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and Projections NFDA is the leading and largest funeral director association in the world. We help our members achieve more by providing tools to manage a successful business. State of the Funeral Service Industry Based on analysis of the major external factors influencing the funeral service industry – the number of deaths, anticipated to increase as the population ages; number of adults 65 and older; the increasing number of cremations; and U.S. per capita disposable income – conditions for the industry over the 2014-2019 five-year period are projected to slightly improve. (IBISWorld Industry Report 81221, July 2014). U.S. Death Rates (annual deaths per 1,000 population) Year Annual Deaths per 1,000 Population 2000-2002 8.5 Final Data 2003 8.3 2004 8.2 2005 8.3 2006 8.1 2007 8.0 2008 8.1 2009-2010 7.9 2011 8.1 Provisional Data 2012 8.3 2016-2020 8.4 Projected Data 2025 8.6 2030 8.9 2035 9.3 2040 9.6 2045-2050 9.7 Source: U.S. National Center for Health Statistics-Vital Statistics of the United States; National Vital Statistics Reports; U.S. Census Bureau. Influence of Rising Cremation Rates on Industry In 2014, over one-third of funeral homes in the U.S. own and operate crematories and 7% plan to build or open their own crematory within the next five years. This means most are in competition with stand-alone crematories in the area of direct cremation (disposition of human remains by cremation without formal viewing, visitation or ceremony with the body present). There is a growing trend to select direct cremation because it is in general more cost-effective for consumers. It is often followed by some type of memorialization event with family and friends – but frequently without the services of a funeral home. This results in increased competition from the direct cremation (direct disposal) sector. The rising popularity of cremation is attributable to a number of factors in addition to cost considerations, including decreased household discretionary income, rising funeral expenses, which continue to outpace inflation (Batesville, 2013), environmental concerns, fewer religious prohibitions of the practice, and simply – changing consumer preferences including a growing preference for simpler, less ritualized funeral practices. Another significant factor in the rise of cremation popularity has conversely contributed to the decline of the historically traditional funeral in America: this is the surge in the number of people who do not identify with any religion. In just five years, from 2007 to 2012, the percentage of unaffiliated adults increased from 15% to almost 20% of the U.S. public (Pew, 2012). It has been shown that the likelihood of choosing cremation for a loved one is directionally higher for those who subscribe to no organized religion than for those who do. (FAMIC, 2010). Cremation has become socially acceptable as more Americans are thinking and talking about death in new ways, and its popularity is expected to intensify. As cremation becomes more popular, revenue gains for funeral homes are forecast to be moderate. Cremation services in general, offered by the vast majority of U.S. funeral homes, produce lower revenue for funeral homes, adversely affecting industry revenue. Typically, cremations cost less than one-third of funerals with burials. (IBIS, July 2013; March 2014). Industry revenue is anticipated to expand at an average annual rate of just 1.5% over the next five years, reaching $17.2 billion in 2019. Direct cremation services make up just over 4% of industry revenue in 2014 (IBIS, 2014). Future growth prospects for the industry will be hampered by the lower revenue and profit per family that cremations generate as well as by rising competition from crematories (IBIS, 2014, July). Cremation revenue is estimated at 42% of the revenue for a traditional funeral including a burial (Closing the Profitability Gap with Cremation, Batesville Services, 2013). To combat these challenges to revenue created by the rise in cremation and decrease in preferences for a traditional funeral, successful funeral homes will likely offer more specialized products and services associated with cremations, such as customized urns and service packages. It is predicted that funeral homes will continue expanding the array of extra services offered to families, and that operators will increasingly focus on niche markets, such as groups with diverse cultural and religious preferences, to differentiate themselves and to draw attention to their value-added services (IBIS, 2014). By 2030, NFDA estimates that 70.6% of all consumers will choose cremations over burials compared with the current rate of 45.1% (NFDA, September 2014). The percentage of cremations is projected to exceed the percentage of burials for the first time in 2015. Even with an expected increase from 2.5 million deaths in 2011 to 3.2 million in 2030 (a 27% increase), the shifting preference for cremations will result in the number of burials declining from 1.31 million in 2011 to 1.20 million in 2015, then to 1.06 million in 2020 and to 745,000 in2030. The number of cremations is expected to rise from 1.07 (2011) to 1.26 million (2015), then to 1.54 million (2020) and 2.27 million (2030). By 2030, NFDA estimates that 70.6% of all consumers will choose cremation over burial, compared with the current rate of 45.1%. The percentage of cremations is projected to
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