Advent business (1) - shortages
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Here we go - the first of December, much of the country under snow and ice, and a critical shortage of Christmas trees is reported in The Independent - take a look at the final section of the report here. It gives a great example of external influences which the suppliers of the trees cannot control - the geographical areas in which the growers are concentrated are covered in snow at the critical felling period and cannot get the trees to market, over the impassable roads. Combine this with another change in the conditions of supply - the EU has withdrawn the subsidies that it used to pay to Christmas tree growers, which means that the supply from countries like Denmark is down as some companies have exited the market.
Meanwhile the conditions of demand have changed as well - British buyers now favour the non-needle-dropping Nordmann Fir which now has a massive 60% share of the market for fresh trees. Fewer than 200,000 of them are expected this year, when there are usually a million available. How could producers plan for this, when there is a 10-year life cycle for the trees from planting to felling, which necessitates very long term planning.
If you were a producer, who would you choose to supply? Who has the greatest power in this market - is it the consumer, the grower or the retailer? And how much will you be prepared to pay to get the Christmas tree that you want, this year?
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