Mommy, where do Christmas trees come from?
There’s a chill in the air in New York City. As you round the corner, the smell of pine sap replaces the usual aroma of
urine and exhaust fumes city streets. You pause, inhale, and for a brief moment are transported to a scene more magical than a Hallmark movie.
Ah, Christmas tree season. And what a promising season it has been (despite the epic failure of America’s most iconic Christmas tree). Americans are buying a lot of trees. Like most home use/feel good products in 2020 there have been supply chain issues and even shortages.
According to the USDA…
- 98% of real Christmas trees come from farms.
- 15,000 of these farms are in the US.
- US farms have about 350 million trees ‘in production’ (aka, in various stages of growth).
- 2.8% of farms control 75% of the trees.
- Each year, 25 Million trees are harvested for sale.
Chances are your tree started life in Oregon, North Carolina, Michigan, or Pennsylvania. Combined, these states produce over 11 Million trees per season. And this figure doesn’t include the trees still growing on farms in these regions.
Christmas tree distribution by region.
Before the trees make their way to various tree lots and local fundraisers, farmers have to forecast supply and demand 8 or more years into the future. That’s an incredibly risky endeavor. Consider what happened when demand for fitness equipment – a relatively stable commodity – shot up in early April. Now imagine trying to predict demand and factor in the risks that come with growing your product. You’re bound to run into supply chain issues, no matter how good your predictive analytics AI is.
If demand and production volatility weren’t enough, the Christmas tree industry faces further threats from artificial Christmas trees.
Ain’t nothing like the real thing, baby.
This is true of both the artificial tree supply chain and whatever Marvin Gaye and Tammi Terell were singing about. For starters, artificial trees have a completely different origin story. It begins in China.
Artificial Christmas tree distribution by region.
China produces 85% of the world’s artificial Christmas trees. Factories, most of them in Yiwu, can produce 1.5k trees every 2 days vs. the 8-10 years it takes to grow a real tree. Add to that shelf stability, wide margins, and consumer convenience and you’ll start to see why 81% of tree trimming Americans use fake, plastic trees.
Christmas trees and pandemic supply chains.
In the upside down year that is 2020 high sales don’t exactly equal high profits for real Christmas trees. This is largely due to major freight price increases. “What we have seen this year has been an unprecedented rate increase.” Brad Hollister, SwanLeap CEO observed. “We have seen anywhere from 18-28% increase in freight prices in 2020.” Major increases like this drive costs up in ways that most people didn’t anticipate when cementing their transportation budgets.
There’s also the issue of a reduced workforce because of COVID-19. Supply Chain Brain reports that some sellers who rely on seasonal workers and shipments from Canada are operating at less than half inventory because of heightened demand, hampered supply, and closed national borders.
When all of the trees are dead and gone (or boxed up and put away), it is hard to say what will be around the corner for us in 2021. As we begin to turn toward the new year, here are some thoughts about how you can best prepare for whatever lies ahead.