PTG tapping strong growth in household LPG sector to expand market penetration

PTG is moving forward to penetrate the LPG business, launching products to suit the needs of customers’ lifestyles.

“We launched the household gas business in 2020 with a goal of meeting consumers’ needs. We began by conducting a consumer survey about existing household gas services. Survey respondents expressed concern about old gas cylinders and also said they were sometimes not comfortable with the gas delivery staff. So, we designed our business plan to provide what customers needed,” said Suwatchai Pitakwongsaporn, managing director of Atlas Energy Company Limited, a subsidiary of the PTG Energy Public Company Limited.

Meanwhile PTG’s liquefied petroleum gas business (LPG) in the automotive, industrial and household sectors is still in the "uptrend" phase, says the company. This is especially true for the household gas sector, which is growing against the trend. Although consumer behaviour is shifting to electrical appliances, gaps remain in the market that offer PTG opportunities to penetrate this sector.

Suwatchai explained that the household gas sector is showing the highest average LPG consumption rate at 2 million tons per year. This compares to 600,000 tons in the industrial sector and 600,000 tons in the automotive sector.

PTG saw the business opportunities in this growth and prioritised studying customers’ needs. To gain customers’ loyalty and desire to use PTG’s services, it knew it had to respond to their requirements.

A year and a half later, the feedback from household gas consumers has been impressive.

In 2020, only 7 per cent of PTG’s gas business revenue came from household use, with the rest from the auto sector. In 2021, income from household use surged to 30 per cent, with automotive gas at 70 per cent. The company has set a goal of boosting the household gas proportion to 50 per cent in the near future.

To strengthen its household gas business for market penetration, as well as the consumer survey, PTG has also created a members’ platform with the “Max Card”. The platform, which has so far attracted 16 million members and is ranked second in the country, enables household gas customers to collect points on their Max Card from all PTG services and redeem them for privileges.

“Max Card is our strong selling point, as the customers can collect points when they refuel or buy gas. We aim to expand the membership to 18 million. We are the only company where customers can buy household gas to collect points for privileges and receive discounts at more than 1,000 participating stores.

The Max Card also allows the company to study consumer behaviour and leads to more responsive service offerings,” said Suwatchai.

PTG has two major strengths in the cooking gas business:

1. The confidence in differentiation and service, with the "new gas cylinder" as a prominent service, according to the customer survey. PTG's gas cylinders are newer than the cylinders of other services currently available in the market. The “Safe Locked Valve” system was developed to prevent gas from leaking, and the “QR Code” allows the cylinder’s usage history to be monitored and recorded from the filling station to the customer’s delivery location.

2. The company’s constant service care and overall quality control, as PTG’s business covers upstream to downstream operations, whether gas transportation, filling plants or gas sales outlets.

There are currently 116 Gas Shop branches in PT gas stations across Bangkok and its perimeter, expanded from 90 branches in 2020. The company aims to have 140 branches operating by the end of 2021 but is likely to expand beyond that target to 160 by year-end.

The company also expected to open another 12 gas filling plants franchises this year, making a total of 16 including the four existing ones. But that expectation has been exceeded after more than 20 entrepreneurs applied for franchise rights. There are currently more than 300 kiosk services located at PT gas stations, and the goal is to expand to 450 branches in 2021.

The goal of the PTG household gas business over the next 3-5 years is to grow its market share to become the No 3 provider by 2024. It expects to boost its market share by 2 per cent in 2021. PTG household gas sales in 2021 are estimated at 80,000 tons, with 15,000 tons sold in the first six months of the year (January to June). The growth rate is more than 100 per cent from the 5,300 tons of household gas sold in 2020.

Suwatchai also revealed plans to expand the LPG business in the automotive sector amid the drop in vehicle usage during the Covid-19 pandemic. The company will add another 50 gas stations, totalling 206 branches by the end of 2021. The company expects to retain its second-highest market share if the Covid situation remains bad. However, if the situation improves, it expects to move up to No 1 with sales forecast to rise by 15 to 20 per cent.

“Taxis are the main customer group in the auto gas market. Some may reckon that gas-powered cars are being replaced by alternative-energy vehicles, but the data shows that there are over 80,000 registered taxis. Hence, there is potential to impel these taxis to switch from NGV to LPG. Our gas tank-swapping service will be free of charge, and taxis will receive continuous services including Covid-19 sterilising spray, free lunches and the Taxi Reward campaign.”

PTG also sees an opportunity to expand in the LPG business due to a shift in consumer behaviour to using cooking equipment that is convenient and safe. The company will launch a “canned gas” product to meet consumers’ demand and need for convenience. Meanwhile, it is experiencing significant growth in the grill restaurant group.

For its canned gas product, PTG has emphasised the approach to customer groups. Thanks to its online ordering and delivery services, including the nationwide network of Gas Shops, the company is confident that this product will receive a good response. It added that while there are other big brands in the market, there is no widespread promotion of sales. And although this type of product is available in convenience stores, the company believes that the PT brand has the advantage of being trusted by consumers.

Suwatchai concluded that strong growth of the LPG sector had opened opportunities to expand the business. The company will be listed on the Stock Exchange of Thailand (SET) to raise additional funds for business expansion, with a goal to invest in a warehouse system. The goal has been set to be swiftly achieved by the end of 2021, or at the latest in the first quarter of 2022.

“In my opinion, the challenge of this business is the logistics system. A good logistics system can reduce costs and we are certain that we can do it because we already have our own transportation system operated by a company in our group,” said Suwatchai.