America’s Most Profitable Products

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3. Monster
> Operating margin: 26.7%
> Revenue: $1.9 billion
> Market share: 37.2%
> Industry: Soft drinks

Monster Beverage Corporation had net sales of roughly $2.1 billion in fiscal 2012, with an operating income of $551 million. According to market research company Symphony IRI, in the 52 weeks ending February 24, Monster-branded energy drinks accounted for 37.2% of the market, just behind main competitor Red Bull. In that time, the company sold approximately 1.2 billion cans of its Monster-branded products, including almost 776 million cans of its original Monster beverage. Because Monster-branded drinks accounted for 92.3% of total company revenue, we have treated the company’s 26.7% operating margin as a proxy for the energy beverage. Monster, like many energy drink vendors, has faced controversy in recent months after the Food and Drug Administration released reports of several deaths that may have been associated with the product.

2. Marlboro
> Operating margin: 30%
> Revenue: $19.0 billion
> Market share: 42.6%
> Industry: Tobacco

Marlboro cigarettes are sold by Altria Group, Inc. in the U.S., and by Philip Morris International — which Altria spun off roughly five years ago — outside the U.S. Marlboro branded cigarettes have made both companies extremely profitable. Altria’s sales of smokeable products totalled roughly $22.8 billion in its most recent full year, 90% of total company revenues, of which 85% of units sold were Marlboros. Altria’s smokeable products unit has an operating profit of 28%. Because Marlboro is one the company’s strongest and best-selling brand, it is 24/7’s estimate that costs to produce the cigarette are lower and average price charged is higher than the company’s discount cigarette lines. As a result, we estimate the cigarette has an operating margin of at least 30%. BrandZ calculates that Marlboro is the world’s seventh most valuable brand at $73.6 billion.

1. iPhone
> Operating margin: 40%
> Revenue: $80.5 billion
> Market share: 20.9%
> Industry: Computer hardware

The iPhone is by far the most successful product Apple sells. Of the company’s $156.5 billion in worldwide sales in 2012, $80.5 billion came from the iPhone alone. Apple sold more than 125 million units last year, a 73% increase from 2011. In contrast, Apple sold 58.3 million iPads that year, generating just $32.4 billion in gross revenue. Each iPhone is far more profitable than each iPad, the company’s second best-selling product. According to documents released as a result of the patent lawsuit between Apple and Samsung, Apple’s gross margins on the iPhone were between 49% and 58% from April 2010 to April 2012, nearly double that of the iPad. This is partly because of larger revenue due to carriers that subsidize the iPhone heavily — an average of $425 per unit according to a recent Stifel Nicholaus analysis. Because of this fact, we calculate the iPhone’s profit margin is 40% — even higher than the entire company’s 35.3% margin.

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