The Economics and Supply Chain of Your Christmas Tree

A holiday season primer on everything that goes into your Christmas tree.

Few symbols are as representative of the holiday season as a Christmas tree.

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Christmas is big business – more than $1 trillion was spent in 2016 – and Christmas trees are no exception.

Real or fake, traditional or upside down, Christmas trees represent the physical center of each family’s celebration and the focal point of displays in stores and in public squares.

But Christmas is also big business – more than $1 Trillion was spent in 2016 – and Christmas trees are no exception.

As it turns out, the economics that brought that balsam fir, douglas fir or white pine into your living room mirrors many of the topics we discuss the other 11 months of the year in corporate procurement and supply chain.

Here are some of the economic realities of the Christmas tree supply chain you may not have been aware of:

Still recovering from the 2008 recession

The most popular types of Christmas trees require seven to 10 years to reach the height most desired by consumers. As is true with other perishable products in the supply chain, time is often the greatest obstacle to overcome.

Look back 10 years from this holiday season, and you’re staring squarely at the 2008 recession.

When the economy started tanking due to the Great Recession starting in 2008, Christmas tree sales dropped. Growers didn’t cut down as many trees as they normally would as demand slackened,” USA Today recently reported.

The shortage led to higher prices for trees that weren’t as tall or full as consumers expected.

On the bright side, however, this year’s strong economy should mean better Christmas tree sales and more plantings, leading to a merry and affordable Christmas … in 2026.

Managing high fuel costs 

The top five Christmas-tree-producing states are Oregon, North Carolina, Michigan, Pennsylvania and Wisconsin. For the other 43 continental United States, that means shipping, which means fuel.

According to AAA, diesel fuel prices are up $0.411 a gallon (or 17 percent) over this time last year. That additional cost has to be tacked on to the already higher prices of trees in 2017. According to the National Christmas Tree Association, the No. 1 source of Christmas trees is chain stores like Walmart and Home Depot: 29 percent of all trees in 2016.

Their low margins leave little room to absorb unexpectedly high fuel costs and end up becoming a pass-through cost for consumers.

Marveling at the supply chain

No supply chain article would be complete without considering the impact of online shopping, and once again, Christmas trees don’t disappoint.

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The top five Christmas-tree-producing states are Oregon, North Carolina, Michigan, Pennsylvania and Wisconsin.

The National Christmas Tree Association has tracked anecdotal evidence of online shopping for trees, approximately 3 percent as reported by consumers in 2016.

While this is a small portion of the overall tree market (artificial trees represent 40 percent of the 46 million trees purchased in 2016), corporate procurement professionals know better than to dismiss its potential for future growth.

This Christmas, whether you are admiring the tree in your living room or taking a selfie in front of the 75-foot-tall Norway Spruce on display in Rockefeller Center, don’t forget to look past the lights, ornaments and tradition to marvel at the economic and supply chain accomplishments necessary to make your holiday complete.

Photography by Denise Johnson and Lionello DelPiccolo, Unsplash

This article first appeared on All Things Supply Chain and was republished with permission. 

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Kelly Barner is the Owner and Editor of Buyers Meeting Point.

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