Major players in US industries
May 3, 2012 9:49 AM Subscribe
Who are the big players that control the majority of the market in US industries?
I recently saw an old George Carlin's clip when he ranted about the illusion of choice: how there are 23 flavors of bagels but very little choice in other aspects.
I also saw this pic that depicts how the majority of products in a supermarket are owned by 6-7 major players.
It got me curious. Who are the major players in the US industries that control a great percentage of the market? From first glance, it seems that in a lot of industries 3-4 players control > 70% of the market. For example: Verizon, AT&T, Sprint, and T-Mobile in the wireless industry. I'm looking for more exhaustive list especially in these industries: meat production, general food production, news, and insurance. Or other industries that do not actually need consolidation of players due to scarcity or technical difficulties. Wireless industry for example has limited radio bandwidth that naturally limits number of players in a given location (though perhaps not nationally) . But not cleaning products. There is no reason why there should be only limited major cleaning product companies.
Thank you.
I recently saw an old George Carlin's clip when he ranted about the illusion of choice: how there are 23 flavors of bagels but very little choice in other aspects.
I also saw this pic that depicts how the majority of products in a supermarket are owned by 6-7 major players.
It got me curious. Who are the major players in the US industries that control a great percentage of the market? From first glance, it seems that in a lot of industries 3-4 players control > 70% of the market. For example: Verizon, AT&T, Sprint, and T-Mobile in the wireless industry. I'm looking for more exhaustive list especially in these industries: meat production, general food production, news, and insurance. Or other industries that do not actually need consolidation of players due to scarcity or technical difficulties. Wireless industry for example has limited radio bandwidth that naturally limits number of players in a given location (though perhaps not nationally) . But not cleaning products. There is no reason why there should be only limited major cleaning product companies.
Thank you.
Best answer: I can speak to insurance. Turns out that Carlin's thesis doesn't really apply to the insurance market. Check this out.
As you can see, State Farm is the largest single insurer by a good bit, but it's only got slightly more than 10% of the total property and casualty market, which is about $500 billion annually. The next biggest player, Zurich, has about 5.5% of the market, and only the top 5 companies have 5% or more. Together, the top five players only control 31.68% of the market, and the top twenty-five are only at 64.95%.
Same goes for the life/fraternal market. Met Life has a bigger chunk of that market than State Farm does of the P&C market, but it's still only about 12.5%, but the top twenty-five players there do control about 72% of the market.
Still, this is far less concentrated than jedicus' example of four companies alone controlling two-thirds to three-quarters of their markets. No single company or even group of companies is particularly dominant. Instead of the top four controlling a majority, the top ten-ish control about half. So there are definitely big and small players, but there's no single gorilla or even duopoly that just runs the show.
This is probably because insurance is a highly regulated industry. Each state has its own department of insurance, and the states regulate both rates and practices but also competitiveness. They simply won't let a single insurer snap up too large a piece of the market. This is because unlike in other industries where bigger market share is largely just bigger profitability, market share in insurers is straight-up risk. If a single insurer has too much of a particular local market, they'll be in huge trouble if there's any kind of catastrophic loss. Insurers actually do some of this policing themselves, as they don't want to get caught holding the entire bag if an entire city block burns down, for instance, but regulators do keep track of each company's market share and have very powerful tools for preventing any single company from getting too big.
In case you're wondering, this regulation of prices has both upper and lower limits. So yes, the state won't let insurers charge excessive rates, but they won't let them charge to little either. Charging too little premium is an easy way to get in trouble if you're an insurer, and the states really don't like dismantling insolvent insurers.
posted by valkyryn at 10:15 AM on May 3, 2012 [1 favorite]
As you can see, State Farm is the largest single insurer by a good bit, but it's only got slightly more than 10% of the total property and casualty market, which is about $500 billion annually. The next biggest player, Zurich, has about 5.5% of the market, and only the top 5 companies have 5% or more. Together, the top five players only control 31.68% of the market, and the top twenty-five are only at 64.95%.
Same goes for the life/fraternal market. Met Life has a bigger chunk of that market than State Farm does of the P&C market, but it's still only about 12.5%, but the top twenty-five players there do control about 72% of the market.
Still, this is far less concentrated than jedicus' example of four companies alone controlling two-thirds to three-quarters of their markets. No single company or even group of companies is particularly dominant. Instead of the top four controlling a majority, the top ten-ish control about half. So there are definitely big and small players, but there's no single gorilla or even duopoly that just runs the show.
This is probably because insurance is a highly regulated industry. Each state has its own department of insurance, and the states regulate both rates and practices but also competitiveness. They simply won't let a single insurer snap up too large a piece of the market. This is because unlike in other industries where bigger market share is largely just bigger profitability, market share in insurers is straight-up risk. If a single insurer has too much of a particular local market, they'll be in huge trouble if there's any kind of catastrophic loss. Insurers actually do some of this policing themselves, as they don't want to get caught holding the entire bag if an entire city block burns down, for instance, but regulators do keep track of each company's market share and have very powerful tools for preventing any single company from getting too big.
