The anticipation of pan-European legislation is setting biolubricant
manufacturers on edge, and rightly so. Forecasts clearly envisage a widespread boom and a significant rise in prosperity for market participants, as and when relevant environmental legislation hits the European market. However, significant challenges will accompany such opportunities, a primary example being the likely intensification of competition between independent suppliers and multinational petroleum companies.

A new study by Frost & Sullivan, the international marketing consulting company, provides a unique look at an industry that clearly sits on the threshold of fundamental change. The research entitled the ‘European Biolubricants Markets’ provides crucial insights for an industry, wherein, strategic planning will prove pivotal to success. In the absence of significant legislative measures, Frost & Sullivan still forecast revenues to rise from US$231.0 million in 1999 to US$664.5 million by 2006.

The research clearly identifies five main drivers in the total market; these are legislation, biodegradability & low toxicity, performance & operational longevity, waste disposal and renewable resources. As already touched upon legislation is clearly the main driver, widespread opinion denotes that even a modest increase would prompt ‘significant growth’. The potential scope of the biolubricants market puts the consequences of such legislation into a definite context, Frost & Sullivan Research Analyst Michael Parrish, comments:

“An extreme opinion in the industry holds that 90 per cent of total lubricant volumes could be rendered rapidly biodegradable if there was intensive co-operation between lubricant manufacturers and users, and if sufficient development resources were made available.”

At present, 50 per cent of European consumption of lubricants stems from four stroke engine oils. Indeed, technological innovation will need to prevail in this area for biolubricants to make a major impact on the overall lubricants market. Currently, the Hydraulic Fluid market is clearly the largest industry segment, representing 66.7 per cent of the total market. However, the study clearly identifies the strong growth that this sector is likely to experience. Indeed, market share for this sector is forecasted to increase to over 80 per
cent by 2006. The three remaining segments incorporate the Chain Saw Oils, Niche Oils and Concrete Release Agents markets.

Independent suppliers dominate the overall market, with many of the large multinationals currently undertaking a minor role in the selling of such products. Independent market participants include Addinol, Fuchs and Panolin. Multinationals taking a more active participation within the market include Esso, Statoil Lubricants and Totalfina. The fragmented nature of the market would appear to send clear signals towards possible future consolidation. The role of Germany, Scandinavia and the Alpine Region in the initial introduction of biolubricants is significant in the reasoning behind their ranking as the top three markets in Europe. Importantly, the study also draws attention to the significant disparities that exist in the environmental culture across Europe.

The key drivers within the European Biolubricants market place a critical emphasis on market participants being strategically prepared. The distinct industry scenarios induce the need for a strategic plan that is in essence, dynamic. Indeed, Michael Parrish puts the challenge that faces the industry as a whole, into context:

“The European biolubricants market faces a particularly formidable challenge as its success depends on displacement of a significant proportion of products from the industry on which the entire global industrial economy is based, namely, the petrochemical industry.”

In conclusion, complex and diverse issues lie at the centre of the industry, a situation that is polarised by the uncertainty that surrounds future European legislative measures. Indeed, market participants must not only be aware of imminent legislation but also develop a significant understanding of its potential impact.

Frost & Sullivan is an international marketing consulting company that monitors the chemicals market for trends, measurements and growth rates. This study is utilised to update a series of online research such as U.S. Biodegradable Lubricant Markets – #5795-39 and European Polyurethane Coatings Markets – #3798-39. This is complemented by support for industry participants with custom consulting needs.

Report Code: 3799-39
Publication Title: European Biolubricants Markets
Publication Date: April 2000
Price: 6,500 Euros