Finance

Australia’s InvoCare pays US$ 36.4 million for pet cremation businesses

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You can read this article from Australia’s Market Herald that announced that Australia’s largest human funeral and cremation provider finalized a deal to purchase two pet cremation business in the country for a combined price of US $36.44 million ($49.8 million in Australian dollars).

We learned that last week, InvoCare, purchased Family Pet Care and Pets in Peace to add to its pet cremation brand, Patch and Purr, which it started in 2018.  According to the article, Family Pet Care, based in Perth, is the country’s larges pet cremation service and conducts approximately 52,000 pet cremations annually.

Pets in Peace, has four locations in Queensland performs about 14,000 pet cremations annually from those locations.

Here are some statistics that we dug out of the article for you — all dollar denominations are listed in US dollar denominations.

  • The combined acquired pet cremation companies did about US $14.12 million in annual revenue last year
  • Combined the companies did about 66,000 pet cremations last year which would work out to a per pet revenue of about US $213
  • The US $14.12 million in revenue produced about US $3.8 million in EBITDA
  • An acquisition price of US $36.44 million would equal an EBITDA multiple of about 9.5 on the sale/purchase

According to the article, InvoCare is “a global company operating funeral homes, cemeteries and crematoria around Australia, New Zealand and Singapore.  It entered the pet industry in 2018.”

Here’s what InvoCare CEO Martin Earp was quoted as saying about the acquisition: 

We are excited to complete these transactions as they are both very high-quality businesses providing exceptional levels of customer service. Expanding the pet cremation business is a natural evolution for InvoCare providing opportunities to leverage its decades of operating in the end of life market.  In addition, it is our belief that our deep experience in memorialisation in our core business will transfer across to the pet sector given the increasing trend towards the humanisation of the pet industry.”

You can access the 2019 InvoCare Annual Report here.  According to that report, the company, at the end of 2019, operated 268 funeral homes, 17 cemeteries and crematoria, as well as a pet cremation business, Patch & Purr.  The report indicates that the public company did about US $361 million in revenue in 2019.

Here is Patch & Purr’s website.

Here is an article from the Sydney (Australia) Morning Herald entitled, “Why the pet cremation industry is booming.”

Funeral Director Daily’s take:  When I first saw this article the number of US $36.44 million for pet cremation businesses really jumped off the page at me.  How could that be?  And, especially at a revenue base as small as US $213 per case?

When you think about it, though, it really reflects the power of a “brand”.  And, how that brand, when embraced and doing something right. . . can really produce revenues through volume even with a low revenue per case base.  It makes sense . . . .I actually see that philosophy in what the low cost cremation providers such as Solace, Tulip, Smart Cremation, and to some extent Neptune Society are trying to accomplish across the United States as well as in the United Kingdom’s Pure Cremation brand.  Time will tell if any of these can build that country-wide powerful brand on low cost direct cremation.

I took time to really go through the InvoCare 2019 Annual Report.  I found it fascinating, and quite frankly, thought provoking when I used their thought processes and put them in the United States market environment.  I think there is a lot that North American’s can learn by looking at that report. When it comes to death care it appears that we have much more in common than we have differences. . . . and I could not help but wonder if those down under have got it better figured out than we do in North America.

The rest of this article is quoted directly from the InvoCare 2019 Annual Report.  I found it an insightful read as to InvoCare’s  perception of the continually evolving death care profession.

Trends in demand and value drivers
Family directed services
Historically, funeral and memorial services have reflected dominant cultural norms, typically with strong religious overtones set in churchlike environments. People have expected, and have been expected by our industry, to follow these norms without significant input.

However, as Australia has experienced greater levels of ethnic diversity and decreasing levels of religiosity, it is clear that people’s needs and expectations have changed and continue to evolve. While some continue to seek the traditional, religiously orientated funeral and/or  memorial experiences, an increasing number of client families are looking for experiences that individualistically celebrate the life of a loved one or, in the case of funeral pre-sales, their own life.

The desire for more control and transparency has shifted expectations away from the delivery of a standardised funeral experience, towards the desire for supportive facilitation to create and host more customised experience that is both culturally and personally appropriate.

With this greater desire for control has come a greater diversity in expectations about the scope of services appropriate for a funeral or memorial experience. These range from very simple arrangements for a cremation, up to very substantial group celebrations involving catering, audio-visual displays and event coordination.

Potential to increase sales lies in the ability to better meet client family needs by providing new and additional services that they value. Many client families aspire to mark the passing of a life in an emotionally fulfilling and socially respectful way. This is driving a demand for bespoke services that enable personally distinctive experiences.

Memorialisation is also an area where the quality and aesthetic values of memorial experiences are valued by those who desire to be remembered or to remember their loved ones in an emotionally uplifting and respectful way. The ability to achieve a price premium reflects the desire to experience a high-quality memorial environment and associated infrastructure.The challenge for funeral and memorial service providers is to evolve our offerings and service capabilities to maximise the perceived value of our services at all levels of expectation, and so realise consistently higher levels of satisfaction by meeting and, ideally, exceeding customer expectations for social approval and emotional fulfilment.

Growth of national brands in metro markets
Brand reputation is a powerful driver in the funeral market, with local (often personality driven) brand recognition traditionally key to referrals and awareness. However, in increasingly mobile and rapidly growing metropolitan populations, national brands are becoming more important as recognised sources of trusted value. This is creating an increasing disparity between the patterns of brand preference between metropolitan and rural locations, where local, personality-based relationships remain dominant.

Sea and tree changers shift to regional areas
Another trend differentiating metro and regional locations is being driven by baby-boomers’ enthusiasm for sea and tree change in their retirement. This has resulted in a reduction in the metro death rates as their populations skew younger and a commensurate rise in the death rates in areas to which metropolitan retirees typically migrate.

Developments in pet cremations
2019 saw the first substantial phase of implementation of the strategy to move into the adjacent market of pet cremations. The aim was to assess this opportunity through a mix of acquisition and greenfield developments on existing memorial sites, before rolling out the strategy nationally once the business model is proven. Our first acquisition, made in 2018, has performed strongly under corporate management largely due to the extended marketing support. 2019 saw the development of an additional greenfield crematorium site built on an existing NSW Memorial Park.

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Webinar:  Here is information on a timely webinar from The Foresight Companies entitled “Pet cremation and the funeral business:  A “Bone-a-Fide” opportunity”.

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