In case you're wondering, this regulation of prices has both upper and lower limits. So yes, the state won't let insurers charge excessive rates, but they won't let them charge to little either. Charging too little premium is an easy way to get in trouble if you're an insurer, and the states really don't like dismantling insolvent insurers.
posted by valkyryn at 10:15 AM on May 3, 2012 [1 favorite]
Best answer: As far as news goes, you're going to want to read about media consolidation and cross-ownership. There are really only six big media companies (though most of GE's revenue is from their finance and manufacturing businesses), seven if you count Clear Channel, which dominates the radio market.
posted by valkyryn at 10:19 AM on May 3, 2012
posted by valkyryn at 10:19 AM on May 3, 2012
I don't have the stats, but I think Proctor & Gamble, Johnson & Johnson and Colgate-Palmolive basically make every brand you find in your local CVS.
posted by Grither at 10:25 AM on May 3, 2012
posted by Grither at 10:25 AM on May 3, 2012
Here's an infographic on media consolidation that I ran across recently: http://www.upworthy.com/who-controls-90-of-everything-americans-watch-hear-and-read
posted by ndfine at 10:27 AM on May 3, 2012 [2 favorites]
posted by ndfine at 10:27 AM on May 3, 2012 [2 favorites]
Grither, don't forget Unilever!
And the drug companies---whoo!
posted by Ruthless Bunny at 10:35 AM on May 3, 2012 [1 favorite]
And the drug companies---whoo!
posted by Ruthless Bunny at 10:35 AM on May 3, 2012 [1 favorite]
I don't have the stats, but I think Proctor & Gamble, Johnson & Johnson and Colgate-Palmolive basically make every brand you find in your local CVS.
Also Unilever, Reckitt Benckiser, Church & Dwight, Estee Lauder, Clorox, L'Oreal...and that's before you get to the pharma companies.
The consumer brand industries aren't nearly as concentrated as the OP's example. You'd have to limit the scope to one particular sub-category like carbonated beverages.
Boeing/Airbus is a good one. Wireless carriers is a good one. Maybe cable companies, but not so much when you add in the satellite and telco providers. Intel/AMD in microprocessors, but not semiconductors in general.
posted by mullacc at 10:42 AM on May 3, 2012
Also Unilever, Reckitt Benckiser, Church & Dwight, Estee Lauder, Clorox, L'Oreal...and that's before you get to the pharma companies.
The consumer brand industries aren't nearly as concentrated as the OP's example. You'd have to limit the scope to one particular sub-category like carbonated beverages.
Boeing/Airbus is a good one. Wireless carriers is a good one. Maybe cable companies, but not so much when you add in the satellite and telco providers. Intel/AMD in microprocessors, but not semiconductors in general.
posted by mullacc at 10:42 AM on May 3, 2012
8 companies control 70% of gasoline sales in the US.
posted by nickrussell at 10:45 AM on May 3, 2012
posted by nickrussell at 10:45 AM on May 3, 2012
There is no reason why there should be only limited major cleaning product companies.
While there's no controlling reason, like licensed bandwidth in the wireless industry, the effect of slotting fees means that only the product companies that can live with razor-thin profit margins can be successful in the mainstream retail space. And those companies are generally those that can apply economies of scale to the problem, meaning smaller players get crowded out.
posted by Cool Papa Bell at 10:57 AM on May 3, 2012 [1 favorite]
While there's no controlling reason, like licensed bandwidth in the wireless industry, the effect of slotting fees means that only the product companies that can live with razor-thin profit margins can be successful in the mainstream retail space. And those companies are generally those that can apply economies of scale to the problem, meaning smaller players get crowded out.
posted by Cool Papa Bell at 10:57 AM on May 3, 2012 [1 favorite]
Archer Daniels Midland pretty much controls the entire American corn crop.
posted by Chocolate Pickle at 11:12 AM on May 3, 2012 [1 favorite]
posted by Chocolate Pickle at 11:12 AM on May 3, 2012 [1 favorite]
Archer Daniels Midland pretty much controls the entire American corn crop.
That's not actually true. Its market share in the HFCS market, for example, is only about 30-35%. It currently has a similar share of the ethanol market. However, the corn market is the kind of market the Asker is getting at, with a handful of companies (e.g. ADM, ConAgra, Cargill, and a few others) basically controlling the market from production to processing.
posted by jedicus at 11:38 AM on May 3, 2012 [1 favorite]
That's not actually true. Its market share in the HFCS market, for example, is only about 30-35%. It currently has a similar share of the ethanol market. However, the corn market is the kind of market the Asker is getting at, with a handful of companies (e.g. ADM, ConAgra, Cargill, and a few others) basically controlling the market from production to processing.
posted by jedicus at 11:38 AM on May 3, 2012 [1 favorite]
If you really want a comprehensive answer on this you should probably check out this page from the census bureau. It tells you how concentrated various industries are. Then you could dig deeper on the industries that are really concentrated.
posted by bove at 3:52 PM on May 3, 2012
posted by bove at 3:52 PM on May 3, 2012
Oligopoly Watch was a website devoted to this exact topic. Sadly it's no longer updated or even accessible except through the Wayback machine.
posted by euphorb at 8:25 AM on May 5, 2012
posted by euphorb at 8:25 AM on May 5, 2012
This thread is closed to new comments.
Tyson, Cargill, JBS, and Smithfield together account for 76% of the beef market and 66% of the pork market, with lesser but still significant percentages of the turkey and chicken markets (source; scroll down for chart).
posted by jedicus at 10:02 AM on May 3, 2012