Xtreme Blog

It’s going to be an interesting year. Already we have supply shortages on chicken affecting many fast-food chains. A labor shortage is affecting many restaurants and quick-service establishments and many small businesses. If you are looking forward to the summer days ahead and cooling off by the pool you may want to get your chlorine now as chlorine will be another item that will be in short supply this summer. Gas is expected to climb higher as summer travel is already well underway, and a shortage of steel is currently driving up appliance prices on average about 12% while the cost of steel itself has increased 300%. If you want to build a new home the drastic increase in lumber prices and labor rates will cost you an extra $37,000 when compared to last year. Prices on many materials are about to go up significantly largely driven by supply chain issues and manufacturers that can’t meet consumer demand. Most of these issues are directly or indirectly related to government stimulus in the wake of COVID 19. Like everything else the fireworks industry is facing significant shortages for this 4th of July Season. You can read all the details as to why prices are skyrocketing and why there will be major shortages in our prior blog post. Be sure to check it out! Now that the season is drawing closer, we can clearly see what is going to be in short supply this year. Before we get into the details keep in mind that shortages will vary from region to region and this post is simply looking at the overall industry. There is no doubt there will be supply shortages on every product produced this year since factories do not have the production capabilities to meet current demand and factories were closed significantly longer this year leaving fewer days for production. Finally, major supply chain issues will delay hundreds of containers of fireworks which means a significant amount of product will not arrive in the US until after the 4th season. Most importers are reporting that they will only receive about 50 to 70% of what they ordered. Looking into the crystal ball, the following are the top 5 products we believe will sell out quickly industry-wide this season as supply is extremely limited:

Honorable Mention 

200 gram multishots:

When you walk into your retailer of choice this season you should be able to find a decent amount of 200 gram multishots. However, retailers will have less variety and value items like 96 shot pearl, garden in the spring, blue stars with report, and other inexpensive 200 gram multishots are in very limited supply. Most distributors have been sold out of these items for a long time now.

#5 – New Products:

Most factories were not able to produce any new items this year as they barely had enough time to produce their staples/best-selling products. So that item with a new effect or that new finale or shell kit you desperately wanted will likely be missing on the shelf this year. Any new 2021 items that were produced will probably arrive after the 4^th.

#4 – Large Bore Roman Candles:

If you are like us and love a GOOD roman candle that shoots like a 200 gram multishot well you may be disappointed this year. Most large-bore roman candles did not get produced this year and distributors sold out in January. If you happen to find some be sure to grab a pack or two!

#3 – Firecrackers:

You should be able to find strips of 50s and 100s this year but rolls of 1,000, 2,000, 8,000, 16,000 will likely sell out quickly. Retailers have a very short supply of these items. Unfortunately, many firecrackers will not make it in time for the season. Moving forward factories will be making less and less novelty items, bottle rockets, and firecrackers as these items are not very profitable. We expect supply issues to exist on these items indefinitely.

#2 – Artillery Shells:

Most retailers will be able to carry 60gram canister shells however you will see a significant price bump on shells in general due to the dramatic increase in cost of shipping (up to a 300% increase in cost). Factories were not able to start producing artillery shells until mid-March this year and with the supply chain issues importers only had a little over a month to get their artillery shells on the water. Items like black box, festival balls, and any other value shells still haven’t shipped and will not make it in time for the season. Distributors have long been sold out of these items so any value shell this year will be an exceedingly rare find.

#1 – Assortments:

Factories made very few assortments this year and moving forward we expect assortments to be in short supply indefinitely as factories would rather make more profitable items like 500 gram finales and canister shells. We expect to see more distributors making their own assortments here in the US as supply over the next few years dwindles. Don’t be shocked to see empty shelves where assortments once were stocked in abundance.

What should you do?

It is very simple you should shop early this year. The busiest days of the fireworks season are July 3^rd and 4^th which will fall on Saturday and Sunday this year. Stop by your retailer on the way home from work during the week when there are no lines and plenty of selection to chose from. As the 3^rd and 4^th draw near this year fireworks in general will sell out quickly.

Is Xtreme Fireworks prepared? The short answer is: Absolutely! We import as well as buy from many distributors to supplement our inventory. We are open all year so selling out of fireworks isn’t an option for us. In fact, we are well stocked with roman candles, bottle rockets, assortments, a wide variety of artillery shells, 500 gram cakes, fountains, 200 gram cakes and plenty of our customer favorite super finales. But, just like every other retailer some products will sell out and shopping early this year will give you the best chance that your favorite item of yours will be in stock. Prices right now are the lowest they will ever be so shopping in early June will save you a ton of cash. As imported items land prices will go up.

