Consumers Drive Up Demand For Wood Alternative Decking Products
AUSTIN - TX:
Rising lumber prices during the pandemic has prompted many homeowners to seek alternatives to traditional wood decking products. As a result, manufacturers like Azek and Trex have seen their sales and value boom over the last year. Both companies produce "composite" lumber product lines - created using wood fiber, plastic, and a binding agent, composite lumber is low maintenance and incredibly durable. And since its made mostly of recycled materials, composite lumber is also eco-friendly.
Virginia based Trex has seen its sales jump 41% year-over-year adding an additional $312 million in revenue to their bottom line, according to the publicly traded company's earnings report from Q2. Trex CEO James Cline attributed their success to sustained demand and market share gains from the increased price of lumber.
Trex is not alone in its landmark year, Chicago based Azek reported a 46% increase in sales year-over-year: bringing their yearly revenue to a staggering $327.5 million. The newly public company (June 2020) has seen their share price jump 56% in the last 16 months.
While the "wood alternative" sector has maintained their meteoric rise in the market (estimated 20% of the decking market), the same cannot be said for the once soaring lumber industry. Lumber is down 17% year-to-date and has fallen nearly 70% from its all-time high in May as supply and demand begin to level out.
Is the success of these wood alternative companies attributed solely to the unprecedented rise in lumber prices over the last year, or are we looking at a broader shift of consumer preference that is here to stay?
We'll have to wait and see.