SIC 6553
CEMETERY SUBDIVIDERS AND DEVELOPERS



This industry includes establishments primarily engaged in subdividing real property into cemetery lots, and developing it for resale on their own account.

NAICS Code(s)

812220 (Cemeteries and Crematories)

According to industry estimates, there are 75,000 to 100,000 cemeteries in the United States. These vary in size from small plots in churchyards to huge national military cemeteries. Cemeteries may be run on a profit or not-for-profit basis. Traditional cemeteries have upright monuments, usually made of stone, and may also include private mausoleums for above-ground internment. Memorial parks, in contrast, have no tombstones, but rather bronze memorials placed level to the ground; they often have fountains, sculpture, or memorial architecture.

Natural preserve cemeteries protect and restore land, and offer natural burials also known as "green" burials. According to Memorial Ecosystems, Inc., they established their first nature preserve cemetery, Ramsey Creek Preserve, in South Carolina in 1998. According to Pam Kelley of the Charlotte Observer , Memorial Ecosystems offers "green" burials and only allows biodegradable caskets made of wood or cardboard and does not allow embalming.

In 1997, a small but growing percentage of cemeteries were run by large, publicly-traded firms known as "consolidators," which have operations in many states and several countries. These firms benefit from economies of scale that result from owning several funeral homes and cemeteries in a single area—a central embalming location, a limousine motorpool, and a team of personnel that can serve facilities in a given region. The companies have also built some funeral homes in or near cemeteries, which offer customers greater convenience.

The largest of the consolidators is Service Corporation International (SCI), which in 1996 had 331 cemeteries and 2,832 funeral homes, with total revenues of $1.6 billion. The second largest, Loewen Group, Inc., had 265 cemeteries and 814 funeral homes, and total revenue of $600 million. Both firms have been the target of strong criticism by some consumer groups, who question their prices and business practices. The companies claim that errors are no more likely to be made by consolidators than other funeral operations, and that their prices are reasonable.

The financial community views the industry more favorably. As Susan R. Little, an analyst with Raymond James & Associates, told National Real Estate Investor in 1996, "There's amazing opportunity in death care because it is very fragmented, and there are sufficient barriers to entry." She added that the industry is recession resistant, and that death rates are expected to climb with the aging of the "Baby Boomers." Since the six largest death care facilities own fewer than 20 percent of the funeral homes and cemeteries in the United States, the opportunity to acquire businesses that have been typically family-owned and operated is substantial.

Much of the growth of the large firms has come from the sale of "pre-need" contracts, where customers make funeral and burial arrangements for themselves. At the end of 1995, SCI alone had $2.3 billion in contracts for prearranged funerals. In some states, pre-need policies were tax-exempt, and thus practically served as tax shelters. Cemetery owners were also becoming more aggressive in their marketing of cemetery plots, with campaigns like the "buy one plot, get a second one for a penny," mounted by one owner.

Further Reading

Cemeteries and Memorial Parks. Falls Church, VA: American Cemetery Association.

Ciandella, Donald. "Investors Take Swings at Unusual Property Niches and Expect Home Runs." National Real Estate Investor, July 1996.

Kelley, Pam. "A Simpler Way to Go." The Charlotte Observer, 6 July 1999. Available from http://www.charlotte.com/observer/0706family.htm .

Larson, Erik. "Fight to the Death." Time, 9 December 1996.

"Memorial Ecosystems Establishes Ramsey Creek Preserve." Memorial Ecosystems, Inc., 21 February 1998. Available from http://www.memorialecosystems.com/Rcpressrelease.htm .

Service Corporation International, 1995 10-K. Houston, TX: Service Corporation International, 1996.

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