Last week, according to this article from Reuters, one of the largest companies in the world of tobacco took a $31.5 billion write down on the value of their future sales.  British American Tobacco (BAT) took this write-down on the value of some U.S. cigarette brands “acknowledging. .  that its traditional market has no long-term future”.

 

In the article, BAT executives point out that there is a decline in cigarette volumes in some markets, that some inflation-weary clients are downgrading to cheaper brands, and emphasized the need to focus on alternatives.  They have made a pledge to generate 50% of their revenues from “non-combustible” products by 2035.

 

In making these decisions the company “shifted the value of these brands to a finite lifetime of 30 years“.  BAT Chief Executive Tadeu Marroco made the comment that BAT was “catching up with reality“.

 

As I read the article I found myself thinking that the market being talked about is a lot like the traditional earth burial with casketed services market. . . .

• There is a decline in volume (casketed burials – at least by percentage)
• Inflation-weary, or simply clients looking for a lower-cost alternative (Direct Cremation with No Services)
• A need by companies to focus on alternatives (offering what a client is looking for — Celebrations of Life, less tradition, etc.)

 

It is interesting to note that British American Tobacco has “acknowledged that its traditional market has no long-term future”.  Has the traditional casketed funeral services market came to that same conclusion yet?  If not, what is the “long-term future” of the product? . . . . As to all death care dispositions, is it a 10% market share, a 20% market share, or is it more or less than that?  And, don’t forget also trying to nudge into the market share of the future is human recomposition (human composting) and alkaline hydrolysis (water cremation).

 

British American Tobacco has set a goal of receiving 50% of its revenue from “non-combustible” sources by 2035.  If you are a traditional funeral home have you set any goals from where your revenue will come from as the future unfolds?

 

I also think that knowing what or where your revenues will come from in the future can only be a help in how you plan your long-term investment strategy in facilities and/or equipment. . . . .do you need a casket selection room anymore?  Can one of your casket reviewal or visitation chapels be converted into a Celebration Center or a hospitality room?  What does the death care facility of the future look like?  Will it be big on technology such as offering top of quality streaming (such as available from OneRoom Streaming) that can draw premium prices from clientele for the service? . . . What else could be of value?

 

I do think there is somewhat of a parallel between the apparent future drop in cigarette sales and the continuing drop of traditional casketed earth burial services in death care. . . . I think British American Tobacco is catching up with the curve recognizing a 30-year lead-time to its value and I think they are smart to be looking that far ahead and working to fill the gap with other revenue sources.

 

What about your funeral home?  Are you being as farsighted as they are?

 

More news from the world of Death Care: 

 

• Firm partners with funeral directors to offer legal advice to bereaved families.  Today’s Wills and Probate (Great Britain)
• Hanover considers adding natural burial option for Pine Knolls Cemetery.  Valley News (NH)
• Editorial:  Veteran’s Administration must come clean on conduct of Pinellas Cemetery Director.  Tampa Bay Times (FL)
• Families seek green alternatives to traditional funerals.  The Financial Times

 

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