The global agarwood chip market is witnessing strong momentum, propelled by increasing consumer demand for high-end fragrances, traditional medicine, and wellness applications. According to a newly published report by Fact.MR, the market is valued at US$ 7,046.1 million in 2024 and is projected to reach US$ 16,562.1 million by 2034, expanding at a CAGR of 7.6% during the forecast period.
Agarwood, known as “liquid gold” in the fragrance industry, is one of the most precious natural resources, derived from Aquilaria and Gyrinops trees infected with specific fungi. The surge in demand for natural, sustainable, and luxury aromatic products across global markets is fueling growth in the agarwood chip industry. From perfumery and incense to traditional medicine and cosmetics, agarwood chips continue to be a cornerstone of cultural and commercial value.
Strategic Market Drivers
Growing Demand for Premium Fragrances and Aromatherapy
The global fragrance industry’s inclination toward natural and exotic ingredients has significantly bolstered agarwood chip consumption. High-end perfume manufacturers are increasingly using agarwood-derived oils and chips to create distinctive, long-lasting scents. Similarly, the spa and wellness sectors are embracing agarwood’s therapeutic properties for aromatherapy and meditation, further enhancing its global appeal.
Expansion of Traditional Medicine and Cultural Applications
Agarwood has deep roots in Ayurvedic, Chinese, and Middle Eastern medicine, valued for its anti-inflammatory, sedative, and spiritual properties. The growing popularity of natural healing systems is reviving the use of agarwood chips in incense and medicinal formulations, particularly across South and East Asia. This cultural continuity, paired with modern wellness trends, is driving recurring demand.
Sustainable Cultivation and Plantation Initiatives
With natural agarwood sources diminishing, commercial plantations and sustainable cultivation methods are gaining prominence. Companies are adopting scientific inoculation techniques to stimulate resin formation, ensuring consistent supply without depleting wild resources. Certification systems such as CITES (Convention on International Trade in Endangered Species) are also promoting ethical trade practices, enhancing industry transparency and credibility.
Luxury Lifestyle and Religious Significance
Agarwood chips hold strong religious and cultural importance in Buddhist, Islamic, and Hindu traditions, used during prayer rituals and ceremonies. The rising purchasing power of consumers in the Middle East and Asia-Pacific regions, coupled with a cultural affinity for oud-based products, continues to shape market expansion.
Regional Growth Highlights
East Asia: The Global Production Hub
East Asia dominates the global agarwood chip market, led by Vietnam, Thailand, and Cambodia—countries with rich cultivation expertise and favorable climates. Vietnam’s integrated agarwood industry, from cultivation to distillation, positions it as a key global supplier. Japan’s demand for high-quality incense products further amplifies the region’s market strength.
South Asia and the Middle East: Tradition Meets Luxury
India, Sri Lanka, and the Gulf countries are witnessing robust growth due to the blend of traditional use and modern luxury consumption. In the Middle East, oud-based fragrances and incense products are integral to cultural identity, driving premium-grade agarwood chip imports. The Gulf Cooperation Council (GCC) region remains one of the most profitable markets globally.
Europe and North America: Emerging Markets for Natural Aromatics
Western markets are increasingly shifting toward natural and sustainable fragrance ingredients. Europe’s luxury perfume segment and North America’s wellness industry are integrating agarwood chips and oil derivatives into products catering to eco-conscious consumers seeking authenticity and sophistication.
Market Segmentation Insights
By Grade
- High-Grade Chips: Sourced from old-growth trees and prized for purity, fragrance depth, and rarity—dominant in luxury perfume and incense markets.
- Medium-Grade Chips: Used in blended fragrances and therapeutic products, balancing quality and affordability.
- Low-Grade Chips: Commonly used in bulk incense and traditional medicine applications.
By Application
- Perfumery and Cosmetics
- Pharmaceutical and Traditional Medicine
- Religious and Cultural Use
- Aromatherapy and Wellness
By Distribution Channel
- Direct Sales
- Specialty Stores
- Online Platforms
- Distributors and Exporters
Challenges and Market Considerations
Despite strong demand, the agarwood chip market faces several hurdles:
- Sustainability and Supply Constraints: Limited natural resources and strict trade regulations under CITES impact global supply.
- High Production Costs: Artificial inoculation, long maturation periods, and complex harvesting processes increase overall production expenses.
- Counterfeit and Low-Quality Products: Rising counterfeit trade threatens brand integrity and consumer trust.
- Regulatory Compliance: Differing environmental and trade laws across countries pose operational challenges for exporters.
Competitive Landscape
The global agarwood chip market is fragmented yet competitive, with players focusing on quality assurance, sustainable sourcing, and international trade partnerships.
Key Companies Profiled:
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; and Sadaharitha Plantations Limited.
These players are investing in cultivation technologies, distillation efficiency, and eco-certifications to strengthen their global footprint and meet growing consumer expectations.
Company Portfolio Highlights
- Asia Plantation Capital: Recognized for its sustainable agarwood cultivation, the company produces premium-grade agarwood chips and oils while maintaining a transparent supply chain that adheres to environmental and social responsibility.
- Agarvina Co., Ltd.: Based in Vietnam, Agarvina specializes in high-quality agarwood chips, incense, and oil products. The company leverages advanced inoculation techniques and exports a wide range of chip varieties across Asia and the Middle East.
Future Outlook: Toward Ethical Luxury and Sustainable Growth
The global agarwood chip market stands at a defining juncture where tradition meets innovation. As luxury fragrance houses, wellness brands, and ethical producers converge, the market is poised to transition into a more sustainable and technologically advanced era.
Manufacturers emphasizing eco-friendly cultivation, authenticity, and traceability will lead the next wave of growth. With rising awareness, expanding international trade, and a renewed appreciation for natural luxury, the agarwood chip industry is set to evolve into a cornerstone of sustainable fragrance and cultural heritage worldwide.
