The Recession-Proof Fireworks Industry: More Bang, More Bucks

As on every Fourth of July, fireworks will be the main attraction all across the country this Sunday (sorry, Toy Story 3). Millions of Americans will watch stunning displays. Very few in attendance, however, will recognize the full impact of what they are seeing: fireworks are a booming business and several factors indicate that they will be for many years to come.

Between 1998 and 2009 annual fireworks industry revenues more than doubled, according to the American Pyrotechnics Association. Last year's total take was $945 million, up from $940 million in 2008. Even a devastated economy could not slow growth.

Regulation Does Not Hurt Revenues

The firecrackers and sparklers that consumers typically buy are regulated by every level of government. While the Feds are entitled to basic controls on the industry, states and townships can impose further restrictions. While most states have few or no additional bans, a handful have very strict policies. Municipalities are able to enforce even tougher laws on top of state rules. However, during difficult financial times, both townships and states allow the expanded use and sale of fireworks because of the tax revenues.

Julie Heckman of the APA says that with a dire need for revenue in many communities, more areas have been loosening firework laws. Improved safety has certainly helped the industry's rise, as well. The APA estimates that injuries per 100,000 pounds of fireworks fell more than tenfold from 1976 to 2008, while consumption is up to 213 million pounds from 29 million pounds over the same period.

Can Growth Continue?

If anything, even greater industry expansion is likely, as more states see the tax benefits to relaxing regulations. Rhode Island, which recently began allowing handheld, ground-based fireworks, will bring in over $1 million in tax proceeds, according to Heckman. And Indiana imposes a "safety tax" that is used to fund its fire-fighting services. Even when the economy rebounds completely, such laws are unlikely to be changed back or made more restrictive.

All of which is good news for an industry that continues to innovate. With improving technology, such as the ability to lodge microchips on the actual shells, and advancements in chemistry, the brilliance of fireworks shows has improved apace.

Heckman notes that now more shapes and colors are possible than ever before. This weekend she will be attending a show in which a ribbon design, like the one used by breast cancer foundations, will be displayed by fireworks. Heckman believes that even more complicated figures will be possible in the future, and that letters and logos are not far off.

Sponsorship Potential

That's sure to attract corporate attention -- what better way, after all, to advertise a company than by blasting its name or logo some 2,400 feet into the air for thousands of people to see? Businesses are already recognizing the marketing potential in fireworks, primarily by sponsoring shows in towns that would otherwise cancel them. For example, in Dallas, the Dr. Pepper Snapple Group recently stepped into subsidize the Independence Day fireworks when the city could not afford them.

The fireworks industry is positioned for explosive growth on both the consumer and commercial levels. While the shows this weekend will often be spectacular, it's easy to believe that next year they will only be better.