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May 24, 2018
Oil men: Amalie Oil's Harry and Rick Barkett

Photo: Alex McKnight

On the left, Harry Barkett, president of Amalie Oil, with brother Rick, the company's COO. The company got a big dose of visibility when it bought the naming rights to the Tampa Bay Lightning's arena.

Manufacturing

Oil men: Amalie Oil's Harry and Rick Barkett

Amalie sells plenty of motor oil. The challenge for the Barkett family is changing how the company sells it.

Amy Martinez | 9/28/2015

At far left, Harry Barkett, president of Amalie Oil, and brother Rick, the company’s COO. The company got a big dose of visibility when it bought the naming rights to the Tampa Bay Lightning’s arena.

In September 2014, a Tampa-based company called Amalie Oil concluded a deal with Tampa Bay Lightning owner Jeff Vinik to put its name on the hockey team's arena.

Financial details were not disclosed, but the move probably cost Amalie at least $20 million, based on the going rates for naming rights to an NHL arena — generally $2 million to $10 million a year, with terms that last a decade or longer.

Amalie can afford it: Operating from a 20-acre facility at the Tampa port, the company blended and sold more than $200 million worth of motor oils and industrial lubricants last year. It ranks among FLORIDA TREND'S top 2 0 0 privately owned companies in the state.

For all its heft, however, Amalie hasn't had much of a profile in Tampa — or anywhere else, for that matter. At the news conference announcing the deal, the company's CEO, Harry Barkett, acknowledged what was on everyone's mind. "I know what you're thinking," he told the crowd of reporters and hockey fans. "You're thinking, 'Who is this guy? Who is Amalie?' "

The answer to the Amalie half of the question goes back to 1903, when the Sonneborn brothers of New York began selling petroleum products under their grandmother's name, Amalie (pronounced AM-a-lee).

By the mid-1920s, the Sonneborns were distilling crude oil into lubricating oils in Pennsylvania, which had accounted for most of the oil production in the U.S. since the 1860s. Amalie, credited with introducing the first motor oil to cope with seasonal variations in temperature, marketed its premium-priced products to car and truck owners nationwide.

In 1960, the Sonneborns sold Amalie to a company called Witco chemical, which later added another motor-oil brand, Kendall, to its holdings.

Fate wasn't kind to Amalie. In the summer of 1970, Amalie's refinery in Franklin, Pa., burned to the ground, killing five people in the process. Rather than rebuild, Witco moved the Amalie operations to its Kendall refinery nearby.

In the process, Amalie became somewhat of a stepchild. The brand languished, and when Witco sold the Amalie and Kendall brands to Sun Co. In a package deal in 1996, Amalie was almost an afterthought.

Meanwhile, more than 1,000 miles away, Harry Barkett's father, Harry Sr., had begun building a small gas distributorship in Homestead into one of the largest gasoline and lubricant distributorships in the U.S.

Barkett Oil bought up gas stations and convenience stores across Florida, eventually owning more than 200 properties. In the late 1970s, it also acquired a small lubeoil manufacturing company, Petroleum Packers, at the Tampa port.

Over time, all four of the elder Barkett's sons — Harry, Rick, Anthony and Ken — joined the family business. And by 1996, when Witco put Kendall and Amalie up for sale, the Barketts had left Miami and the gas station business to focus on the Tampa operation.

The Barketts were among the losing bidders for the Kendall- Amalie package. Aware that Kendall accounted for the bulk of the business, they thought the winning bidder, Sun, might be willing to let Amalie go.

They approached Sun with an unsolicited offer for Amalie. And in 1998, as the elder Barkett retired, the family completed an all-cash deal for Amalie, paying an undisclosed amount — and changing its corporate name to Amalie.

"Fortunately for us, Witco had ignored the brand. And Sun had no desire to go back and try to build it up," Barkett says. "If they had continued to market the brand the way they marketed Kendall, it would have never been sold."

With the Barketts in charge, Amalie has been able to sell plenty of motor oil. The challenge for the family is to change the way Amalie sells it.

Around half of Amalie's business comes from blending and packaging motor oil and lubricants for about 140 other oil companies, including the "Mobils of the world," Barkett says, along with automotive retailers and mass merchandisers like Walmart. The private-label production enables Amalie to maintain its sales volume, but fierce competition puts a squeeze on profit margins.

The other half of Amalie's business comes from selling products under labels it owns, including the 136-year-old Wolf's Head line, a 2006 acquisition.

The profit margins for those proprietary-label sales are much higher — up to 30%, analysts say — than for the private-label brands. If they can goose demand for the proprietary brands, the Barketts know, they'll boost Amalie's bottom line considerably.

Thus, the interest in the arena naming rights deal. By raising Amalie's visibility and stimulating consumer demand, they hope to show retailers that they can drive traffic to stores.

Amalie-branded motor oils are sold nationwide and in more than 100 countries. In the U.S., however, Amalie lacks the market power to get auto-parts retailers to give its brands premium placement on store shelves — or to carry them at all. And while many oil change shops use Amalie-branded products, the shops don't advertise or actively promote them.

The naming rights deal worked better than the Barketts were prepared for. In the days that followed the announcement, the Barketts were flooded with inquiries from customers wanting to know where they could find Amalie products.

"Well, that's a little bit of a problem," Harry recalls telling people. "If you're in Ecuador, you can get it," his brother Rick, the company's COO, adds ruefully.

"To be perfectly candid with you, we were overwhelmed," says Harry. "We expected it to give us more visibility. We just didn't think it would be as much as it has been."

He says a main goal of the sponsorship was to get "some of these do-it-for-me" oil change places to feature Amalie products, "at least with signage on their buildings."

He says Amalie now has verbal commitments from national auto-parts chains to carry its products at stores in the southeastern U.S. so that "we can then start letting people know" where to buy them. And while he wishes those deals had been in place earlier to capitalize on the announcement, he thinks the Lightning's success in the 2015 NHL playoffs will continue to create interest and demand for Amalie's products. "We think we're going to be fine."

Tags: Energy & Utilities, Manufacturing/Distribution

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