Z relinquished its relationship with Countdown.
BP uses AA membership cards to attract customers, a typical offer being a 6c-per-litre discount, rising to 10c on special offers.
Z also operates the AA card loyalty discount after its purchase of the Caltex service stations from Chevron NZ.
Forsyth Barr broker Damian Foster said Z’s introductory offer for August was a 6c-per-litre fuel saving and triple Fly Buys points.
"Z’s decision is interesting as it marks a clear change of strategy."
Where Z was previously happy to relinquish volume to maintain margin, the new offer is a clear move to regrow retail market share for the Z brand.
"It will be interesting to see how Z’s offer resonates in the market."
Forsyth Barr had an outperform rating on Z. Z’s acquisition of Chevron NZ provided a significant opportunity to deliver earnings growth, Mr Foster said.
He was positive on the transaction and confident Z would be able to derive benefits greater than its guidance.
Z was now the dominant player in the downstream fuel market.
Fuel margins were the key value driver and had moved upwards from unsustainably low levels over the past years, he said.
"We do not expect margins to increase materially from current levels."
Fuel demand was generally not elastic and while it was an important value drive, its variability was less than margins.
Maintaining a minimum volume level was still important for supply chain economics, Mr Foster said.
Z refined about 75% of its product at New Zealand Refining, which generally provided a positive and competitive advantage over imported product.
However, when refining margins were very low, importing product was typically cheaper.
Reviewing the acquisition of Chevron, Mr Foster said the updates remained upbeat.
About $15million of Z’s 2018 $25million to $30million benefits from the purchase remained locked in and Z was still at an early stage of assessing opportunities.
Formal guidance would be provided to the market at the end of August.
Z had indicated renewal of the AA Smartfuel contract with Caltex had cost an extra $5million it had not been aware of, he said.
