List of Contents
What is Agarwood Chips Market Size?
The global agarwood chips market size accounted for USD 84.91 billion in 2025 and is predicted to increase from USD 47.61 billion in 2026 to approximately USD 84.91 billion by 2034, expanding at a CAGR of 7.51% from 2025 to 2034. The increasing demand for natural fragrances, wellness items, and special aromatics is expected to boost the growth of the market during the forecast period.
Market Highlights
- North America dominated the market by holding more than 40% in 2024.
- Asia Pacific is anticipated to witness the fastest growth during the forecast period.
- By application, the oil production segment held the largest share of the market in 2024.
- By application, the incense and fragrance segment is anticipated to expand at a considerable growth rate in the upcoming period.
- By distribution channel, the indirect segment held a significant share of the market in 2024.
- By distribution channel, the direct segment is projected to grow at a significant rate between 2025 and 2034.
Market Overview
Agarwood chips, which are extracted from the resin inside Aquilaria trees, are valued around the world for their wonderful scent and medicinal qualities. Agarwood is regarded as “liquid gold” and is highly used in the production of scents and incense. Because people are choosing natural and organic products, the demand for agarwood chips is rising. The agarwood chips market is experiencing significant growth, driven by the rising demand for traditional medicines.
People are increasingly choosing environment-friendly solutions that fit well with holistic health, such as aromatherapy, in which agarwood is used for its soothing and beneficial effects. Besides, luxury perfumes often use rare and unique substances, and agarwood is especially recognized for its complicated and refined aroma. Rising awareness about agarwood's benefits further supports the market's expansion.
What is the Role of AI in the Agarwood Chips Industry?
Artificial Intelligence is being brought into the agarwood chips industry to make production, quality control, and distribution processes simpler. With the help of AI, it is possible to enhance the quality and yield of agarwood chips. AI helps manufacturers predict future demand, optimize inventory levels, and streamline logistics processes. AI also helps save on resources in inventory and distribution management, which increases profitability. Utilizing AI technology in farming, picking, and sorting has made agarwood chip production more efficient. AI analyzes environmental data to optimize growing conditions, resulting in increased yield.
What are the Major Growth Factors of the Agarwood Chips Market?
- Growing demand for natural scents: More consumers are choosing natural ingredients over those that are synthetic ones in their scented products. Because of its luxurious and unusual aroma, the use of agarwood is increasing in high-end fragrances.
- Rising demand for aromatherapy: There is a rapid trend toward aromatherapy, boosting the demand for agarwood chips. Agarwood possesses therapeutic qualities like anti-inflammatory and anxiolytic effects, making it suitable for use in aromatherapy. People are rapidly turning toward aromatherapy to calm their minds, reduce tensions, and help them relax.
- Greater use of sustainable farming methods: Farmers are using modern methods that have less impact on the environment. Developing sustainable harvesting and cultivation methods ensures long-term supply.
Market Scope
| Report Coverage | Details |
| Market Size by 2025 | USD 84.91 Billion |
| Market Size in 2026 | USD 47.61 Billion |
| Market Size in 2034 | USD 84.91 Billion |
| Market Growth Rate from 2025 to 2034 | CAGR of 7.51% |
| Dominating Region | North America |
| Fastest Growing Region | Asia Pacific |
| Base Year | 2024 |
| Forecast Period | 2025 to 2034 |
| Segments Covered | Application, Distribution Channel, and Region |
| Regions Covered | North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa |
Market Dynamics
Drivers
Increasing Demand for Agarwood Products
People's interest in incense, perfumes, and natural fragrances for aromatherapy has increased, leading to a high demand for agarwood chips. In perfumes, agarwood or Oudh is regarded as a precious ingredient and is called “liquid gold” because it is so valuable. In Saudi Arabia, Qatar, and Middle Eastern countries, Oudh is frequently burned at important religious festivals. People attribute a lot of significance to agarwood in their cultures and religions. Agarwood's rarity and high price position it as a luxury product.
Rising Awareness of Health Benefits
People are becoming more aware of the health benefits of agarwood, driving the growth of the agarwood chips market. Agarwood is widely used in traditional medicines in India, China, and Southeast Asia. It is known for its ability to relieve stress, calm inflammation, and support breathing. Those following a natural way of life are interested in learning about natural healing and herbal medicines. Many people use agarwood chips to help them relax. More and more people are understanding its health advantages, and agarwood is finding a spot in both natural medicine and alternative medicine around the globe.
