Editor’s note: This profile originally ran in the March/April 2015  issue of IGM, published by SIGMA, and is reprinted with permission. For those  not in the know: SIGMA is a national trade association representing fuel marketers and convenience store chain retailers in the United States and Canada. Its approximately 260 corporate members command nearly 50% of the petroleum retail market, selling approximately 80 billion gallons of motor fuel each year. Learn more at: www.sigma.org

(Photo: PAPCO CEO John Malbon, left, and Gary Gilmore, President)


By Mark Ward, Sr.

Many companies mark their fiftieth anniversary by celebrating the past. While PAPCO Inc. of Virginia Beach, Virginia, honors its heritage, however, at its golden anniversary in 2008 the company was focused on moving forward. “As early as 2007 we decided to significantly expand beyond our home base for, really, the first time in our company’s history,” recalls chairman and CEO John Malbon, whose father C. Roger Malbon founded Princess Anne Petroleum in 1958. “Through acquisitions we started expanding into central and northern Virginia, North Carolina, and Maryland. So on our fiftieth anniversary, without forgetting our past, we were looking very much to our future.”

In 1976, Princess Anne Petroleum purchased CAPCO, a small residential and commercial business bought at auction on Southern Boulevard in Virginia Beach, VA. This was the start of PAPCO, a new company named from a blend of the two previous company names; first year sales were just under a million dollars.

Today’s PAPCO is a multifaceted petroleum marketing company whose commercial fueling services extend across 15 states, that supplies retail dealers in five states, and continues to supply lubricants, commercial propane, home heating oil, and marine fuels to the Hampton Roads region of Virginia.

PAPCO president Gary Gilmore believes the roots of his company’s transformation date back to the late 1980s. “By then we realized that we would eventually saturate our market,” he observes. “But to maximize that potential we had to differentiate ourselves. So we started hiring people who understood price risk management, gaining experience in that area so that we could protect our customers against price volatility.”

Bolstered by increasing expertise in fuel buying, PAPCO grew significantly throughout the 1990s. During the decade, the company entered the lubricants business and acquired a small chain of convenience stores. PAPCO also established a retail division that today supplies some 170 dealers in Virginia, North Carolina, South Carolina, Maryland, and Delaware with Shell, BP, Exxon, Mobil, Citgo, Valero, and unbranded product. By the end of the decade, PAPCO’s yearly volume topped 80 million gallons. “But at the same time,” adds Malbon, “we had just about saturated our home market and had to think about expanding our footprint.”

In 2002, PAPCO started putting in place the human resources needed to expand by hiring new management positions in sales, moving the sales department into a standalone complex, and upgrading backoffice computer systems companywide. In 2007, PAPCO invested in the technology required—onboard truck computers, automated dispatching, web-based reporting—to provide additional value for customers and bundle its service offerings.

Between 2000 and 2007, PAPCO also acquired five local and regional oil companies. Everything was in place to expand—the people, the expertise, the technology, and the capacity. As for capital, says Gilmore, “By the 2000s we’d been trading on the oil markets for 20 years. To get the credit we needed to expand, we had fortunately developed lots of contacts in the international banking community.”

While PAPCO strives to limit debt and fund growth through cash flow, notes Gilmore “We’ve also used our banking contacts selectively to take advantage of opportunities that present themselves.”

The remaining piece of PAPCO’s expansion puzzle, continues Malbon, “was to bring all our operations under a common PAPCO brand identity, so that we could effectively market ourselves in new territories.” In 2011, consultants were brought in to survey the company’s workforce and customer base. The goal, Malbon states, was to “launch a major strategy shift by redefining our future path and poising our brand for rapid growth by serving customers better.” To meet customers’ current and future needs, PAPCO in 2012 acquired the commercial and governmental fuels divisions of ISO bunkers, thereby extending the PAPCO trading area from New York to Florida. That year the company also began shipping product on the Colonial Pipeline, creating new opportunities for their customers and for growing its service areas along the eastern United States.

“But in addition to identifying customers’ needs, our surveys taught us something just as important,” continues Malbon, “We thought that we did a good job of communicating our mission and vision internally, to our own employees. But we found out that we needed to do better.”

Starting in 2011, PAPCO not only redesigned its customer offerings but also “discovered new ways to align our entire organization with the value proposition we wanted to offer our customers,” explains Gilmore. By 2013 the company implemented corporate training programs for all employees to communicate the new PAPCO brand identity and, he explains, “train all our people in how to deliver a consistent and newly aligned service experience for customers across 15 states.”

PAPCO uses the term “brand” not in the traditional petroleum industry sense of a fuel brand. Rather, the company uses the term in the broader sense of what it stands for. “Our brand is about the total experience we deliver to our customers,” says Malbon, “and that experience is summed up in our corporate tagline: Solutions for Success.”


Wholesale Changes

Providing successful solutions for fuel resellers has made PAPCO a supplier of choice in 15 states. “We leverage our market expertise to develop customized supply and price risk management programs for our customers,” explains Eric Rosenfeldt, vice president of sales, supply, and trading. “

PAPCO acquires its own fuel supply,” continues Rosenfeldt, “from various branded suppliers—ExxonMobil, Citgo, Shell, Hess, BP—but also by buying directly from independent refineries and unbranded suppliers. We’ve literally bought fuel from every source available to us—again, leveraging our experience to provide solutions for customers. Also, by being a shipper on the Colonial Pipeline with inventory locations throughout the East, we offer more control over pricing and provide a secure supply.”

“From market swings to geopolitics to extreme weather,” adds Rosenfeldt, “PAPCO customers are protected.” Security of supply is also aided through a network of longstanding PAPCO transportation partners. “We can ship by rail, barge, and truck,” he states, “to make sure our customers get product where and when they need it.”

PAPCO is licensed to operate in Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. Products include all grades and blends of gasoline as well as on-road and off-road diesel, biofuels, marine fuels, heating oil, and kerosene.