How much is the U.S. Funeral Industry worth?
The U.S. funeral market is currently estimated to be worth around $20 billion annually, with 2.4 million funerals taking place each year. Due to the increase in the U.S. senior population in the coming years, this death rate is set to rise.
There are an estimated 19,000 funeral directors currently offering services in the U.S., but exact numbers prove to be difficult to pinpoint as the profession is regulated differently by each State. This means it is wise to ensure the funeral director you choose is reputable and appropriately licensed.
The COVID pandemic resulted in 3.4 million deaths and a record increase in cremations during 2020 -2021.
Funeral Industry’s declining profits and changes in the funeral market
Senior industry analyst Toon van Beeck of research firm IBIS World has reported that the revenue of the U.S. funeral industry will continue to grow. However, the industry is battling declining profit margins due to the growth of the cremation rate. Still, the steadily-rising death rate in coming years will likely help increase revenues.
The market size of the funeral industry sector is expected to grow by 1.5% in 2023.
Since the economic downturn, the funeral industry has continued to see a decline in profits as families economize on funeral costs or choose cremation as a lower-cost funeral alternative.
The funeral industry reported at its annual NFDA convention that the average profit from a funeral was down by 37%.
In 2022, 59.3% of Americans choose cremation, which is increasing exponentially in all states. It is anticipated that by 2040 over 80% of Americans will be cremated.
Some states, such as Nevada, Washington, and Hawaii, have cremation rates over 65%, whereas Mississippi, Alabama, and Kentucky have some of the lowest cremation rates in the U.S. However, all states are experiencing a growth in cremation rates.
“Death and Taxes”: The inevitability of a life cycle…
“The honest-to-goodness truth of the matter is that everybody does die,” stated Arvin Starrett, a spokesman for the National Funeral Directors Association and the owner of Starrett Funeral Home in Paris, TX, in a New York Times article.
‘Death and Taxes’ are, as the cliché states, two unavoidable facts of life!! And, let’s face it in an economic and political environment that changes with the wind, it is the one absolute truth we all can accept. That is why the funeral industry boomed when the global and domestic economy around them was crumbling.
It is now estimated that the real average cost of a traditional funeral is over $8,000 and much nearer to $10,000 when cemetery fees are considered.
Funeral Prices: Why do they vary so much?
Funeral prices can and do vary enormously both within a local area and between funeral directors, so comparing like-for-like quotes is strongly recommended to anyone requiring funeral-related services.
I am often asked by families why funeral prices can vary so much and why funeral directors are sometimes unwilling to disclose full pricing. The answer is that the funeral industry has existed for decades as a business where families did not ask about the cost upfront but accepted the cost of a final funeral bill, sometimes without question. Today that has all changed as families are demanding simpler funeral services at less cost and with clear disclosure of what they are paying for.
Family-owned vs. Corporate Funeral Companies
Funeral director businesses range from part-time, sideline ventures to family-run enterprises, from small to medium groups through to international corporations.
One of the main criticisms of the industry by watchdogs and other groups is that some funeral homes are not totally clear about their true ownership, hence the reason many traditional family business names still exist even though larger groups may have acquired them.
Therefore, when acquiring funeral services, it is wise to establish exactly whom you are dealing with, as many people opt to choose a trusted local family funeral business, only to find they are dealing with a large corporation.
As already mentioned, funeral prices can vary enormously. As a contradiction to current retail practice, it is not always the national corporations with large buying power that offer the best value services!
As a $20 billion annual industry, the funeral trade has also attracted unscrupulous traders who may appear to offer discounted services, but be sure to check out any firm offering what seems unrealistically discounted services!
The funeral market in the U.S. can be largely viewed as a juxtaposition between the corporate industry and the independent family-run business. Service Corporation International (SCI), whose main brand is Dignity Memorial, is the largest corporate company in the funeral industry marketplace.
SCI bought out the number 2 corporate company ‘Alderwoods’ in 2008 and, in December 2013, acquired the number 3 corporate company Stewart Enterprises. SCI also owns the National Cremation Service brand, The Neptune Society, and Advantage Funeral and Cremation Services.
In 2022, SCI grossed $4.1 billion in revenue and currently sits on $7.4 billion in future revenue from their preneed funeral and cemetery sales. SCI has funeral properties in 43 states, 8 Canadian provinces, and select parts of Germany. However, their recent acquisition of Stewart Enterprises has led to them selling off and consolidating properties in some states to comply with the monopolies commission.
Be careful to check the identity of the funeral home you choose, as many corporate funeral homes still trade under a family name. If in doubt, it is wise to ask the question directly as to whether they are independently owned or part of a corporate chain. In some cases where SCI acquired funeral homes, they not only kept the same family name but also continued to employ the same staff!
There are also several privately owned companies that are conducting large numbers of funerals in the US. Northstar Memorial Group, Smart Cremations, Foundation Partners Group, and Newcomer Funeral Service Group offer services on a larger scale.
Licensing and Trade Associations in the Funeral Market
The National Funeral Directors Association (NFDA) has its own strict “Code of Practice” by which its members are bound. It has a broader membership as it caters to the whole funeral profession, from independent to national corporate companies.
There are a number of trade associations for the U.S., many of which operate at a State level. Most funeral homes are members of one or more of these associations and schemes; however, there is no regulation or law to insist on membership in any. It would be worth considering whether the funeral director you select to handle your needs is a member of one of these trade associations.
There is also Selected Independent Funeral Homes – a member association solely for independent funeral homes. CANA (Cremation Association of North America) devotes itself to the furtherance of cremation training and the collation of cremation-related data. ICCFA (International Cemetery, Cremation, and Funeral Association) is an international association.
Visit Death Care Disrupted: How Cremation and Tech are Changing the Funeral Industry to learn more about current trends in Cremation, Technology, Regulation, Acquisitions, and Private Equity Interest in the death care sector.