By: Chris Reese

“It’s always something”, is the saying every year for consumer fireworks retailers. For 2020 we had to deal with COVID-19, industry shortages, and regulation changes in China that would most certainly increase prices and availability of items for 2021. There are always delays, issues with the supply chain, and constant threats to move the industry into chaos. But what transpired in 2020 set off a chain reaction that will have substantial negative implications for the industry for years to come. No doubt this will be the most challenging year in the history of the consumer firework industry and will likely alter the industry forever. Listed below are the 8 reasons why retailers and consumers should be genuinely concerned.

• Metal Cages and The Reclassification of Larger Consumer Items

In a surprise announcement last year China arbitrarily decided that any firework with a tube size of 30mm or greater will be reclassified as 1.3 professional fireworks. As a result, these items will have to be wrapped in a metal cage significantly increasing their cost. The bottom line is these items will be so expensive that they will be met with price resistance from the consumer and will most likely be phased out of production soon. Fireworks with low shot counts (large shells) offer unmatched performance in height, special effects, and break size. Those massive breaking effects that people love to see will price themselves out of the market and fade into history. Be sure to check out our October 2020 blog post to get all the specific details on how reclassification will change the product and industry forever.

• US Port Delays

As of this blog post ships full of containers are wandering in the ocean off California waiting to doc. There is a tremendous back log as the ports are short on workers due to the pandemic. Unfortunately, that shortage extends into the entire supply chain from rail and freight. What normally takes about 2 weeks to receive a container once it hits the port is now taking up to 2 months. This problem is not unique to the fireworks industry. Now more than ever consumers are shopping at Amazon, Walmart, and other big retailers online in the comfort of their homes. As retailers are seeing diminished stock, they are submitting some of the largest orders in history. With a depleted supply chain, it’s causing a traffic jam of epic proportions. Specifically, for consumer firework retailers, containers must be shipped by early April or its likely they won’t be delivered in time for the July 4^th season which is devastating because the July the 4^th season accounts for 60 to 100% of yearly gross revenues.

• Limited space on shipping vessels

Delivering your container once it hits the port is one thing, but actually getting it on the boat and shipping it to the US is growing more worrisome by the day. Shipping vessels can only set aside a small amount of space to ship hazardous materials. Since consumer demand is at an all-time high, space for any consumer goods is extremely limited. Of the limited space available for consumer fireworks TNT has a pact with the Chinese government and therefore 50% of the limited shipping space is monopolized by one company. As a result, many importers, wholesalers, and retailers are worried that the product won’t arrive until after the 4^th this year and this has created a bidding war to get companies’ orders shipped before the window of opportunity passes.

• Shortage of shipping containers

With a dramatic increase in demand from China, retailers are experiencing severe delays in transit times. Unfortunately, this means that many of the containers needed to fill orders from China are tied up in the US. The fact is there is a huge trade imbalance with China, so the containers are sitting in the US waiting to be filled with US goods to be exported. However, with little exports shipping to China, empty containers are piling up in the US. With no empty containers available in China fireworks can’t be shipped to the US.

• Short production season

With product piling up and hitting capacity in the factory warehouses due to the logistical issues stated above, factories were forced to close 10 days early this year for Chinese New Year. This means when the factories open back up in March importers/retailers will only have four weeks to get product produced and shipped in order to receive it in time. A shorter than usual production season means certain products will not be manufactured and other fireworks will have lower supply quantities. Combine that with the largest orders in consumers fireworks history because of historic inventory lows at wholesaler warehouses, Chinese factories will not be able to meet demand.

• Bidding wars

Its not a secret that China’s economic activities are somewhat scrupulous, and you can get just about anything you want if you’re willing to pay the price. With historic demand shipping has become a bidding war with various importers willing to pay as much as 200% to 300% more in shipping costs just to ensure their product finds its way onto a shipping vessel in time for the July 4^th season. As we get closer to the season there is no doubt that the war will rage on and shipping costs will only escalate.

• Value of the US Dollar

Unfortunately, the flood of economic relief and stimulus in the US had devalued the US dollar. With the pandemic still raging in the US, we have had a much more difficult recovery than China. So far in 2021 COVID-19 has had little impact on the Chinese economy. As a result, the US dollar has weakened against the Yen. Further weakening is expected moving forward driving up product costs about 10-15% over what was expected in 2020.

• Impact on the industry and consumer

As I write this article prices are rising almost weekly and supply in the US is at an all-time low while consumer demand is at an all-time high. Containers loaded with fireworks are trickling in and while the industry expects shipping volumes to increase in the upcoming weeks there is limited space available which means wholesalers/retailers/importers expect to receive only 60 to 80% of their orders. What arrives before the 4^th is still up for debate. But regardless this is going to come at an enormous cost to the consumer. Retail prices across the country should rise about 30% to as much as 100% on some products.  That means that consumers who spend $100 in fireworks every 4^th of July will probably on average get about $50 to $70 worth of fireworks that they normally purchase. Unfortunately, if supply is significantly less than projected prices may increase as much as 40% to 150%!

