What are some of your favorite examples of consumer brands with disgustingly awesome EBITDA margins and what is the main moat that got them there?
By disgusting, I mean 25% - 30%+. Like Olaplex!
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Based on the WSO Dataset, let's delve into consumer brands with notably high EBITDA margins and the strategic moats that contribute to their financial success:
Coca-Cola (KO):
McDonald's (MCD):
These examples highlight how strong brand recognition and strategic business models can create substantial economic moats, leading to high EBITDA margins.
Sources: Basic Overview of the Consumer Sector, Basic Overview of the Consumer Sector, Framework for Understanding Results, POPULAR ACCOUNTING/FINANCE QUESTIONS
Don’t have the updated figure or stats but Brandy Melville is an interesting one. They really blew up in the early-mid 2010s and are still relevant to this day. Saw in the documentary that the bankers were surprised at their margins back when they were in a process to get acquired by Abercrombie, though that deal never ended up happening.
I would assume their success is due to 1) they were the big pioneers of instagram marketing / UGC in its earlier days 2) “one size fits all” cultivated a weird sense of exclusivity that drove demand 3) not to mention how much easier it is to optimize inventory when you don’t need to deal with multiple sizes
They are also very cute and comfy. Quality will always set the basis of a good consumer brand.
This is a great one. They are also very culturally prominent as the hot, sorority girl shop, and that image pays premiums
Sorority girl shop? I'm pretty sure their target demo is like 15 year old high schoolers, lol.
Rare Beauty? Quality sucks price on the cheaper end and goes viral IG everytime. Not sure which PE firm will buy it though.
Probably Rolex. They promulgated a digital marketing campaign at the beginning of this century that continues to support a remarkable bubble in the watch industry writ large. It’s the only watch brand most people know.
I don't like studying the brand moat because it's very hard, or impossible to replicate in most cases. Obviously great if you own the business though.
It is indeed a good moat though, lots of examples...
Hermès, they have invented and mastered the whole pre-spend/quota system for handbags.
Arguably Apple, with my favourite example being their headphone line. It makes up a massive amount of the business and has fully become a fashion accessory.
I mean, it’s only really applicable in the US and is more of a network effect play, similar to Bloomberg or Tinder
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