← External Forces: Industry Specific (all topics)
Premiumisation - lubricants (long-drain synthetics)
What it is
Synthetic and semi-synthetic oils that last far longer between changes than mineral oils, sold at a substantial price premium. A modern passenger car may run 10,000-15,000 km between drains against 5,000 for older mineral formulations
OEM specifications increasingly mandate them
Impact on industries
- Realisation per litre rises sharply, and OEM specification means the premium is mandated rather than argued
- Longer drain intervals cut litres consumed per vehicle per year, so value growth comes at the cost of volume - the industry sells less oil at higher prices
- Rising vehicle parc and higher average kilometres partially offset the volume loss from extended intervals
- It is the clearest case in the sheet of premiumisation being defensive rather than offensive - the alternative is volume decline with no price offset