So, what should you do if you plan to buy fireworks this year?

Shop early: Shortages will mean that products that are normally well stocked will be in short supply and as the season gets closer prices will only continue to increase. Fireworks don’t have a shelf life so stocking up now will save you some serious cash.

Contact your retailer in May: By late April or early May your retailer will have a good grasp on what products will arrive in time for the 4^th season, the % of price increase, and what will be in short supply.

Pay in cash: Retailers won’t be motivated to offer huge discounts or special promotions this year due to the increased cost. But cash is always appreciated due to high credit and debit processing fees which means your retailer might be willing to cut you a better deal when paying with cash.

How is Xtreme Fireworks Prepared? In regard to Xtreme Fireworks we expect some minor price increases this year but we are well stocked for the upcoming season and do not expect any significant shortages on product availability.

In an upcoming blog post I will explore how this will continue to impact the consumer fireworks industry in the future. Unfortunately, there is even more turmoil ahead as more volatility is expected.

By: Chris Reese

As I stated in October the road ahead for consumer fireworks is a bumpy one with many potential potholes. The consumer fireworks industry has always been a unique challenge and the recent port closures in China were unexpected leaving many wholesalers and retailers without product for the New Year season.

Fortunately the New Year season is only a fraction of the demand the industry sees for the 4^th of July. In the Northern states most consumers do not celebrate with fireworks since the climate is so cold. However, depending on the weather, parts of the Southwest and most of Southeast retailers usually see up to 60% of their 4^th of July revenue. While the New Year season is not as big as the 4^th of July it’s still very important for many retailers.

For those that do celebrate the New Year with fireworks, certain products may be difficult to find and once again due to the shortages prices are increasing as the supply dwindles. Recently many wholesalers increased their prices on their remaining inventory 5 to 15%. At first this may not seem like much to the average consumer but this is the 3^rd price increase this year and retailers simply cannot afford to absorb the added cost.

Why did Chinese ports close?

In short the ports are building new facilities for testing hazardous materials. As a result, hundreds of containers that were destined to various wholesalers and retailers for the NY season are loaded and waiting to be shipped. However, with the projected closure to last for several months products won’t make it in time for the NY season. Usually this wouldn’t be a significant blow, but due to record sales this past 4^th, suppliers are extremely low and many are saving what they have left for their own retail operations.

To make matters worse, the longer the ports are closed the greater impact this could have on supply for the 4^th next season. Any further delay would simply be catastrophic for the industry. Fortunately we don’t expect that at this time.

Some good news:

As of this week, the Beihai port opened back up allowing some firework containers to ship out. Unfortunately the port/local government has decided to add another $5,000 on to the already high freight cost due to what the Chinese government calls a “peak season” charge. With most wholesalers usually shipping 20+ containers this is an exorbitant cost retailers and wholesalers are not willing to pay so very little product is expected to land in the US for the remainder of this year.

What products are in short supply?

As always availability will vary considerably from retailer to retailer and region to region. However in general listed below are the top 10 products that will likely be hard to find this New Year season.

Bamboo Sparklers – bamboo sparklers are generally safer and in higher demand then the wire version. Most wholesalers have been sold out since the 4^th.

Bottle Rockets – most retailers will have the generics on hand but the premium versions will be almost impossible to find.

Saturn Missiles – we expect the 300 shot versions will be especially difficult to find.

Small 200 gram aerials – items like garden in the spring, blue stars with reports, various happy’s, color pearls, magician, 100 shot magical barrage are retail staples that you may not see on the shelf this NY season.

Large diameter racks (NOABS) – Often referred to as nine on a board these titans give off the biggest display possible in consumer fireworks.     

Rockets – While most retailers will have some rockets expect selection to be small.  

Novelties – Items like adult snaps, tanks, and more popular smaller items will be in short supply.

Large effect roman candles – these are nowhere to be found period. Thankfully generic roman candles should be easy to find.

Artillery shells – especially the high powered 60 gram canister shells. Many wholesalers are sold out!

Assortments – without a doubt this will be the most difficult item to find on the shelf this year. If you’re the typical consumer that doesn’t know much about fireworks so you usually grab an assortment shop early this NY! If your retailer is sold out just ask a knowledgeable sales rep to put a package together for you that meets your budget.

So if you plan to exit 2020 by setting off a few fireworks shop before New Year’s Eve for the best selection or your plans for NY might just turn out to be a dud!

