Ten Cheap Products Making American Companies Billions

Just because certain products have a low price tag does not mean they cannot sell for billions of dollars. In fact, some of the cheapest products make the most money for their companies. 24/7 Wall St. identified some of the best-selling consumer goods and food products costing under $5 and the companies that make them. The cheapest and most successful products are sold by companies with the strongest and oldest brands that spend the most on advertising.

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All of the companies that make the most money from selling inexpensive items have exceptionally strong brands. They are highly recognizable and held in high regard. Coca-Cola, which makes billions of dollars off its trademark drink Coke, is the most valuable brand in the world, according to brand valuation company Interbrand. According to Brand Z, McDonald’s, producer of the world’s favorite french fries, is the most valuable brand. Other brands, such as Cheerios, Campbell’s, and Starbucks, are also instantly recognizable.

These products have such strong brands partly because their parent companies spend huge sums of money on advertising. In 2011, Procter & Gamble, maker of Gillette razors, spent $9.3 billion on ads for all products — 11.3% of its total sales. This amount increases substantially each year, reflecting the lengths companies must go to preserve market share. Ian Cook, chief executive of Colgate-Palmolive, recently promised “increased advertising support behind many new and existing Colgate products” in 2012 to protect its global standing. The company said it had increased advertising spending in the fourth quarter to $428 million, up 5% from one year ago.

Additionally, these brands benefit from having been around for years and having existed in the public conscious a very long time. Products such as Coke, Colgate toothpaste, and Dole bananas have been around since the 19th century. Campbell’s soup and Cheerios have been household staples since the middle of the 20th century. Consumers have grown to trust the brands and expect a certain level of quality.

24/7 Wall St. reviewed the 500 largest companies by sales to identify the ones that focus on inexpensive consumer goods and low-priced food products. We then looked at the most inexpensive products sold for less than $5 and hold the highest market share. These are the cheapest products making American companies billions.

1. Gillette Razors
> Company name: Procter & Gamble (NYSE: PG)
> Market share: 70%
> Average price: $5

Procter & Gamble is the largest advertiser in the world. It spends nearly $10 billion a year on TV, internet and print campaigns to market the many highly successful consumer goods it sells, including razors. In the razors and blades market for men, P&G’s global market share is a staggering 70%, according to the company, primarily through its Gillette franchise. Net sales for P&G’s grooming segment increased 3% in 2010 to $7.6 billion. The average razor sells for approximately $5.

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2. Coke
> Company name: Coca-Cola Co. (NYSE: KO)
> Market share: 17%
> Average price: $2.69 for a 6-pack

The Coca-Cola Company dominates the U.S. soft drink market, holding a 42% market share in 2010, or over 12 percentage points more than closest rival PepsiCo. When it comes to brand-specific market share, Coca-Cola’s greatest asset is its trademark product, Coke, which has a market share of 17% on its own. Diet Coke has the second highest market share among all soft drink brands with a 9.9% share. PepsiCo’s drink Pepsi-Cola ranks third, holding a 9.5% share. Coke continues to do exceptionally well for the company. In 2010, the product “accounted for nearly 400 million unit cases of incremental volume, the largest incremental growth … seen since 2007,” according to the company. Sales in America, however, have dropped over the past 10 years.

3. Campbell’s Soup
> Company name: Campbell Soup Company (NYSE: CPB)
> Market share: more than 60%
> Average price: less than $2

A can of Campbell’s soup costs less than $2. Each year in the U.S., the company sells nearly 2 billion cans. As a result, the company holds more than 60% of the country’s wet soup market. Each year, more than 80% of all households in the U.S. purchase Campbell’s soup, the company claims. This is nearly 100 million households. On average, American consumers have six cans of Campbell’s soup stocked at all times.

