Even Christmas trees have not been spared by the supply chain disruptions of 2021. Most artificial trees are made in China. Because of longer manufacturing and delivery lead times, their supply is scarce, and prices have skyrocketed. This situation has benefited live tree growers who can expect to sell all or most of their limited stock this season. Lucky shoppers will be able to get a tree, but maybe not the one they wanted.
Video Spotlight: Christmas Tree Shortage Affecting Real and Artificial Trees Ahead of Holiday Season (November 23, 2021, CBS Mornings)
This post is based on The Washington Post article, Oh, Christmas Tree, not You, too: Supply Chain Problems Come to the Fir Trade, by L. Reiley, November 26, 2021, and the YouTube video in the Spotlight. Image source: Happy Hirtzel/Shutterstock.
1. What are the factors affecting the supply-demand dynamics for live trees in 2021?
Guidance: The factors affecting the supply-demand dynamics are both related and unrelated to the pandemic. During the financial crisis of 2008, growers did not have the resources to plant a large number of new trees, thereby limiting the supply of mature trees this year. Furthermore, the heat, drought, and fires in the Pacific Northwest reduced not only the amount but also the type of stock available this season. Because of high demand last year, some growers oversold trees, limiting the current supply (see video). The pandemic has certainly affected the demand for live trees. More people choose to stay at home and have their own tree for Christmas. Bringing nature inside has definitely been a recent trend. Furthermore, the supply chain disruptions have caused the prices for artificial trees to increase by up to 30%, as opposed to 10% for real trees. With inflation straining people’s budgets, a $70 live tree is more attractive than a $600 artificial one, and as a bonus, its sale benefits the local economy.
2. What is the impact of a Christmas tree shortage on other products in 2021 and 2022?
Guidance: A tree shortage results in lower demand for all types of Christmas ornaments, tree skirts, stands, and lights. These items might be in short supply as well, but if they are also stuck at ports and warehouses, the late deliveries will result in huge inventories of seasonal items for retailers. It is also possible that lower traffic for purchases of Christmas ornaments might affect the sale of other products such as impulse items.
3. How should Christmas tree farms prepare for next year?
Guidance: Since sales are expected to be very good this year, growers should plant more trees of different varieties for increased flexibility. They should also build on the current momentum to promote the environmental and economic benefits of live trees in order to avoid a glut in the future.