October 23, 2020
By Chris Reese

Every year the consumer fireworks market is under substantial peril. In 2019 the market was bracing for its greatest threat ever. Two of the largest consumer fireworks retailers teamed up to change the industry forever. Like a thief in the night, secret negotiations were made with the consumer protection safety commission to remove all metals in aerial fireworks. In short, removing all metals would render all consumer aerial fireworks useless and the industry would have been reduced to safe and sane fireworks like fountains and sparklers. While this may seem counterintuitive to the average consumer, the retailer giants had everything to gain and nothing to lose. Their goal, under the guise of safety, was to create an extremely profitable monopoly of the industry. With the supply chain agreements in place with Walmart locations all over the country it was a slam dunk. Thankfully at the stroke of midnight the National Fireworks Association was made aware of this hostile takeover plot and in late 2019 the industry was saved allowing it to survive another day.

In conjunction with the industry turmoil, in 2019 fireworks were also facing a 25% tariff due to the hostile trade relations with China. Fortunately, just in time for the importing season the 25% tariff was lifted and once again the industry could take a brief sigh of relief.

Fast forward to 2020 and the fireworks industry once again faces tremendous obstacles that will likely force significant changes for the foreseeable future. In 2020 the fireworks industry not only survived Covid but thrived! While this may be cause for celebration, 2021 does not look so rosy for the consumer’s wallet. The combination of factory shutdowns due to Covid 19, tragic factory accidents in China, and decimated inventory across the industry, has caused a perfect storm of a major supply chain log jam that simply cannot meet the US and European demand. To add insult to injury the Chinese government continues to force permanent closures of fireworks factories. It is no secret the Chinese government would prefer to abolish the fireworks industry altogether.

Over the last five years consumer fireworks have increased in cost on average about 5-10% year over year. However, this potentially may pale in comparison to what we see starting in 2021. The primary reasons for the price increase in the past include continued increase in demand, raw materials, labor, and shipping. There is no evidence that these price increases within the supply chain will abate anytime soon. To make matters worse the Chinese government is about to enforce a new regulation that will further increase the cost of consumer fireworks and will likely forever change their performance.

In 2021, all fireworks with tubes greater than 1.2 inches in diameter will need to be caged for shipping. In conjunction with the supply chain issues mentioned above, this will likely start to further escalate prices for years to come.

So why is the Chinese government requiring cages and how will this increase the retail prices of consumer fireworks? To be direct the US market does not quite understand the reasoning behind the Chinese government’s position on this new regulation. The Chinese government claims that the cages will provide an extra layer of safety during fireworks transportation. However, without going into a long lengthy explanation as to why this position is false, the cages will do nothing but add cost to the products affected and waste to US landfills.

At this point most Chinese factories expect an increase of about $12 to the case price of the items that will require a cage which is $3 per item for a 4/1 packed case. While that does not seem like much, as it moves along the supply chain the cost will exponentially increase. For example, let us say that firework X, packed 4/1, has a current FOB case price of $68 and the tube size is greater than 1.2 inches requiring it to be caged. This will increase the FOB price to $80 or by 17%. Keep in mind the cage will also increase the size (or cubes) of the case taking up more space on the shipping container and increasing the shipping cost. Once the case lands in the US the distributor may remove the cage or may leave the cage for the retailer to remove. Either way the cost will once again increase either through added shipping weight and extra labor for the retailer to remove the cages or extra cost for the distributor to remove and dispose of the cages. So, let us add another $1 per case to account for this added cost. This brings the landed distributor cost to $81 or an increase of 19%. Unfortunately, the cost increase will not end at this point.  The distributor must add their margin to the total landed cost. As you will see their margin will only exacerbate the case price of product “X”.

Original landed cost without the cage with shipping: $68 FOB + 30% shipping cost = $88.40

Landed cost with the cage including shipping: $80 FOB + 31% shipping ($24.80) + $1 cage removal = $105.80

Now let us add in the distributor’s margin for sale to retailers throughout the US:

Without cage distributor/wholesale price: $103.43

                                VS.

With cage distributor/wholesale price: $123.79

What was an initial $12 price increase has now roughly grown to $20. However, we still need to calculate the estimated retail price to get a better understanding of how this will impact the consumer.

To do this we need to add the average shipping cost and margin for the retailer:

Current retail price per item (non-caged): $68.52 (non-caged, shipping cost and average industry margin)

                                 VS.

Projected retail price per item (with cage): $82.01

What was initially just a $3 increase per item has now inflated to $13.50 per item or a whopping $54 per case! Most consumers will by more than just one item which means China’s new regulations will hit their wallet hard in 2021.  Also, keep in mind this is just using industry averages. Some areas will see an even higher increase for their market. Finally, what is even more concerning is that we do not know how shipping and raw material cost inflation will increase this price even further nor do we know how increase in demand will raise product cost.

There is no doubt the price increase forecasted for 2021 will be much more substantial then we have seen in the past and it most likely will not go unnoticed by the consumer. Unfortunately, this will not be the last threat to the industry as there are more perilous times ahead and baring another last minute miracle some fireworks are literally about to explode.