Inside the $1 Billion Christmas Tree Business

A Christmas tree is synonymous with the holiday season as much as gift-giving overload; fun but mildly dysfunctional family get-togethers; and otherwise cringe-worthy but enjoyable "seasonal" music. But do you know where your tree comes from?

Should you have gotten a fancy plastic one with pre-attached lights? Are millions of real tree caracasses that end up in dumpsters January 1st really better for the environment? And who are those scruffy out-of-towners on New York City and other urban corners selling "real Canadian" firs?

We'll tell you.

Inside the $1 Billion Christmas Tree Business

First, some history

The use of evergreens as a "symbol and celebration of life during Winter Solstice celebrations" started in ancient Roman and Egyptian times. It evolved over the centuries to be incorporated into Christmas celebrations in the Germanic areas of Europe, according to the National Christmas Tree Association.

Christmas trees as we know them have been around for more than 500 years.

According to the NCTA, the first decorated Christmas tree was in Riga, Latvia in 1510. Early Christmas trees were decorated with paper, fruits, and sweets.

By 1531, the first retail Christmas tree lots are started in German cities.

In 1777, the tradition of the Christmas tree is brought to colonial America by Hessian troops fighting for Britain in the Revolution War.

Trees made their way to New York City in 1851, when Mark Carr opened a retail Christmas tree lot in the city, the first in the United States.

The first White House Christmas tree was brought in by President Franklin Pierce in 1856.

Pictured: President John F. Kennedy and Jacqueline Kennedy pose in front of the Christmas tree in the Blue Room of the White House in Washington on Dec. 13, 1961.

Inside the $1 Billion Christmas Tree Business

A big industry

Each year, 30 to 35 million American families get a holiday tree, according to the NCTA.

Virtually all of them — roughly 98% — come from farms. There are close to 350 million Christmas trees currently growing on tree farms in the U.S., using about 350,000 acres.

There are close to 15,000 Christmas tree farms in the U.S. and more than 100,000 people employed full or part-time in the industry.

The U.S. retail market was worth $1.03 billion in 2008, according to the consumer tracking survey commissioned by NCTA and conducted by Harris Interactive.

Inside the $1 Billion Christmas Tree Business

Wal-Mart or Boy Scouts?

Most Christmas trees come from farms, but many are bought in-doors.

According to the NCTA, 31% were bought at farms in 2008, but 24% came from chain stores like Wal-Mart and Home Depot. Non-profit groups like churches or Boy Scouts sold another 18%; 7% came from retail lots; and 11% from nurseries and garden centers.

Inside the $1 Billion Christmas Tree Business

Made in the USA?

Significant amounts of Christmas trees bought in the U.S. come from Canada.

According to the Canadian Christmas Tree Growers Association, the country harvests approximately 5.5 million Christmas trees annually.

In 2008, Canada exported 1.8 million trees, worth $34.2 million, according to the Canadian government. Of that amount, nearly $32 million worth were exported to the U.S.

Canadian trees also go to Central and South America (especially Mexico) and the Caribbean islands.

Despite the exports, Canada also imports U.S. trees. According to the USDA Foreign Agricultural Service, Mexico is the fourth largest market for U.S. Christmas tree exports behind the Netherlands, Belgium and Canada.

Mexico recently levied a 20% tax on U.S. Christmas trees in retaliation for a NAFTA trucking spat, making traditionally more expensive Canadian furs, which remain duty-free, more attractive.

Mexico has also started to grow its own trees, according to the USDA, and hopes to rid itself of imported trees one day.

Inside the $1 Billion Christmas Tree Business

The planting

For every Christmas tree cut, one to three seedlings are planted the following spring, according to the NCTA.

It can take as many as 15 years to grow a tree of typical height (six to seven feet) or as little as four years, but the average growing time is seven.

The top producing U.S. states are Oregon, North Carolina, Michigan, Pennsylvania, Wisconsin and Washington.

Inside the $1 Billion Christmas Tree Business

Scotch or Douglas, Ma'am?

The most common Christmas tree species are: balsam fir, Douglas fir, Fraser fir, noble fir, Scotch pine, Virginia pine and white pine, according to the NCTA.

Inside the $1 Billion Christmas Tree Business

Sales so far

Sales of Christmas trees this holiday season have been strong.

Research firm ISI Group says sales for the first week of December were up 6.5% year over year. "Customers continue to look for the larger 8-9 ft. trees, and 10-11 ft. trees are selling very quickly. They are also seeing good interest in garlands and wreaths. Overall prices are the same as last year...Overall participants feel they are off to a good start for the season."

That continued into the second week of December: "This week Christmas tree sales were up + 3.1% y/y. Sales continue to be fairly good even in some regions where the weather was rainy andsnowy over the weekend. Some participants commented that people bought earlier this year."

That slowed the third week of the month; sales were only up 1.4% year over year. "The rainy weather this weekend kept people away part of the time," noted ISI. "Sales are beginning to slow and inventories are shrinking. Overall, our contacts believe that people purchased trees earlier than normal this year."

