The unprecedented demand for Christmas trees
With the rise of the new Omicron coronavirus variant, the incredibly constrained supply chain sees further clogs right before Christmas. Families who picked up their Christmas tree just after Thanksgiving are lucky, as the U.S. is now facing continued threats of inflation rising above 6%. Those who did not rush to pick out a tree for the holidays face inflated prices, if they can find a tree at all.
Analysts are seeing record demand for durable consumption and retail products, likely a result of repeated encouragement for consumers to start their holiday shopping early. There is one glaring issue though – companies don’t have the products to meet the demand. This is especially true in the Christmas tree industry today. There are fewer Christmas trees being grown now compared to 10 to 15 years ago, yet more people are buying them. Not to mention, more people are willing to pay marked up prices for a tree. In 2020, a record of 32.8 million Christmas trees were sold in the United States. The average price of a Christmas tree, soaring to $78, set a new record as well. Doug Hundley, a seasonal spokesperson for the National Christmas Tree Association, stated that the increase in demand and the public’s willingness to pay may be due to more millennials are having children. The experience of a fresh-cut Christmas tree with their growing families have increased the perceived value of Christmas trees.
The National Christmas tree shortage
According to the National Christmas Tree Association, North Carolina and Oregon, the two major tree-producing states, have fewer trees to sell this year compared to those past. The low demand for Christmas trees around the great recession in 2008 led to less being planted. With too many trees available during this time, farmers could not cut down the trees, resulting in less space to plant new ones. The average 8-10 foot tree customers desire takes around 10 years to grow. Hundley summed the situation up well, “the slimmer planting seasons of yesterday created the slimmer Christmas tree pickings of today.”
Unfortunately, the supply chain disruptions following the onset of the COVID-19 pandemic has not helped the situation, either. The worst disruption as of late has been natural disasters likely caused by climate change. Flooding and fire in Canada – a U.S. supplier of nearly 2 million Christmas trees per year – is limiting exports to American vendors. Wild fires on the west coast, and the east coast droughts of 2016 and 2020 are additional natural disasters shortening the supply of trees.
How the Omicron variant is impacting the Christmas tree industry
The Omicron variant is halting travel and putting additional restrictions in place that aggravate the already strained supply chain. Additionally, the variant keeps people from returning to the workforce at a time when inflation is already high. If Omicron slows the economy and the Federal Reserve maintains its stimulative stance, it could cause inflation to accelerate.
Freight costs have skyrocketed due to the variant limiting the nation’s hurting supply chain. The increase in costs have led independent vendors of trees to raise their prices. However, some companies have lost profits due to the rise in costs. For instance, wholesale supplier, River Ridge Tree Farm, located in in Scottville, North Carolina took a hit on its margins on orders placed before the rise in freight expenses. The owner, Jessie Davis, payed close to $10,000 for a truck of additional trees from Washington State to North Carolina.
The rise of Omicron has also hindered vendors and seasonal workers from Canada who travel to the states for work during the holiday season. Wisconsin-based vendor, Evergreen East Co-operative, saw their Christmas tree stands dwindle from 65 to 30 and workforce be cut in half due to border restrictions.
The most impacted are independent sidewalk vendors who depend on Christmas tree exports from out-of-state. Mike Cruzado has been running two stands in Brooklyn, New York for the past 37 years. He saw expenses increase by 15%, resulting in thin margins. Vendors for stands such as Cruzado’s, who believe in selling Christmas trees is more about the tradition and spirit of giving rather than money, are certainly taking a big hit from Omicron’s impact on the industry.
The unforeseeable future
Most Christmas tree farms, vendors, and suppliers are initiating changes to their operations due to the rising conditions surrounding the industry. While the high demand can be great, it is not sustainable for the future supply. Tonry Christmas Tree Farm had to make the difficult decision to close on December 7th, 2021, a first in the farm’s 57-year history, based on protecting the inventory of their trees for the following years.
The industry must come up with a sustainable way to continue, although, doing so is more difficult than it sounds. There are high barriers to enter the Christmas tree farm industry, as land values and low profits for at least 5-10 years are difficult to cover.
Due to climate change limiting an already low supply of trees, more farmers may be forced to make the tough decision to close shop early. With the uptick in Christmas tree demand, businesses are likely going to persevere. As America adjusts to life in the post-pandemic era, the Christmas tree industry must adapt as well.
