Special Report

America's Most Profitable Products

7. Garmin nüvi
> Operating margin: 15%
> Revenue: $1.2 billion
> Market share: Greater than 50%
> Industry: Consumer electronics

Garmin is a navigation device company, focusing on GPS technology. By far, the most profitable of the company’s five divisions on a dollar basis, despite the fact that other divisions of the company have better margins, is the automotive/mobile group. This division makes and sells Garmin’s GPS units. This segment accounted for 55% of the company’s sales in 2012 — $221 million in operating profit on $1.5 billion in revenue. By comparison, none of the other four segments accounted for more than 15% of sales. Much of the segment’s success was due to Garmin’s nüvi product line, which accounted for 43% of the company’s total revenue in 2012. Garmin is by far the largest participant in the GPS market, with over a 50% market share, according to Consumer Reports.

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6. Folgers
> Operating margin: 23.6%
> Revenue: $2.3 billion
> Market share: 11.8% (U.S.)
> Industry: Packaged foods and meats

Folgers is owned by the J.M. Smucker Company, which reported sales of $5.5 billion in 2012. Of those sales, $2.3 billion came from coffee. (p.28) The company’s U.S. retail coffee unit, of which Folger’s is the top-selling brand, reported an operating margin of 23.6%, which is down from 27.8% in 2011 and 28.5% in 2010. We estimate that Folgers has an operating margin of at least that. The brand is the market leader for instant coffee in the U.S., commanding an 11.8% market share as of 2012. However, this is down from 13.2% in 2011. J.M. Smucker cut the price of coffee by 6% in 2012, which will affect the bottom line for both its Folgers brand and Dunkin’ Donuts-licensed coffee. One of the reasons the company’s profitability is so impressive is that it exists in a highly competitive market with brands like Maxwell House and Starbucks.

5. Enfamil
> Operating margin: 24%
> Revenue: $2.3 billion
> Market share: 15.1%
> Industry: Packaged foods and meats

The Mead Johnson Nutrition Company primarily sells infant formula and nutritional products for children, with infant formula making up 59% of the company’s total sales in 2012. The vast majority of Mead’s infant formula sales are from Enfamil, one of the best-selling infant formula brands in the U.S. The product also has several versions designed for babies with different types of feeding problems, intolerances and nutritional needs. There is also no major category in the infant formula industry in which the brand doesn’t have a presence. According to Crain’s Chicago Business, Mead Johnson had the second largest market share in infant formula as of mid-2012, with 15.1% of the market. The company was also the market leader in the rapidly growing Chinese formula market as of last year. The company’s operating margin in FY 2012 was 22.3%.We estimate its top brand has a margin of at least 24% as a result of higher retail prices earned by its strong brand and lower costs to produce due to production economies.

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4. Coca-Cola
> Operating margin: 25%
> Revenue: $14.3 billion
> Market share: 41.9%
> Industry: Soft drinks

Coca-Cola and Diet Coke were the two most popular sodas in the world as of 2011, with Diet Coke recently surpassing Pepsi to become the second-most popular drink in the U.S. Overall, trademark Coca-Cola products accounted for approximately 48% of all case sales of finished finished products, the company sold in fiscal 2012. Given that the company’s finished products unit, which includes the Coca-Cola brand, accounted for 62% of total revenue for the company, Coca-Cola trademark drinks accounted for roughly 30% of the company’s total revenue. Overall, the Coca-Cola Company reported 2012 sales of $48 billion and an operating profit of 22.4%. We estimate that the tremendous sales of the company’s flagship brand pushes its operating margin to 25%. BrandZ reports that Coke is the world’s sixth most valuable brand at $74.3 billion.

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