Rick Dungey, an NCTA spokesman, tells us sales were strong over the weekend of December 19th and 20th at lots and farms on the east coast last week, despite the bad weather.

"Although the snow storm they got over the weekend was a pain, many expected it would help boost late sales for those who were still waiting to get a tree," says Dungey. "Snow equals Christmas spirit equals 'Yeah, let's get a tree.'"

Inside the $1 Billion Christmas Tree Business

NYC's 'Conifer Clause'

Some of those sales were in New York City, which has a long tradition of temporary street vendors that pop on blocks across the Big Apple in December.

Tree farmers haul firs in from states like Pennsylvania and Vermont or down from Canada. Then they or a short-term hire sit with the trees either all day or all night — usually for 12 hour shifts — usually with little more than a small heated trailer or impromptu shack and a radio.

Many of the street vendors are French Canadian, while others are young Americans or Europeans eager for temporary work and adventure.

Vendors actually do not need a permit from the city because of the "Conifer Clause." The New York Times explains:

But Christmas tree vendors need neither permits nor First Amendment protection to spread their holiday cheer. They are entitled to what might be called the ''coniferous tree'' exception, adopted by the City Council in 1938 over the veto of Mayor Fiorello H. La Guardia. The city's administrative code allows that ''storekeepers and peddlers may sell and display coniferous trees during the month of December'' on a city sidewalk without a permit, as long as they have the permission of owners fronting the sidewalk and keep a corridor open for pedestrians. (The law originally cited Christmas trees, but the religious reference was removed in 1984.)

Inside the $1 Billion Christmas Tree Business

The real deal?

A sizable number forgo the traditional real tree for a fake.

Last year, all sales were down, especially for artificial trees. According to an NCTA poll, U.S. consumers purchased 28.2 million farm-grown trees (down 10%) and 11.7 million artificial trees in 2008 (down 35%).

Says the NCTA: "Many factors can influence total trees purchased, including harvest conditions, weather conditions, number of consumers traveling for the holidays and even the number of days between Thanksgiving and Christmas."

Inside the $1 Billion Christmas Tree Business

Don't be boring

Artificial trees come in many colors and shapes.

Retail sites like Treetopia.com sell pink, blue and American flag trees. Eighty percent of artificial trees worldwide are manufactured in China, according to the U.S. Commerce Department.

International companies like Polygroup employ thousands of workers at multi-million square-foot factories that pump out hundreds of different types of trees made of plastics and metals.

As a report in Slate noted, that includes green, gold, silver, flocked, frosted, pre-lighted, and fiber-optic. Some even "spray snow, some have real pine cones, some play music, some rotate, and some count down to New Year's and then launch into 'Auld Lang Syne.'"

Inside the $1 Billion Christmas Tree Business

Cost analysis

Every year, many decide between real and fake trees, but it's a tricky calculation.

Two industry associations try and push consumers in either direction. The NCTA, which represents the real tree farmers, emphasizes the irreplacable aesthetics and environmental sustainability of natural firs.

On the other hand, the American Christmas Tree Association notes the higher costs over time and potential dangers — fire, pollen, mold — of real trees.

The ACTA says that based on a ten year analysis, the "purchase of a single pre-lit artificial Christmas tree costs 70% less than the purchase of 10 real Christmas trees over the same period. With many consumers keeping their artificial tree for 20 years or more, the savings are even greater."

Inside the $1 Billion Christmas Tree Business

The footprint

Artificial trees are, well, artificial, but are they better for the environment?

A study sponsored by the ACTA (which represents fake tree businesses) found that the carbon footprint of artificial trees was actually lower.

"Owning an artificial Christmas tree is healthier for the environment over a 10 year period than using real trees," notes the ACTA, which included "analyzing each stage of the life cycle of natural Christmas trees, from seedling through commercial farming, cultivation and harvesting, transport to retail, transport to consumer homes, and finally transport and disposal. The study also examined the manufacturing of an artificial tree including resource harvesting, raw material transport, each stage of the manufacturing process, transport to retail, transport to consumer homes, and finally transport and disposal."

The NCTA fires back on its site: "That's a very short-sighted perspective. According to research, most fake trees are only used 6 to 9 years before they're disposed. Even if you would use one for 20 years or more, it will eventually be thrown away and end up in a landfill. And unlike Real Trees, which are biodegradable and recyclable, fake trees are always a burden to the environment."

Inside the $1 Billion Christmas Tree Business

Or just cut one yourself

Enterprising tree seekers can forget the farm versus fake debate and cut their own.

U.S. national parks sell cutting permits, usually for $10 or less.

As NPR's Marketplace noted recently, the program existed since the late 1940's, but the Forest Service says permit sales have increased 50 percent in the last two years. Maybe it's the recession.

Top photo via IntangibleArt's Flickr