Throwback Newsletter Article to 1977, When Casket Profits Were $4 Per Casket
Monday, April 3, 2017
The following article was printed in the March 1977 “News Letter” of the Casket Manufacturers Association of America (CMA), the predecessor association to CFSA. We thought that the perspective from 40 years ago would be interesting to our members and readers!
THE PROFIT ON THE AVERAGE CASKET WAS $4 in 1976
Profits on caskets and other funeral supplies declined in 1976 for the third consecutive year. Combined with very small price increases, this indicates an economically unhealthy situation for the funeral supply industry.
According to a recent Business Week survey of 880 U.S. firms, 1976 sales were up 13% over 1975, and 1976 profits were up 30%. Net profits as measured by sales margin were up from 5.2% to 5.5%, and profits as a return on investment rose from 10.5% to 13.7%. By both measures, casket industry profits are less than half the national average and -- worse yet -- they have been declining rather than advancing.
The average return on investment for casket companies dropped from 10% in 1975 to 6.3% in 1976. The average sales margin for casket companies went from 2.7% in 1975 to 1.7% in 1976.
CMA's sales statistics indicate that the price of the average adult casket rose from $231 in 1975 to $234 in 1976, an increase of approximately 1.3%. This surprisingly small rise was partly due to very modest price increases by manufacturers in 1976 and partly to a slight but significant buydown trend in many sections of the nation.
In concrete, dollar terms, what this means is that a casket company's profit on the average adult casket in 1976 was $4. ($234 average wholesale price times 1.7% average sales margin.) Thus, it is inevitable that 1977 will see substantial increases in the prices of caskets at all levels and in all sections of the country. CMA estimated for the Regional Meetings that manufacturers' overall cost increases for labor, raw materials, energy, shipping, etc., will exceed 7% this year. Without substantial price increases, these escalating costs would turn 1976's extremely narrow profit margins into losses.