The World’s Most Lucrative Business Markets
This is a blog post by Drea Knufken.
What global business markets make people the most money? It depends. If following the law and paying taxes plays a role, oil, weapons, and alcohol are decent bets. For those who prefer the black market side of things, however, you can’t beat illegal products like drugs and counterfeits. We’ve combined the best of the world’s legal and black markets to provide a list of the world’s most lucrative business markets.
Note: We determined this list based on the size of the market (hundreds of billions to trillions), the proportion of profits to revenues, and industry growth. Some markets have matured, but have the market size necessary for this list; others are still smallish, but growing so rapidly and profitably that we included them, too.
Two words best describe the global drug market: Insanely large. According to UNODC (The UN Office on Drugs and Crime), the global market for illicit drugs is worth more than $300 billion annually. If the drug black market were a country, its GNP would rank 21st in the world, after Sweden.
Marijuana alone has a market value of $141.8 billion, according to the black-market research organization Havocscope. Add to that a $70 billion cocaine market, a $65 billion market for prescription drugs, and a $28 billion amphetamines market, and you just have the beginning. One can only marvel that governments are missing out on the taxation opportunity.
Image: US Army/Flickr
Governments spend trillions per year on tanks, artillery, armored vehicles, aircraft, motor gunboats, missiles, and other defense goodies. Global military spending was $1.14 trillion in 2007. That number is only going up. Global military spending is expected to increase 34% to $1.15 trillion by 2012. And global defense industry profits increased 12.6% during 2007-8, according to Fortune.
Who’s the biggest, baddest military spender of them all? That honor goes to the US, which spent $623 billion on defense in 2008. We’re also the world’s biggest military weaponry supplier. 9 of the 10 biggest profiteers of last year’s global war spend were US companies. Hey, at least we have one market that the recession hasn’t dry up.
If you’ve ever slipped a sex worker money for sweet-tasting deeds, congratulations. You just contributed to a $108 billion market. Enslavement contributes to those high returns: Globally, a single woman sex slave earns her pimp up to $250,000/year. Who needs business school when you can build an empire of prostitutes?
Although prostitution is more common in poor countries and around military bases, rich countries like the US certainly get their share. Here, prostitutes charge an average of up to $50 for oral sex, $100 for intercourse, and have 3-5 clients per day. If nothing else, the prostitution market is productive.
The 6 most profitable oil companies in the world—Exxon Mobil, Gazprom, Shell, Chevron, BP, and Brazil’s Petrobras—netted a total profit of $156 billion in 2008. Add to that peak oil’s potential supply shortages, OPEC’s ongoing legal collusion, a $12.5 billion oil smuggling black market, and shady commodities deals, and you have oil barons swimming in profits for the foreseeable future.
Image: David Shankbone/Wikimedia
Counterfeiting continues to burgeon, especially with regards to technology and drugs. Check out these Havocscope market size numbers:
• Counterfeit technology products: $100 billion
• Counterfeit pharmaceutical drugs: $75 billion
• Web video piracy: $60 billion
• Software piracy: $51.4 billion
• Movie piracy: $18.2 billion
• Counterfeit auto parts: $16 billion
The list above doesn’t include other lucrative counterfeit markets like clothing, shoes, and pirated music. Or fake medical devices, which make up a $7 billion market. Even more scarily, counterfeit airline parts are a $2 billion market. Cheapness, it seems, has no rational limits.
Image: Shine 2010/Flickr
No matter what country you’re in, you have a home team. You may own merchandise, like a baseball cap or mug, related to that team. You probably watch your team’s games on TV. You may even place the occasional bet on your team (unless you’re a Cubs fan).
Around the world, there are millions, perhaps billions of people just like you. Thanks to your fandom, savvy merchants are cashing in big on TV rights, sponsorships, merchandise, hospitality, and the hundreds of other ways sports can make money.
According to Plunkett Research, in the US alone, the “Big 4″–NFL, NBA, NHL and MLB–bring in $17 billion in annual revenue. “That’s just the tip of the iceberg,” says Plunkett:
U.S. sporting equipment sales at retail sporting goods stores are roughly $41 billion yearly, according to U.S. government figures. A reasonable estimate of the total U.S. sports market would be $400 to $425 billion yearly. However, the sports industry is so complex, including ticket sales, licensed products, sports video games, collectibles, sporting goods, sports-related advertising, endorsement income, stadium naming fees and facilities income; that it’s difficult to put an all-encompassing figure on annual revenue.
That’s the US alone. Now add in soccer, rugby, handball, table tennis, muay thai, and all those other sports the rest of the world loves. Sprinkle in global events for good measure–this year’s FIFA World Cup is expected to bring in about $3.4 billion in revenue–and sports is always in the running for the world’s most lucrative market.
Image: Melissa Gray/Flickr
Last year, gross legal gaming revenues in the US were about $33 billion. Nevada alone was responsible for more than $10 billion of that. If you add other global gambling centers, such as Macau (which brought in $1.7 billion this February alone), Monte Carlo, Estonia, other legal global casinos bring that amount up substantially.
