I’ve been able to receive a private report from November 2017 on the State of the American Casket Market. It is an extensive report that goes into who are the players in the industry, what is the market like, who has what percentage of market share, what is the profitability of the industry, and attempts to give a look into the future of where the industry is going.
I found the report, and I’ll share parts of it with readers over the next few days, fascinating. Although, if you are in the industry and have lived what is happening – you will know what the conclusions of the report are without reading it.
First of all, the report relates that the industry in America is a $657 million industry that is still highly profitable — leaving about a 10% margin to the bottom line — that’s a total of over $60 million cumulative to shareholders of the industry’s companies. However, the industry is highly concentrated with the top three companies controlling about 79% of the market share. As a matter of fact, the top two companies – Batesville and Matthews – control over 75% of the market share.
Here are some other highlights of the report:
- At the time of the Great Recession Wal-Mart made a highly publicized entry into the retail casket sales channel. Longstanding relationships between manufacturers and funeral homes virtually blunted that effort and made any Wal-Mart market share negligible.
- Import competition posed a threat at the same time. That has also been negligible due to the loyalties of funeral homes and their current suppliers and changing consumer preferences about funeral service has been responsible for virtually all of the market decline, not withstanding the Wal-Mart and import competition.
- The overall market decline has been at an annual rate of 3.6% over the last five years and the report expects it to accelerate to about 4.1% annually going forward for at least the next five years.
- A decline at a 4.1% annual rate would bring American casket manufacturing revenue down to about $533 million total as compared to this year’s revenue expectation of $657 million. The industry’s workforce is expected to contract due to this prediction. Our – Funeral Director Daily’s – opinion is that an approximately 10% bottom line profit could not be maintained with these drops. Moving even further with that conclusion at FDD – we see an accelerated consolidation of companies to synergize what economies of scale are left in the business.
- The report indicates that “High burial expenses and a greater cultural acceptance of cremation have reduced demand for caskets”.
As I said, this was an interesting report to read, however, any experienced funeral director can virtually write this report with what we have seen change the death care business. I’m also of the opinion that changes in the United States funeral industry are not over and certainly believe that where there are challenges there are also opportunities.