Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Casket Industry
Transcript
- Lucas: So I was reading the latest NFDA data — that's the National Funeral Directors Association — and one number jumped out. In 2025, the U.S. cremation rate hit 61 percent. Back in 2015, it was 48 percent. That's a thirteen-point shift in a decade. Luna: And that's a huge deal for an industry built around burials. Caskets, grave plots, embalming — all of that gets bypassed with cremation. Lucas: Exactly. And the demographics driving this are fascinating. It's not just changing preferences — it's that people are having fewer kids. When someone passes away, traditionally the children handled the arrangements. But with smaller families, and adult children often living far away, more people are pre-planning. And pre-planning tends to favor cremation — it's simpler, cheaper, and easier to arrange remotely. Luna: So the casket industry is essentially getting squeezed from two sides. Fewer burials per death, and fewer deaths overall in the near term because the big baby boomer wave has already crested. Lucas: Right. The baby boom generation — born 1946 to 1964 — they're now between 62 and 80 years old. The peak death years for that cohort were the 2020s. We're now entering a period where the number of deaths in the U.S. is projected to plateau or even decline slightly, because the generations behind the boomers are smaller. Luna: Which means fewer caskets sold overall, and a lower percentage of those deaths choosing burial. That's a brutal one-two punch for casket manufacturers. Lucas: And yet, the industry is still dominated by a few big players. Batesville, which is owned by Hillenbrand, used to control something like 40 percent of the casket market. But they've been diversifying. Hillenbrand sold off Batesville in 2023, actually. The casket business was becoming a drag. Luna: So what happens to all those small-town funeral homes? Many of them rely on casket sales as a big profit center. If burial rates keep falling, their margins get crushed. Lucas: Yeah, and we're already seeing consolidation. The number of funeral homes in the U.S. has been declining slowly, but the big corporate chains — Service Corporation International, which owns over 2,000 funeral homes and cemeteries — they're scooping up independent operators. SCI reported in their Q1 2026 earnings that same-store funeral revenue was down 2 percent year-over-year, partly because of the mix shift toward cremation. Cremation services generate lower revenue per case than traditional burials. Luna: Lower revenue, but also lower costs. No casket to stock, no embalming supplies, no grave liner. The profit margin on a cremation might be similar or even better on a percentage basis, but the dollar amount is smaller. Lucas: Right. And that creates a kind of race to the bottom for independent operators. They have to invest in cremation equipment — retorts, urns, memorial software — while still maintaining a showroom of caskets that people increasingly don't want. It's a capital-intensive pivot. Luna: And then there's the innovation angle. I read about a company called Eterneva that turns cremated remains into diamonds. That's a completely different product from a casket. There's also companies making biodegradable urns for tree planting, or even reef balls for ocean burials. Lucas: Those are niche, but they point to a broader trend: the funeral industry is being forced to become more customer-centric. For decades, it was a seller's market — you didn't shop around for funeral services because you were grieving and in a hurry. But with pre-planning, consumers are comparing options, reading reviews, and making rational choices. That's a huge cultural shift. Luna: And it's being accelerated by demographics. Fewer children means more people are planning their own funerals. And when you plan your own funeral, you're more likely to choose whatever is cheapest and simplest, not what your kids might feel obligated to buy. Lucas: Which brings us back to the casket. The average casket sold in the U.S. costs about $2,500, according to the NFDA. But you can buy a very nice casket from Costco for $1,000. That price transparency is killing margins. And again, fewer people buying means the fixed costs of manufacturing and distribution get spread over fewer units. Luna: So the casket industry is facing a structural decline, not just a cyclical one. This isn't going to bounce back when the economy improves. Lucas: No, it won't. The demographic trends are one-way. Birth rates aren't going up in a meaningful way. So the death care industry has to adapt. Some are moving into the cremation space aggressively. Others are adding pet cremation services — because pets are often considered family now, and that market is growing fast. But the core casket business is a shrinking pie. Luna: And it's not just the U.S. Japan has been dealing with this for decades. Their cremation rate is over 99 percent. The casket industry there is almost nonexistent. They've moved on to entirely different death rituals. Lucas: That's a good comparison. Japan's experience shows us what the future looks like. Their funeral homes now focus on ceremony and memorialization, not the physical product. They do elaborate floral arrangements, video tributes, things like that. The casket is just a box to transport the body to the crematory — often a simple, even rented, container. Luna: So the casket industry is essentially being disrupted by demography. It's not a technology disruption, it's a demographic one. And the companies that survive will be the ones that stop thinking of themselves as casket makers and start thinking of themselves as death care service providers. Lucas: Exactly. And look, this is where the listener might think, 'Okay, this is interesting, but does it affect my life?' Well, if you're an investor, you probably want to avoid casket manufacturers and look at companies like SCI that are pivoting to cremation. If you're a funeral director, you need to be thinking about your service mix. And if you're just someone planning for your own future, it's a reminder that the choices you make about end of life are increasingly shaped by the demographic reality around you. Luna: Speaking of that reality — if walking through the economy with us has made something click, we do have a small ask. This show is ad-free, and listener support is what keeps it that way. Lucas: Yeah, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It's that simple. And it genuinely helps us keep doing deep dives like this one. Luna: We appreciate it. Now, back to the casket industry — one more thing I think is worth touching on is the regulatory side. The FTC's Funeral Rule requires itemized pricing, which has already driven down costs. Do you think further regulation is coming? Lucas: It's possible. As the industry consolidates, there's concern about price gouging in markets where one company owns most of the funeral homes. But I think the bigger pressure is from consumer choice. People are more informed, and they're voting with their wallets. The casket industry's decline is really a story of consumer empowerment driven by demographics. Luna: It's a reminder that no industry is immune to demographic change. Even the most traditional, stable-seeming businesses can be upended by something as fundamental as how many children people are having. Lucas: And that's the thread we'll keep pulling on this season. Next week, we're looking at how falling birth rates are reshaping the pet insurance industry — which, spoiler, is booming. Until then, thanks for listening.