Virtual venues also rake in returns. The American Gaming Association says that “Internet gambling revenue for offshore companies was estimated to be $5.9 billion in 2008 from players in the United States and $21.0 billion from players worldwide.”
Take away the taxes, and gambling becomes a sea of profit. In the US alone, illegal sports wagers are worth as much as $380 billion annually, according to one National Gambling Impact Study Commission estimate. (About 92% of those earnings go to organized crime groups.) How big is illegal gambling? Perhaps Roger Dunstan sums it up best in this government report: “We are ignorant about the full extent of it.” Suffice to say, it is very lucrative.
The recent global liquidity crisis brought down the pre-tax profits of the world’s top 1,000 banks to a measly $115 billion. Still, those same banks hold $800 trillion in assets. If those asset numbers go much higher, they’re going to be the first industry to introduce us to the concept of quadrillion.
Investment banking fees alone made banks $66 billion in 2009. Nearly half of those revenues came from US banks, followed by Europe. That said, the world’s most profitable bank today is the Industrial & Commercial Bank of China, which made $16 billion in profits in 2008.
The combined market cap of the world’s five biggest alcohol companies is $227 billion. Nearly 200 billion liters of alcohol were sold in 2004; that number has since gone up, thanks in large part to developing countries in Eastern Europe and Asia.
Still, “the leading alcohol marketing companies are nearly all headquartered in developed nations, rank among the world’s largest transnational corporations, and rely on large marketing budgets to dominate the market and extract oligopoly profits,” according to the World Health Organization. They profit heavily off those addicted to their products. In the US, for example, the “top top 5% of drinkers consume about 42% of the alcohol sold,” according to Corporations and Health. Add in minors, who consume about 17.5% of total alcohol sold, and binge drinkers, and you have an ongoing lucrative proposition.
How big is porn? Well, how big do you want it to be, baby?
Porn sales statistics are notoriously hard to get your hands on. Everyone seems to have a size estimate, but nobody has an accurate measuring stick to see how big the industry really is.
One 2006 estimate has the global porn industry at $97 billion in revenues. Although piracy is eating into the profits of more traditional outlets like paid online subscriptions and DVDs, underpaid porn stars and nearly infinite distribution channels ensure that the industry remains strong. Everyone from Verizon (smartphone porn) to Marriott (pay-per-porn) profits off the stuff. According to one estimate, 28,000 Internet users are watching porn every second.
Adult-oriented video games, magazines, anime and manga also diversify porn’s income channels. Even though the economies of porn market leaders Great Britain, South Korea, and the US have have slumped, peoples’ sex drive hasn’t.
Image: Tacit Requiem/Flickr
The global pharmaceutical market is estimated to be worth more than $700 billion. They’re also one of the world’s most profitable industries (with profit as a percentage of revenue).
Yet patent expirations threaten the pharma industry’s profit engine. The US, which boasts some of the world’s most profitable pharma companies, has a big patent cliff coming in 2012. Pharma companies are scrambling to find new drugs, redefine old ones, and sell to new markets to retain their bite of the profit pie.
Combating boredom has always been good business. Whether it’s paying $20 for a 3-D Shrek movie or being one of 11 million people to buy a copy of Halo 3, consumers always seem to have entertainment money on hand.
The US is the biggest entertainment market in the world, raking in an estimated $726 billion this year (PWC projection). The lowly TV, it turns out, still has a lot of cash-cow power. TV ads are estimated to make more than $200 million of that. Hollywood movie studios will make most of their profits from come from TV licensing. Computer and video game software, meanwhile, made $11.7 billion in 2008. The number of games sold worldwide continues to grow.
On the international stage, Asia is catching up, with a projected $425 billion entertainment market this year. China is leading the pack; some say the Chinese film industry will be bigger than the US’s by 2050. Even if we’re all watching movies on our iPads in a few years, entertainment in its many forms will continue to be one of the most lucrative markets around.
Image: A Campaign Designed to Drop Sales/Flickr
Human trafficking could be the ultimate organized crime. Essentially, people are tricked or stolen away from their homes and turned into slaves. Girls and women become prostitutes, children are trafficked for adoptions purposes, still others are forced into bondage as laborers.
Human trafficking is worth a relatively paltry $32 billion today, but it’s the fastest growing organized crime in the world. At least 27 million people around the world were slaves in 2008, according to American Public Radio. That number will only go up. In Europe and North America, sex trafficking alone generated as much as $9 billion in 2004. When you consider the low overhead involved, human trafficking could be one of the most profitable businesses around.
Drea Knufken is a freelance writer, editor, ghostwriter and content strategist. Her work has appeared in national publications including WIRED, Computerworld, National Geographic, Minyanville, Backpacker Magazine and others. For more information, please visit www.DreaKnufken.com. You can also find Drea via her blog, Facebook, LinkedIn and Twitter.