Trends portend slump in sales of holiday trees

Jonathan Brinckman, The Orgonian, 10/26/04
503/ 221-8190
fbrinckman@news.orgonian.com

The trend is not the friend of Oregon's beleaguered

Christmas tree growers, now entering harvest season.

Oregon is the nation's biggest producer of Christmas trees by a wide margin, but growers are increasingly being forced to look overseas for growth. They're hoping international customers will help make up for increasing supply and declining demand in this country.

The success of that effort-and of attempts to rejuvenate the holiday tree spirit domestically-could be important to Oregon's economy in the years ahead.

Christmas trees were the state's fifth-largest cash cop in 2003, with a value of $159 million, according to the Oregon Department of Agriculture. Roughly 10,000 state residents work, full or part time, in the industry.

Some Oregon growers expect sales this year to fall 10 percent from last year's numbers. Others project steady or even increasing sales, although all agree the future is uncertain as artificial trees cut further into their market.

Meanwhile Oregon growers are planting more trees than ever.

"With the trends in marketing and the trends in planting, we're in for a train wreck," said Stan Low, president and owner of Highland Farm a Christmas tree operation in Beavercreek It has sold about 40,000 Christmas trees a year for the past decade. "We clearly need to do something to stabilize the market."

Oregon tree farmers are taking steps to ward off calamity: First, they're increasing exports in an effort to sell excess trees internationally. Second, they're funding a national marketing campaign designed to steer U.S. consumers back to live trees.

"If we don't get exports up, it's going to magnify the problem," said Joe Sharp, president and owner of Yule Tree Farms of Aurora, which last week sent a container of Christmas trees to an Asian country he declined to identify for competitive reasons. The trees were destined for a buyer who wanted to examine them before deciding whether to place a larger order.

Oregon growers statewide also have contributed a voluntary surcharge of 12 cents a tree, raising $460,000 to date, toward a $1 million marketing effort by the national Christmas Tree Association. The campaign is intended to boost domestic purchases of live trees during the holidays.
What the numbers say

The reason they feel compelled to act: Annual sales of live trees have dropped from 32 million in 2000 to 23.4 million in 2003 while the number of artificial trees displayed each year has grown from 50.6 million in 2000 to 62.9 million in 2003.

"We want to change the trend," said Irwin Loiterstein, director of the national marketing campaign. "We're hoping to stabilize Christmas tree sales."

Alan Ayers, an Ohio consultant working on the campaign, said the Christmas tree industry mistakenly attributed declining tree sales in recent years to economic conditions, brought by the bursting dot-com bubble, the Sept 11 terrorist attacks and the recession.

Industry analysts now realize that other changes have been afoot. Tree sales are dropping, Ayers said, because people are increasingly busy, buying artificial trees if any and taking less time for holiday preparations.

In an effort to reverse the slide, he said, the industry is targeting the children of the baby boom generation with a goal of increasing their interest in live Christmas trees. He said that cohort, called Generation Y, is showing an interested in reviving traditions such as live Christmas trees.

"We see this as an awesome opportunity," Ayers said. These post-baby boomers have the power to change markets,"

Promotional tie-pins

The campaign includes tie-ins with a Warner Bros. movie, "The Polar Express" scholarship contests and discount coupons for local tree lots.

It will not include print and broadcast advertisements, Ayers said. Instead, the goal is to use marketing to create "a buzz."

"One of the things that is unique about Generation Y is that traditional marketing doesn't work," Ayers said "Y's have been exposed to magazine, network TV all their life, so those kinds of things tend to fly right by them. They are more interested in what their friends are doing."

Oregon growers have maintained sales in the recent years, said Brian Ostlund, executive secretary of the Pacific Northwest Tree Association, only because they've picked up market share as growers in states such as Michigan, Ohio, Wisconsin and New York have left the business. But with the national market continually dropping, he said, that no longer will be enough to buttress sales.

"We've gotten away with it for awhile now because of displacement," Ostlund said. "Now that ability for displacement is over."

Possibly making matters worse, the Northwest association sees an upward trend in tree planting. It reports Oregon's 775 Christmas tree growers planted 9.5 million trees in 1997, 7.3 million in 1998, 8.1 million in 1999, 9.6 million in 2000 and 10.5 million in 2001.

Looking Ahead

There's a big oversupply problem down the road," said John Schudel, who with his two brothers owns Holiday Tree Farms in Corvallis. Schudel expects the surplus to hit hard in 2006. His company, which sells about 1 million trees a year, is the state's largest Christmas tree grower.

Ostlund predicts an increasing effort to offset the oversupply by finding export markets. "There's a saying in agriculture: 'New markets com in down times,'" he said. "Exporting is going to come to the forefront of growers' minds."

Low of Highland Farm said he and others growers will have to expand in foreign markets, especially Mexico, as well as to invest in efforts to increase domestic sales. And growers are doing other things.

Sharp of Yule Tree Farms said Oregon growers are increasing the mechanical shaking of trees-a step to reduce insects and dead needles in trees. Also, they are emphasizing that tree farms provide wildlife habitat and that individual trees can be converted into mulch.

What growers say they can't do is stand pat. "Doing business as usual has got us to this point, "Low said. "I don't think doing business as usual is likely to get us out of trouble