Amarillo.com: Rising Star: Chevron bringing back Texaco brand, symbol: “To get their merger cleared by antitrust authorities, ChevronTexaco sold exclusive rights to the Texaco brand for three years to a group led by the Shell division of Royal Dutch/Shell Group.” (ShellNews.net) Posted 30 May 05

By James F. Peltz

Los Angeles Times  

Michael Lemmons / michael.lemmons@amarillo.com

SAN RAMON, Calif. - Odd as it sounds, the U.S. arm of Chevron is getting back into the business of Texaco.

The Texaco brand of gasoline had withered in the U.S. market since 2001, when Chevron Corp. bought Texaco Inc. for $39 billion. The combined company went by the name ChevronTexaco until shortening its official moniker to Chevron Corp. earlier this month.

To get their merger cleared by antitrust authorities, ChevronTexaco sold exclusive rights to the Texaco brand for three years to a group led by the Shell division of Royal Dutch/Shell Group.

There were about 12,800 Texaco stations in the United States at the time. Most were converted to Shell stations over the next three years, and Texaco was poised to disappear from the U.S. market.

But Chevron regained the U.S. rights to Texaco last year, and it's bringing back the brand.

"Texaco still has incredible strength and awareness out there," said Danny Roden, head of Chevron's North American marketing operations. "Our strategy is to maximize that benefit."

It has already converted nearly 1,200 gas stations in the East and South to carry the Texaco banner. Chevron also plans to add 300 Texaco stations in eight Western states by year's end, including about 75 in California.

The oil giant is convinced that the Texaco name still attracts loyalty, even in a commodity business such as gasoline. Chevron said that was evident overseas, where Chevron has continued to supply about 9,000 Texaco stations.

The company also plans to issue dual-branded credit cards that holders can use at either Chevron or Texaco stations, which would give Texaco an immediate base of 7 million potential customers nationwide.

Some analysts also believed that the Texaco brand still had value. "With the right visibility, advertising and support, they can build a good story and resurrect it," said Alan Siegel, chairman of Siegel & Gale, a New York consultant on corporate branding.

Shell still supplies about 2,700 Texaco stations around the country, said spokesman Cameron Smyth, who otherwise declined to comment on Chevron's efforts.

Chevron says its consumer surveys show that Texaco's once widespread presence and its catchy advertising over the several decades still resonate with motorists.

One of Texaco's most enduring slogans, launched in 1962, urged drivers to "trust your car to the man who wears the star," a reference to the company's logo.

Raj Saran is one of the newest dealers to wear the star. The owner of five stations in central California, he recently converted one in Visalia from Shell to Texaco. The other four are Chevrons.

"It's a brand name that was famous in the past," said Saran, 56. "I like that people are familiar with that."

Saran was persuaded to make the switch by Norm Crum, owner of Valley Pacific Petroleum Services Inc., a Stockton distributor that supplies Saran and other dealers with gas from Chevron and other producers.

"It's not like you have to explain what Texaco is," Crum said. "There's a feeling of trust and recognition, which is a big part of branding, so that footwork has already been done."

Chevron is relying on distributors such as Crum - known as "jobbers" - to persuade non-Chevron dealers to switch to Texaco. Chevron also provides the jobbers with cash, discounts and other incentives to help the new Texaco dealers install the Texaco signs, set up credit card accounts and otherwise re-brand the stations.

The company won't break out those costs, but doesn't argue with suggestions that the Texaco campaign is a multimillion-dollar effort.

Yet for all the consumer awareness Texaco still holds, its appeal varies by region, Roden acknowledged.

For example, "Texaco was not particularly strong in the Los Angeles basin," he said. Yet the Chevron brand is, so the company is content to leave Texaco out of many metropolitan areas in southern California and the San Francisco Bay Area.

That leaves the rest of the state, where Chevron hopes that its dual-brand attack will take market share from Shell, Arco, ConocoPhillips' 76 and other brands.

But bringing Texaco back in California's ultra-competitive gasoline market won't be easy, at least initially, because of the complex way in which ChevronTexaco and Shell divided their rights to the Texaco brand.

Texaco began as Texas Fuel Co. in 1901 and changed its name to Texaco Inc. in 1959. Its early television ads showed dealers singing, "Oh, we're the men of Texaco; we work from Maine to Mexico." They were regulars on "Texaco Star Theater," a TV show hosted by the late comedian Milton Berle that had millions of weekly viewers.

When Universal Studios Florida built a 1940s gasoline station on its site as its symbol of motor travel, it placed a Texaco sign on the building. When the "Back to the Future" movies of the 1980s chose a gas station as a backdrop, it was a Texaco.

By 2001, the Texaco and Shell refining and retail operations in the United States, along with their brands, were owned by two joint ventures whose partners included Texaco and Shell. (Most of the gas stations themselves are owned or operated by independent dealers who agree to sell particular brands of gas.)

To win government approval of their merger, Texaco and Chevron agreed to sell Texaco's interests in the joint ventures to Shell. The deal gave Shell exclusive U.S. rights to Texaco until July 2004, after which Shell and ChevronTexaco agreed to share rights until July 2006. That's when Chevron will regain the Texaco brand for itself.

Once Chevron regains the exclusive rights to Texaco, all Texacos will get their gas from Chevron and Shell will be out of the picture.

Crum, the distributor, noted that Texaco's brand awareness wasn't built overnight and that it also would take time to erect enough Texaco stations to again make the brand competitive.

Texaco Timeline

1901: The Texas Fuel Co. is formed.

1902: The company's founders start Texas Co., which absorbs the previous company.

1903: The new company is saved from bankruptcy by a gusher oil well at Sour Lake, Texas.

1911: Texas Co. opens its first filling station in Brooklyn.

1931: Texas Co. gains the rights to the Havoline brand name.

1936: The company founds Caltex with Standard Oil Co. of California, which later became Chevron.

1959: Texas Co. changes its name to Texaco Inc.

1984: Texaco purchases Getty Oil Co.

1987: Texaco files for bankruptcy protection.

1988: The company settles a four-year legal battle by agreeing to pay Pennzoil $3 billion.

1988: Financier Carl Icahn tries to take over Texaco.

1998: Texaco and Royal Dutch/Shell Group place U.S. refineries and gas stations into joint ventures: Equilon, serving the western half of the United States, and Motiva, serving the eastern half in partnership with Saudi Aramco.

2000: Chevron Corp. agrees to buy Texaco Inc. for nearly $39 billion to create ChevronTexaco.

2001: Chevron and Texaco complete their merger after selling Texaco's stake in the Equilon and Motiva joint ventures to Shell and the Saudis for $2.1 billion. Shell begins converting some Texaco stations to the Shell brand.

2003: ChevronTexaco begins sale of $6 billion in lagging oil fields, refineries and other assets.

2004: ChevronTexaco regains rights to the Texaco brand.

April 4: ChevronTexaco announces it will purchase Unocal Corp. for $16.4 billion.

May 9: ChevronTexaco Corp. announces it is shortening its name to Chevron Corp.

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