Oh Christmas Tree… Prices

December 16, 2019
Oh Christmas Tree… Prices

Christmas tree prices remain high for the third straight year, with today’s shopper paying about twice what was charged in 2014.

While prices vary by location, the average is currently around $76 nationwide.  Fewer trees were planted during the recession of 2008, and since it takes about a decade for the trees to mature, the shortfall is being felt now.

To further exacerbate the problem, the strong economy of the last few years has meant that demand for real trees increased by 20% last year, with high demand expected this year as well.  Savvy shoppers may note that the highest prices for trees tend to appear on Cyber Monday, and prices sometimes drop as Christmas draws nearer.

Video Spotlight: Yule Pay More: Shortage Drives Up Christmas Tree Prices

This post is based on the Yahoo! Finance article, Why Christmas trees are getting more expensive, by Ethan Wolfe-Mann, December 3, 2019, and the YouTube video, Yule Pay More: Shortage Drives Up Christmas Tree Prices, by KPIX CBS SF Bay Area, November 29, 2019. Image source: Don Mason/Blend Images

Discussion Questions:

1. What makes forecasting demand for trees difficult for Christmas tree farmers?

Guidance: Since it takes about ten years for Christmas trees to mature, farmers may have little idea what market conditions will be that far in advance.  Many unknown variables, such as the state of the economy, consumer preferences, and the cost of artificial trees (often made in China and now the potential target of more tariffs) can affect demand for trees.

In addition, farmers’ ability to plant is often limited by their own economic circumstances.  Since some farmers were not able to plant or not able to plant as much during the years surrounding the 2008 recession, there are now not enough trees to meet demand.  Even if they had the funding back then to plant more, it would have been hard to gauge exactly what to do.

2. How do location-related factors affect the pricing and competitiveness of trees?

Guidance: In areas such as Vermont or Wyoming, where trees can be cut down by the consumer, there may be less demand and lower prices (this year, around $40) charged for pre-cut trees.  In places such as San Francisco, Texas or Hawaii, increased transportation costs lead to higher prices, and consumers are likely to pay $100 or more.  In these markets, competing products such as artificial trees may see increased demand.


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