How is cremation changing the funeral industry in 2022?

The U.S. cremation rate is now at around 57.7%.  Forecasts are for the rate to reach 80% within 20 years.  So, how is the cremation trend changing the funeral industry in 2022?  Are cremation prices increasing, although with gas prices? Will the cremation rate continue its upward trend? Or will consumers shift to greener alternatives in a bid to address concerns about climate change?

Some say that the funeral industry faces some grave challenges.

Let’s first look at how this cremation trend is affecting the cemetery industry.

Most certainly, cemeteries are facing a huge challenge.  In recent years, some cemeteries have added cremation niche mausoleums and ash scattering gardens.  Now there are reports of cemeteries in some locales merging.  This is an attempt to better prepare for a future with a very low burial rate and reconcile overhead costs.

U.S. cemeteryCemeteries are not as popular as they once were.  With Americans’ attitudes changing, more migration happening, and less religious and nuclear family values, cemeteries are becoming green spaces with little foot traffic.  Progressive cemeteries have added green burial sections and realigned their purpose in their community by holding community recreational events.

As the cremation rate continues to climb, cemeteries will be further challenged to stay operational.  Families save thousands of dollars opting for cremation instead of burial,  but these same families are then less likely to spend hundreds of dollars interring cremated remains.  Cremation niches, scattering or interring ashes all cost if you use a cemetery.

Fees start at around $300 for a basic scattering or natural burial of cremated remains.  Although most cemeteries are likely to charge a minimum of $500 to inter cremated remains.

And, now, what changes have we observed in funeral homes?

I think there are several distinct changes that we can see.  Firstly, the revenue potential for funeral homes has decreased markedly.  The average cost of a traditional funeral is $7,848 (NFDA 2021) without any cemetery costs.  If a family now opts for a cremation service, that price is likely to drop to around $3,600.  So, it is easy to see that funeral home revenue must decrease as families shift from traditional burial to cremation.

Secondly, more small independent funeral homes are installing cremation equipment.  Presently, 30% of funeral homes own and operate their own crematory, with a further 10% planning on installing equipment in the next 12 months.  The current growth trend in cremation may indicate it is a sound business strategy to install cremation equipment on-site. However, this equipment can be costly for a small business. If a funeral home cannot increase its volume of cases and now has increased its overhead, it could be in serious trouble in the coming months or years.

Other changes we are seeing are related to changes in legislation and training.  Many states require funeral homes to have an embalming room to be licensed.  Some years ago, this was challenged in Minnesota by Crescent Tide Funeral & Cremation Services.  The small funeral business challenged the requirement for an embalming room when all they were offering was cremation services.  They won their case.

Other states are beginning to revisit funeral legislation, especially where it is holding small funeral businesses back.  More training is being implemented for cremation technicians who do not have to hold a funeral director’s license.  In Florida, the law permits a business to open as a ‘Direct Disposer’ only.

More funeral homes already have, and continue to, open separate cremation companies to cater specifically to the demand for cremation.  And many funeral homes have sought to extend their normal service area in an attempt to generate an increase in cremation cases and hence increase their revenue.  This, of course, has implications for those small funeral homes that are not competing in the cremation market.

How can all funeral homes remain in business when over half of Americans’ are opting for a cremation?  And furthermore, figures indicate that around 80% of those cremation services are low-cost direct cremation.  In most cities now, a direct cremation can be arranged for around $900.

How is the death care sector changing overall to adapt to cremation?

Cremation marketA few big changes are beginning to occur.  Most notably, I have observed an increase in acquisition by larger funeral groups.

This is not only corporate acquisition on a large scale but a number of private regional and even private family groups extending their reach into new markets.

The Internet has changed the marketing of funeral services more than any other medium in the last century.  Marketing funerals has always been complex.  Selling a service that no one really wants to purchase!

Now funeral companies are using Google Ads to position themselves in a way never before possible.  With a greater capacity to reach into areas and markets with greater ease and investment.  Aside from the increase in funeral homes now having websites and entertaining social media, a growing number are offering online arrangement portals.  Allowing families to conduct cremation arrangements without ever visiting the funeral home.

The future journey ahead for the funeral industry.

Future of the funeral industryHere are my predictions for some further changes we are likely to see in the next 10 years.  We will see a reduction in the number of funeral homes in the U.S.  The number has decreased by at least 2,500 over the last 10 years.  But many more small-town funeral homes will not be able to compete in the changing death care landscape.

A Potential Growth in more Eco-friendly Disposition Alternatives

I believe there is a probability that we will see another shift in the landscape.  There is a growing concern about the environment and an interest in natural death care alternatives.  Cremation (albeit more eco-friendly than traditional burial) still creates the same emissions as a 500-mile car journey.

There has been a simmering interest in greener death technologies and alternatives.  And, the attention given to Climate Change from 2021 onwards will likely impact our death care choices.  Our final journey is one that we can choose to be as kind to the environment as possible.

