Matthews International Corp., a casket and bronze-marker maker founded in Pittsburgh in 1850, recently acquired competitor Aurora Casket, itself founded in 1890 in namesake Aurora, Indiana, and the nation’s largest privately owned casket manufacturer.
Why did these supercentenarians combine their operations and why did Aurora abruptly end its five generations under family ownership for $214 million?
Staying alive in the funeral services industry is best achieved through an alliance rather than in head-to-head combat, particularly if your company crafts caskets.
This year, cremation rates are projected to surpass burials. More consumers are choosing cost-effective cremations over traditional casketed burials, as cremations are generally half the cost of a funeral.
By 2020 some 55% of US consumers are expected to choose cremation, according to the National Funeral Directors Association. The group anticipates that by 2030 more than 70% of US consumers will opt for cremation.
Reasons for the change include declining household discretionary income, rising environmental concerns, and a preference for less ritualized funeral ceremonies. Interestingly, consumers also look to cremation because it is considered to be less emotional, according to the Cremation Association of North America, citing a five-year study.
Matthews’ move to acquire Aurora is one of the better ways to breathe new life into their businesses.
Aurora Casket, which generated $142 million in revenue in 2014, is being integrated into the Matthews business to create Matthews Aurora Funeral Solutions.
Matthews estimates that by buying Aurora it will save up to $20 million annually. To achieve this, the company plans to streamline production capacity and eliminate warehouse personnel and locations, administration employees, sales and marketing representatives, and real estate.
Also, with Aurora under Matthews’ umbrella, more funeral services providers will have access to business-building products and services, including marketing programs.
Despite their impressive longevity and recent alliance, Matthews and Aurora are still not the biggest casket makers. Industry giant Batesville Casket remains the leader with a 43% market share.
Industry Impact: Funeral home operators should negotiate the best wholesale pricing for their high-margin caskets, given recent consolidation in the industry and increased competition among remaining suppliers.
Tracking the moves of consumer products makers since 2003, Catherine Colbert is a company insights writer and blogger. Before covering companies, she spent ample time in magazine publishing, technical writing, ad copywriting, medical writing, and marketing. Follow her on Twitter.