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4. Trident
> Company name: Kraft Foods (NYSE: KFT)
> Market share: 23.8%
> Average price: $4 for a 3-pack

Kraft Foods owns a number of top brands, including Nabisco’s Ritz and Oreo, and Kraft macaroni and cheese. Kraft also owns Trident, which holds 23.8% of the U.S.’s $2.7 billion gum market — the largest share in the country. Wrigley’s Orbit is a close second with a 20.6% share. Trident gum, which costs approximately $4 for a 3-pack, is one of Kraft Foods top-revenue generating brands with over $1 billion in global annual sales.

5. French Fries
> Company name: McDonald’s (NYSE: MCD)
> Market share: 12.7%
> Average price: $2 for a large size

McDonald’s has the largest share of the U.S. fast food market — 12.7%. The company with the second-largest market share — Yum! Brands (NYSE: YUM), which operates KFC, Pizza Hut, and Taco Bell — has a significantly smaller share of 9.7%. Since 2004, McDonald’s has delivered an annual growth rate of 5%, according to CNN Money, and in 2010, revenue exceeded $24 billion. According to the company’s 2007 annual report, classic menu items such as french fries account for more than 75% of its global sales. It also notes that this percentage is growing. When not ordered as part of a meal, a large order of the famous french fries costs around $2.

6. Bananas
> Company name: Dole Food (NYSE: DOLE)
> Market share: 34%
> Average price: $1 per lb.

Dole Food has the largest market share in a number of products, including iceberg lettuce, celery, cauliflower and packaged fruit products. One of the company’s most surprising number one positions is in bananas, where it has 34% of the U.S. market. In 2010, Dole sold approximately 153 million boxes of bananas. It is also the largest brand for bananas in Japan.

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7. Colgate Toothpaste
> Company name: Colgate-Palmolive (NYSE: CL)
> Market share: 44.7%
> Average price: $3.50

Colgate-Palmolive’s flagship product, Colgate, is in heated competition with P&G’s Crest for the number one toothpaste in the U.S. On the global scale, Colgate has a more comfortable lead, controlling 44.7% of the market, according to the company’s press release for first quarter 2011 results. This is an increase of 0.6% from the year before. One six-oz. tube of Colgate sells for between $3 and $4. Colgate recently announced that it had raised prices in North America in the fourth quarter, after cutting prices each quarter since 2009.

8. Tropicana Orange Juice
> Company name: PepsiCo (NYSE: PEP)
> Market share: 28.2%
> Average price: $1

Although PepsiCo is not the leader of the soft drink market, it is the leader of the orange juice market through its Tropicana brand. Tropicana controls 28.2% of the U.S. market for orange juice and orange juice blends sold in supermarkets, according to Beverage Digest. Although a 12 oz. carton of Tropicana orange juice only costs about $1, Tropicana beverages, which include orange juice and other fruit juices, earned Pepsi approximately $5 billion in 2009. Despite being the industry leader, Pepsi is feeling the heat from Coke’s Simply Orange. To regain lost market share, it is pursuing a makeover.

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9. Cheerios
> Company name: General Mills (NYSE: GIS)
> Market share: 12.6%
> Average price: $5

Cheerios have been General Mills’ top-selling brand since 1951. They are also the most popular cereal in the U.S. As of 2008, Cheerios had a market share of 12.6%, according to Nielsen. As of 2011, one in eight boxes of cereal bought in the country were Cheerios. A single box of Cheerios costs about $5.

10. Starbucks Coffee
> Company name: Starbucks (NASDAQ: SBUX)
> Market share: 32.6%
> Average price: less than $3

Starbucks, which was founded in 1971, is the largest coffee and snack shop in the U.S., holding a 32.6% share of the market, according to a 2011 report by analyst group IBISWorld. Built around one of the most simple of products — a cup of coffee — Starbucks has grown into an international behemoth, and it continues to get bigger. In fiscal 2010, the company’s revenues increased to a record $10.7 billion. This is quite a feat for a store where the average price of a beverage is less than $3 and 90% of drinks cost under $4. The company sells an average of 8.2 million coffee drinks a day in the U.S, according to The Boston Globe.

Charles B. Stockdale