Table of Contents
Market Overview
The global Agarwood Chip Market is experiencing robust growth, projecting the market size to reach USD 91.3 billion by 2034, expanding from USD 43.9 billion in 2024. This represents a compound annual growth rate (CAGR) of 7.6% during the forecast period from 2025 to 2034.
Agarwood chips are derived from the Aquilaria tree, which produces highly valued aromatic heartwood when infected by a specific fungus. These chips serve as essential components in the fragrance, incense, and traditional medicine industries, making them one of the most prized natural materials globally.
Market Segmentation Analysis
By Nature
The market is dominated by conventional cultivation methods, holding a 69.8% share in 2024. This dominance stems from traditional cultivation practices that have been established for decades, ensuring reliable supply chains and market familiarity. Organic agarwood chips, while gaining traction due to environmentally friendly cultivation methods, represent a smaller niche segment but are showing growth potential as consumers increasingly seek sustainable products.
By Applications
Oil production maintains the largest market share, driven by rising demand for agarwood oil in perfumes, cosmetics, and wellness products. The oil’s rich aromatic properties and therapeutic benefits make it highly sought after in the luxury fragrance industry. Incense and fragrance applications also contribute significantly to the market, particularly in cultural and religious practices across Asia. Other applications account for a minimal share, focusing on specialized niche markets.
By Distribution Channel
Indirect channels hold the dominant position in the market, benefiting from established retail and online distribution networks that provide widespread consumer access. These channels, including wholesalers, distributors, and e-commerce platforms, have made agarwood chips more accessible to broader audiences. Direct channels, while contributing to the market, serve primarily niche markets and specialty stores with personalized customer interactions.
Regional Market Dynamics
North America leads the global market with a 40.5% share, valued at USD 17.5 billion. This dominance is attributed to increasing demand for premium fragrances, supportive trade regulations, and robust distribution networks across the United States and Canada. The region’s consumers show growing awareness of natural and therapeutic ingredients, driving market expansion.
Asia Pacific remains significant due to traditional cultural and religious practices, with countries like India, China, and Southeast Asia benefiting from native agarwood tree cultivation. Rising disposable incomes and preference for natural scents continue to fuel demand in this region.
Europe’s market is growing steadily, driven by increasing interest in aromatherapy, perfumery, and holistic wellness. The region’s focus on sustainable and rare botanical products aligns with current consumer trends.
The Middle East and Africa represent promising markets, particularly in Gulf countries where oud-based products are culturally significant. High-end demand for luxury incense and perfumery, combined with retail investments, supports growth in this region.
Key Market Drivers
The luxury fragrance industry’s expansion serves as a primary growth driver. Consumers increasingly seek unique and exotic scents, making agarwood a coveted ingredient in premium fragrance lines. The rising preference for natural and organic products aligns with the shift toward clean and sustainable choices, particularly strong in Asia, the Middle East, and Europe.
Traditional medicine applications in countries like China, India, and Japan create additional demand, as people turn to alternative and natural health remedies. The wellness and aromatherapy sectors’ growth opens new opportunities, with agarwood gaining popularity for its calming and soothing effects.
Market Challenges
Deforestation and overexploitation of agarwood trees pose significant challenges. The overharvesting of Aquilaria trees, combined with their slow resin production process, leads to environmental degradation and raw material scarcity. Several Aquilaria species are now endangered, prompting stricter regulations and trade restrictions.
High costs represent another major restraint, as agarwood ranks among the most expensive raw materials in the fragrance industry. This limits its use primarily to luxury markets and restricts wider adoption in mass-market products.
Emerging Trends and Innovations
Modern processing techniques are transforming the industry. Artificial inoculation methods allow producers to generate agarwood faster and more efficiently than traditional natural infection processes, helping meet growing demand while reducing pressure on wild trees.
The shift toward eco-friendly packaging reflects growing environmental consciousness among consumers. Brands are adopting sustainable materials to appeal to green-minded buyers and strengthen their market reputation.
Agarwood is expanding beyond traditional perfumery into premium candles, soaps, and home fragrance items, catering to consumers seeking exclusivity and quality in luxury markets.
Key Market Players
Leading companies in the market include Arista Agarvina Co. Ltd., known for sustainable production and eco-friendly harvesting methods; Sai Export India, with extensive networks and established supply chains; Myanmar Treasure Co-op Ltd., specializing in direct sourcing from Myanmar’s resources; and K.A.B. Industries, recognized for innovative processing techniques that enhance aromatic quality.
Other significant players include Green Agro Sadaharitha Plantations Limited, BINH NGHIA AGARWOOD CO., Ltd., Hoang Giang Agarwood Ltd, ASSAM AROMAS, Asia Plantation Capital Pte Ltd., and Lao Agar International Development.
Recent Developments
- In Jan 2025, D2C fragrance startup House of EM5 aims to reach Rs 24 crore in revenue by the end of the fiscal year, driven by strong consumer demand and strategic marketing initiatives.
- In Feb 2025, Lake & Skye’s founder discussed the recent acquisition by Tru Fragrance, highlighting the potential for expanded distribution and enhanced brand presence in the fragrance industry.
- In Apr 2024, Mane acquired Avoca, a leading American specialist in fragrance fixatives, enhancing Mane’s portfolio and positioning it for further growth in the global fragrance market.
Future Outlook
The agarwood chip market is positioned for continued growth, driven by expanding global fragrance industries, increasing adoption of natural wellness products, and growing e-commerce accessibility. Sustainable cultivation practices present significant opportunities, with potential yields of 30-40 kg per tree after 10 years of planting. Government investments and regulations in key producing countries like Vietnam and India are focusing on sustainable cultivation and fair trade practices, which are expected to attract more investors and ensure long-term market stability.
The combination of luxury appeal, natural sourcing, medicinal value, and technological innovations in processing techniques supports steady market expansion throughout the forecast period.
Conclusion
In conclusion, the agarwood chip market is experiencing strong growth, driven by demand from the luxury fragrance, wellness, and traditional medicine sectors. While challenges like deforestation and high costs exist, innovations in processing and sustainable practices provide solutions. Regional growth in North America, Asia Pacific, and the Middle East, along with consumer preferences for natural products, ensure the market’s continued expansion.
Discuss Your Needs With Our Analyst
Please share your requirements with more details so our analyst can check if they can solve your problem(s)
