OPINION: Continuing the conversation on Casey’s and E15

By Cassie Mullen, director of market development at the Renewable Fuels Association | September 04, 2019

Last month, I featured the first part of an interview with Nathaniel Doddridge, Director of Fuels for Casey’s General Store, about the opportunities of implementing E15 at the retail level. Here’s the final part of our conversation about adjusting for E15.

RFA: Our industry has gone to great lengths to ensure we are getting this product into the market in a safe and effective manner. Equipment configuration and proper labeling is a huge part of that. Has Casey’s had any issues in this area?

ND: The only issues we've had regarding labeling are some self-inflicted issues. And I would say that those were really driven by the by the one-pound waiver. But specific to any misfuelling issues – no, we have not experienced any misfuelling claims. Additionally, now that we have a set standard on being able sell E15 year-round, it will further reduce the likelihood of future issues.

RFA: On a similar note, has all this growth and success from ethanol spurred any conversations about how Casey’s currently purchases, receives, and stores the product?

ND: We are having those discussions and looking at whether it does it make sense for us to invest in infrastructure. We know a lot of our counterparts and competitors are doing some of those things to make the economics work better. Looking at our saturation and our footprint, it’s clear we can make an investment in infrastructure outside of the store location to give us more capability to do some blending if we must. We haven't felt like we needed to do that yet to help a supplier provide the product for us, but we have looked at it in some of our larger markets in case we do get to a point where we can't get it at the right economics. We feel that moving forward there are some options for us to consider.

RFA: From a competitive standpoint, Casey’s is known to be a leader in the industry. What has your model been when it comes to pricing and what have you shown to be successful as you add E15 to your product mix?

ND: We tend to be with the industry on this. Most of the industry is pricing Unleaded 88 or E15 five cents below Unleaded 87 E10. That's where we tend to start. But the reason we're putting in this product at so many stores is it actually gives us leverage if we need to go out and do something differently (and priced more aggressively) to attract more value-conscious customers. We want to do that. But we're also very careful because we don't want to give the perception to the customer that, hey, we have a cheaper product and that there is less quality there. We have to be careful with customer perception. If you discount it too much, I think the customer starts to ask questions: Why is this so cheap? Does that mean I can't use it? Is there less quality? And we know that’s definitely not the case with this product. So, we're always walking a fine line with the price of E15 vs E10.

RFA: Since you are so competitive, what have you seen as far as percentage of sales when it comes to E15 vs E10?

ND: That’s a tough one to answer but I will say this: There is a good reason we're adding it to our offering, and we aren’t in the business of trying to sell products that customers don’t buy. We can't afford to put something in the ground that's just going to sit there and take up working capital. As a part of our product mix, it ranks anywhere from No. 2 or No. 3 on the list of what we sell the most. At the end of the day, it's going to take a lot for us to move Unleaded 88 past our No. 1 fuel, which is 87 E10. It’s just what people buy. Bu it has steadily moved up the chart.

RFA: What can we do as an industry to help Casey’s continue on such an incredible path?

ND: To the ethanol industry in general is I think just continuing to communicate to the customer. It’s the marketplace that will make or break this. The consumers need to be consistently reminded that there have been billions and billions of miles driven with E15. Here at Casey’s, we're still seeing little to no issue at all in regard to compatibility for vehicles, and customers just need to be confident that this is okay to buy. They need to know that when you see this product in the marketplace It's okay to pick up that blue nozzle and drive with confidence. It needs to become common knowledge among consumers that the blue nozzle is compatible with what your car manual says. We need to change the customers’ mindset if we want this to be something that we see as a long-term success, because the customers have been in the same buying pattern for a long time.