Willingness to Pay for Retail Location and Product Origin of Christmas Trees

By Zaffou, Madiha; Campbell, Benjamin | Agricultural and Resource Economics Review, December 2017 | Go to article overview

Willingness to Pay for Retail Location and Product Origin of Christmas Trees


Zaffou, Madiha, Campbell, Benjamin, Agricultural and Resource Economics Review


(ProQuest: ... denotes formulae omitted.)

According to the USDA there were 309,365 acres of cut Christmas tree production in 2012, with acreage down 10 percent from 2007. However, the number of harvested trees was only down 1 percent to 17,319,060 in 2012 (USDA Table 35). Counting domestic and import sales, there are around 25-30 million Christmas trees sold every year, with a retail value in 2014 of around $1.04 billion for real trees alone (National Christmas Tree Association 2014). Even with the large number of Christmas trees sold each year, there are particular consumer segments with a higher likelihood of purchasing a tree, notably Christians, households with children, and consumers who spend Christmas at home. Furthermore, consumers who are Caucasian, younger, have a higher income, and live in a single-family dwelling are more likely to have a real tree (Hamlett et al. 1989). More recent studies have validated that younger consumers are more likely to purchase a real tree compared to older consumers most likely due to the perceived extra cleanup associated with a real tree by older consumers (Florkowski and Lindstrom 1995, Behe et al. 2005, Bauerlein 2011).

Given the number of Christmas trees sold and the retail value associated with those sales every year, it is essential to understand and provide information to tree producers to help facilitate good decision-making at the outset of production. For instance, it takes an average of seven years for a Christmas tree to reach the typical six- to seven-foot height consumers desire (National Christmas Tree Association 2014). Thereby, a producer must forecast out half a decade or more as to what tree species will be desirable, anticipated height needed, which retail outlets to target, and estimated price needed to remain profitable. Adding to the complexity of the market are artificial trees, which have seen an 18 percent increase in purchases from 2008 to 2014 (National Christmas Tree Association 2014). As noted by Davis and Wohlgenant (1993), artificial and real trees are substitutes, with a 1-percent increase in artificial tree price, resulting in an 11.8 percent increase in the quantity demanded for real trees.

Understanding the value of attributes that influence a consumer's decision to purchase a real Christmas tree is essential to providing actionable recommendations to producers and other stakeholders. As noted by Davis (1993), consumers with knowledge of tree species valued height, branch spacing, and color, and had a negative value of needle length, while consumers who were not knowledgeable valued only color. Outside of the Davis (1993) paper there has been little work examining consumer valuation of real Christmas tree attributes (not including tabletop trees). In order to provide information to producers and retailers as well as to fill this gap in the literature, we used a choice experiment with latent class modeling to value various attributes to better understand the drivers of purchase for real Christmas trees. Of particular interest, we examined the value of retail outlets and the potential impact local labeling (i.e., grown in Connecticut [CT]) might have on preference and willingness-to-pay (WTP). Local labeling of food products has been thoroughly examined, but little effort has focused on the value of local labeling on nonfood products, in particular for plants and trees. Our main hypothesis was that local labeled trees at choose-your-own and nursery/greenhouse retail outlets would receive a premium compared to locally labeled trees sold in home improvement centers across latent classes. Furthermore, we hypothesized that CT trees would be valued more than trees imported from outside of CT.

Materials and Methods

In the fall, during the first two weeks of October 2012, we initiated an online survey of CT consumers to value key attributes of Christmas trees. CT was chosen for a variety of reasons, notably due to the funding source for this project. …

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