Agarwood Chips Market Anticipated to Reach US$ 67.45 Bn by 2031 - Persistence Market Research

The global agarwood chips market is witnessing robust growth, with its valuation projected to increase from US$41.05 billion in 2024 to US$67.45 billion by 2031, representing a healthy CAGR of 7.4% during the forecast period. Agarwood, also known as oud, aloeswood, or gaharu, is a rare and fragrant resinous wood derived primarily from Aquilaria trees. The aromatic wood forms when the tree becomes infected by a specific mold (Phialophora parasitica), triggering a defense mechanism that produces the resin.

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Agarwood chips have become increasingly popular in aromatherapy, traditional medicine, religious ceremonies, and premium perfumery. This demand is driven by a shift towards natural wellness solutions and cultural traditions. The conventional segment currently dominates the market, accounting for 70% of the market share, while North America leads in regional market share, driven by a rising inclination toward natural fragrances and increased online retail presence.

Key Highlights from the Report

➤ The market is expected to grow from US$41.05 Bn in 2024 to US$67.45 Bn by 2031 at a CAGR of 7.4%.
➤ North America accounts for the largest market share, with the U.S. alone valued at around US$5 Bn in 2024.
➤ Incense sticks remain the largest end-use segment, growing at a CAGR of 7% through 2031.
➤ Increasing demand for sustainable, luxury fragrances fuels market expansion.
➤ The conventional nature segment accounts for 70% of market share due to cultural acceptance.
➤ Advancements in cultivation and inoculation techniques are enhancing sustainability.

Market Segmentation

The market is segmented based on nature, end use, distribution channel, and region. Under the nature segment, conventional agarwood chips dominate, due to their long-standing use in cultural and religious traditions. Organic agarwood is emerging gradually, attracting health-conscious and eco-aware consumers.

The end use segment includes incense sticks, fragrances, and retail/household use. Incense sticks are the leading category due to agarwood's long-standing association with spirituality and therapeutic benefits. The distribution channel bifurcates into B2B and B2C, with B2B dominating due to large-scale procurement for perfumery and traditional medicine manufacturing.

Regional Insights

North America leads the agarwood chips market, accounting for 40% of the global share in 2024. This growth is attributed to rising consumer awareness about the therapeutic benefits of natural scents, especially among millennials and Gen Z. E-commerce and the emergence of niche fragrance brands have also played a crucial role.

The Middle East and South Asia remain strong due to traditional and cultural reliance on oud for personal and religious use. Events like the Dubai International Fragrance Fair have boosted demand. Southeast Asia, the heart of agarwood cultivation, continues to dominate supply and is seeing more sustainable initiatives in farming and harvesting.

Market Drivers

One of the key drivers of the market is the increasing cultural and ceremonial significance of agarwood chips, especially in regions such as the UAE and Southeast Asia. In Arabic cultures, agarwood is burned during important social and religious occasions. This symbolic value drives a consistent demand for high-quality agarwood chips.

Another driver is the rising demand from the fragrance industry. Agarwood oil, chips, and essence are considered premium ingredients in perfumes, especially luxury blends. Perfume houses like L'Occitane and Yves Rocher are introducing agarwood-based scents to attract consumers interested in natural and exclusive aromas.

Market Restraints

Despite a positive outlook, the market faces certain restraints. Price volatility due to overharvesting and inconsistent supply affects product availability and affordability. The CITES regulation, which protects endangered agarwood species, adds complexity to international trade.

Moreover, trade restrictions in agarwood-rich regions like India have led to decreased supply and increased prices, especially for smaller players who depend on international imports.

Market Opportunities

The increasing religious and cultural integration of agarwood products presents significant growth opportunities. From religious rituals to wellness tourism, agarwood chips have found a home in multiple lifestyle domains.

Also, the growing interest in traditional medicine and alternative therapies provides a fertile ground for agarwood's medicinal use. Ayurvedic, Chinese, and Southeast Asian medicine systems view agarwood as a natural remedy, which continues to boost its demand.

Sustainability is another opportunity area. Cultivation techniques like inoculation methods, where resin is induced without harming trees, will play a key role in future supply chains.

Frequently Asked Questions (FAQs)

◆ How big is the agarwood chips market in 2024?
◆ Who are the key players in the global agarwood chips market?
◆ What is the projected growth rate of the agarwood chips market?
◆ What is the agarwood chips market forecast for 2031?
◆ Which region is estimated to dominate the agarwood chips industry through the forecast period?

Company Insights

The agarwood chips market is highly competitive and includes both established players and emerging brands. Some of the key players include:

• Grandawood Agarwood Australia
• Binh Nghia Agarwood Co., Ltd
• Hoang Giang Agarwood Ltd.
• Aalam Ul Oud
• KAB Industries
• Duy Hai AGARWOOD
• Thien Phu Agarwood Co., Ltd
• Asia Plantation Capital Pte Ltd.
• Ori Oud Asia
• ASSAM AROMAS
• Sadaharitha Plantations Limited
• Green Agro
• Thai Borai Agarwood Co., Ltd.
• KANHA AROMA
• Homegrown Concept Sdn Bhd (HGC)
• THE MJI GROUP
• Sai Export India
• Kamil Swarga Woods Ltd
• THE WESTWOOD GROUP
• Gaharu International

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