Green Funerals and Natural Burial have been around for some time, but recent surveys have indicated that 52% of Americans would consider a green funeral.  A green burial is still cheaper than a traditional burial but more expensive than a simple cremation.

Alkaline hydrolysis (water cremation) and human composting are new initiatives that are causing disruption.  If gas costs, cremation permit fees, and emission charges rise, the cost of cremation may escalate to a point that the public will revert to a new alternative that offers affordability and simplicity.

Water cremation (in the 20 states where it is legal) can be conducted for between $1,295 and $2,500, making it an environmentally friendlier cremation alternative.  If gas prices, and other costs, drive up the price of flame cremation, water cremation may become as affordable and certainly have a much lower carbon footprint.

As we approach the end of 2022, we are also witnessing a growing concern about the economy, especially rising energy and gas prices affecting everyone. From the start of this year, we have observed that many cremation providers are increasing their cremation costs to account for rising gas prices.  Within our network, 40% of providers have increased their direct cremation base price by $50 to $150.

If cremation costs continue to rise, and other greener alternatives come to the market at a more affordable cost, will we see a shift away from cremation being the preferred choice for the majority of families?

Human Composting (Natural Organic Reduction) has now been legalized in 4 states and offers an eco option.

It will certainly be interesting to observe what further changes and challenges 2023 brings for the funeral industry.

Funeral Insurance: Legalities that can provide loop-holes!

LIfe-Insurance-PolicyThis story in the news today (USA Today: Funeral expenses leave mother’s body in limbo) highlights some potential risks with using life insurance to pay out for funeral expenses.

Dorothy Johnson believed she had been prudent and wise in taking out a life insurance policy for $50,000 which would cover her funeral expenses and hopefully leave a financial legacy for her children.

She did not foresee that she would die young (53 years) of a heart condition and having made her youngest son the beneficiary, that he would not legally at 16 years old, be able to access the funds.

We all know that insurance companies hate to pay out and will find any loop-hole, small print opportunity to void a policy or clause that you have transgressed to escape making full payment.

In the Johnson’s case, their mother’s body remains deteriorating at the funeral home whilst the insurance company claims that a legal guardian has to petition the court to access the funds.  This could take weeks, if not months, and all the Johnson’s want is to be able to hold a dignified funeral for their mother and say their final goodbyes!

The surviving family does not have sufficient money to be able to hold a funeral service without the life insurance funds.  They have approached 7 Social Service organizations for help, but as of yet no help has been offered.

This is a sad but true story of how ordinary families across America are affected by funeral costs today.  Preplanning is an excellent idea and is meant to save your surviving family the anguish of this sort of situation.  However, as this story exemplifies, you MUST ensure that all your ‘ducks are in row’ with any kind of insurance policy you take out to cover final expenses.

In the Johnson’s case it looks like they will not be able to have the funeral they wanted for their mother – a home-going funeral befitting for a woman who did nothing but care for others.  The family will have no option but to hold a simple and low cost cremation in order to handle the disposition of their mother.

If you hold life insurance, or are considering taking out a funeral insurance policy, do ensure you carefully check ALL the terms about how the funds can be accessed by your designated beneficiary.

Is the expansion of SCI at the cost of the average funeral consumer?

businessweek-death-incBusinessweek has this week chosen to cast a spotlight on the $16 billion death care industry.  The cover of Businessweek features the ominous title ‘Death Inc.’ as it takes a look “inside America’s fastest-growing merchant of death.”

The feature refers to Service Corporation International (SCI), the largest corporate player in the funeral industry, who is in the process of taking over Stewart Enterprises (STE), the second largest corporate death care company.

This take-over will give SCI a 15% share nationally of the funeral industry in the U.S., with an even greater share is some markets such as Florida, Texas and California.  Which, of course, happen to be states where significant populations reside.

According to data compiled by Everest Funeral, a Houston-based “concierge” funeral planning service, SCI charges $3,396 on average for a cremation with memorial service—30% more than independently owned rivals.  Similarly, SCI charges $6,256 on average (excluding casket and cemetery plot) for a traditional funeral, 42% more than independents.

funeral-costs

The message is clear – economies of scale do not operate with SCI as they do for other corporates in other markets.  Let’s take Walmart for example, who certainly hurt the funeral industry when they introduced their $995 casket.

The more consumers become aware of the insidious aspect of the funeral ‘sale’ and can make more informed decisions, thousands of unnecessary dollars can be saved by families on funeral costs.

The DFS Memorials network was established specifically for this cause.  To help families save money on funeral costs, and to champion the independent Mom and Pop funeral homes, who in many cases DO offer far better value than the corporate funeral giants.

Never mind $3, 396 – our network of cremation providers can offer a basic cremation with a service for half this cost!  A direct cremation can be purchased in some areas for as little as $495, and in most metro areas is available for under $1,000.

Click here to read the full story from Businessweek.

If you want an inexpensive funeral option – check out your local DFS Memorials provider.