Shell and BP service stations to products and other market sectors. This was intended to create two viable marketing organisations and terminate the joint agency arrangement.

  Aftermath

  Shell-Mex and BP ceased to operate as the unified UK marketing vehicle as the parent companies resumed distinct marketing operations. Supply, storage, delivery, computing and other shared services required additional transition planning.

  Source

1. 1Shell-Mex and BPen.wikipedia.org