Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / Falling Birth Rates Reshape the Funeral Industry
Transcript
- Lucas: So here’s a question you don’t hear every day: what happens to the funeral business when there are fewer people to bury? Luna: That’s grim, but actually really interesting. I hadn’t thought about it. Lucas: It’s one of those industries where the demographic shift is inevitable. Funeral homes are already feeling it, especially in countries like Japan, where the cremation rate is over 99 percent. Fewer births means fewer deaths decades later, but it’s not just about volume. Luna: Right, because the structure of who’s planning the funeral changes too. If you don’t have kids, who handles the arrangements? Lucas: Exactly. The traditional model has been — family steps in, pays for the service, often buys a family plot. But with smaller families, more people dying without direct descendants, the buyer is shifting. Increasingly, it’s friends, neighbors, or even the state. Luna: So the customer base is not just shrinking in number, but also in spending power and emotional connection to the deceased. Lucas: That’s a big part of it. In Japan, one of the largest funeral operators, Kokoro, has been reporting declining revenues for the past five years. They’ve started offering “pet funerals” and even tree-planting ceremonies to diversify. But the core business is under pressure. Luna: And Japan is the canary in the coal mine. What about Europe? Lucas: In Germany, the traditional burial rate has dropped from about 60 percent in 2000 to around 40 percent now. People are choosing cremation, which is cheaper and doesn’t require a plot. That’s a direct hit to revenue for funeral homes that rely on selling grave markers and cemetery space. Luna: But cremation margins are lower, right? So they have to sell more volume just to stay flat. Lucas: Exactly. And volume is going the wrong way. The UK’s National Association of Funeral Directors found that the average number of funerals per home fell by about 8 percent between 2019 and 2025. That’s a significant squeeze. Luna: So how are they adapting? I’ve heard of “green burials” — is that a growth area? Lucas: It is. In the U.S., the Green Burial Council says the number of certified natural burial grounds has more than doubled in the last decade. They’re cheaper and more eco-friendly, but they also appeal to a demographic that’s less tied to tradition. And with fewer kids, people feel less pressure to maintain a gravesite. Luna: So it’s not just a pricing thing, it’s a cultural shift. People want something that reflects their values, not just a plot in a cemetery. Lucas: And that’s where the innovation is happening. Some funeral homes in Sweden are offering “memorial subscriptions” — you pay a monthly fee for digital remembrance and annual gatherings. It turns a one-time purchase into a recurring revenue stream. Luna: Subscription grief support — that’s a sign of the times. But it also requires a different kind of marketing. You can’t just rely on the local obituary page anymore. Lucas: No, and that’s another angle. Digital memorial platforms like Keeper or Eterneva are growing fast. They offer online spaces where people can share memories, and they monetize through premium features or partnerships. It’s a completely new category. Luna: So the funeral industry is essentially being forced to innovate because of demographics. And that’s actually a good thing for consumers — more choice, more transparency. Lucas: Exactly. But it’s also a tough transition for small family-run funeral homes. They’ve been doing the same thing for generations, and now they have to compete with tech startups and larger chains that can invest in marketing and new services. Luna: Walk through the economy with us — and we mean that literally, episode after episode, no ads interrupting. If that’s something you value, you can support the show at buy me a coffee dot com slash fexingo. Lucas: Yeah, we keep it ad-free by design. It lets us go deeper without selling you anything. And support from listeners is what makes that possible. Luna: So back to the numbers — one thing that surprised me is the rise of “direct cremation.” No service, no viewing, just the cremation itself. That’s the cheapest option, and it’s growing fast. Lucas: In the U.S., direct cremation now accounts for nearly 40 percent of all dispositions, up from 20 percent a decade ago. That’s huge. And it’s especially popular among people without close family. Why pay for a service nobody will attend? Luna: That’s a sobering thought, but it’s rational. And it puts even more pressure on traditional funeral homes. Lucas: Yes. The National Funeral Directors Association estimates that the average cost of a funeral with viewing and burial is over $8,000. Direct cremation can be under $2,000. So that’s a massive revenue gap. Luna: And with fewer births, that gap will only widen. Unless the industry finds new ways to add value. Lucas: Which brings us to the role of technology. Some funeral homes are now offering live-streamed services for remote attendees. That’s become standard after the pandemic, but it also appeals to a more dispersed social network — friends who might not be in the same city. Luna: So the service becomes less about the immediate family and more about the community. That’s a fundamental shift. Lucas: And there’s a business opportunity there. Companies like GatheringUs offer platforms for virtual memorials, and they charge a flat fee plus add-ons. They’re essentially competing with funeral homes for the same customer. Luna: But it’s not just about competition. It’s about redefining what a funeral even is. If you don’t have kids, who decides what happens to your remains? More people are pre-planning, and that changes the sales cycle. Lucas: Pre-need funeral contracts have been growing at about 5 percent annually. People are buying funeral plans in advance, often online. That’s a different relationship — less emotional, more transactional. And it favors large providers with digital infrastructure. Luna: So the big get bigger, and the small struggle. It’s a familiar story, but in an industry we don’t usually think of as high-tech. Lucas: And the stakes are quite literally life and death for these businesses. The question is, will the industry consolidate, or will we see a wave of mom and pop funeral homes closing? Luna: I think we’ll see both. But the data suggests a clear trend: in Japan, the number of funeral homes has already started declining, about 2 percent per year since 2020. Lucas: And in the U.S., the number of funeral homes per capita is also falling. The Northeast, with its older population, has seen the steepest drops. Meanwhile, the Sun Belt, where more families are moving, has seen some growth, but not enough to offset. Luna: So geography matters too. But the underlying force is the same: fewer births mean fewer funerals, and the industry has to adapt or shrink. Lucas: And that adaptation might look very different in ten years. I could see a world where funeral homes become more like event spaces, hosting celebrations of life for anyone, not just the deceased’s family. Luna: Or they partner with grief tech companies, or offer estate planning services. The business model is up for grabs. Lucas: And that’s what makes this demographic trend so fascinating. It’s not just a slow decline — it’s a catalyst for reinvention. The industry that deals with the end of life is being forced to think about its own future. Luna: Which is oddly poetic. If we’re having fewer children, maybe we’ll also have fewer traditional funerals, but more meaningful ones. Lucas: That’s the hope. And for now, it’s a story of adaptation, not collapse. But the clock is ticking for businesses that don’t pivot.