Restraint
Illegal Logging and Stringent Regulations
Illegal logging or unlawful harvesting is a major factor restraining the growth of the agarwood chips market. Due to the high costs of agarwood, unlawful harvesting of Aquilaria trees is rising. Many times, people harvest without approval and cut down trees without caring about conservation. Unlawfully harvesting Aquilaria trees is linked to deforestation and the loss of species. Because of illegal loggers, getting the right amount of agarwood is difficult, so buyers find it difficult to set the fixed pricing. Moreover, stringent regulations on harvesting and trade limit the growth of the market.
Opportunity
Expanding Applications and Sustainable Cultivation
The expanding scope of applications of agarwood creates lucrative growth opportunities for the agarwood chips market. Agarwood is finding its way into the cosmetics industry. It is used in high-end cosmetic products for its r its luxurious scent, hydrating properties, and potential anti-aging benefits. With the growing concerns about illegal logging, there is a heightened need for sustainable farming methods. To reduce the use and over-harvesting of wild Aquilaria trees, farming them in ways that do not harm nature is important. Many growers are turning to artificial inoculations to steer resin formation. The new ways to extract agarwood boost both the yield and standard of the resin, improving its efficiency. Companies are also developing new products using agarwood, such as ointments, soaps, skincare, and wellness oils, due to its distinct aroma and wellness features, fuelling the growth of the market.
Segment Insights
Application Analysis Insights
Why Did Oil Production Dominate the Agarwood Chips Market in 2024?
The oil production segment led the agarwood chips market with the largest share in 2024. This is mainly due to the increased demand for agarwood oil. The modern methods of steam distillation and solvent extraction are used to extract essential oils from agarwood, which are then used in aromatherapy, traditional remedies, and cosmetics. The increased preference for natural and eco-friendly products has boosted the popularity of agarwood oil. Moreover, the increasing use of agarwood oil in medicines is likely to sustain the long-term growth of the segment.
The incense and fragrance segment is anticipated to expand at a considerable growth rate in the upcoming period. Agarwood chips are heavily used in the production of incense and fragrances for their rich, earthy, and sweet scent. In many parts of Asia Pacific and the Middle East, agarwood chips are used in spiritual and cultural settings. Incense and fragrances made from agarwood are also used in aromatherapy to help people relax, lessen stress, and enhance their mood. The rising demand for natural incense and various home fragrances further bolsters the growth of the segment.
Distribution Channel Analysis Insights
Why Is the Indirect Sales Channel Leading the Agarwood Chips Market in 2024?
The indirect segment held a significant share of the agarwood chips market in 2024. An indirect sales channel, also known as a B2B sales channel, enables manufacturers to reach a broader consumer base. This channel involves intermediaries known as wholesalers, distributors, and retailers. With these intermediaries, agarwood chips can now be purchased from stores and online outlets. This channel provides consumers with a wide array of brands, items, and stores that routinely advertise special offers through loyalty programs or discounts.
The direct segment is projected to grow at a significant rate during the forecast period. Direct sales channel, also known as B2C sales channel, eliminates the involvement of intermediaries. This channel enables manufacturers to sell their products directly to consumers, increasing profitability. The rise of e-commerce platforms is likely to support segmental growth. Manufacturers are utilizing their own websites and social media networks to establish relationships with buyers in every country. This sales channel enables manufacturers to have better control over pricing and improve customer relationships.
Regional Insights
How Fast Is the U.S. Agarwood Chips Market Growing?
The U.S. agarwood chips market size is exhibited at USD 13.29 billion in 2025 and is projected to be worth around USD 25.96 billion by 2034, growing at a CAGR of 7.70% from 2025 to 2034.
North America accounted for the largest revenue share of 40% in 2024. This is mainly due to increased demand for unique and quality perfumes. Agarwood is mainly used in the production of high-end perfumes for its unique scent profile. The region is likely to sustain its position in the market in the coming years. This is mainly due to an increasing preference for natural ingredients. Many people in North America are opting for scents that contain naturally and sustainably sourced ingredients. The increasing awareness among consumers about agarwood's healing properties is boosting its adoption in aromatherapy and wellness products. More luxury perfume and cosmetic brands in the region valued agarwood for its pleasant scent and medical benefit, contributing to the growth of the market in the region.
Why Is Asia Pacific the Fastest-Growing Market for Agarwood Chips?
Asia Pacific is expected to experience the fastest growth during the forecast period. Agarwood is used in several ceremonies in China, India, Japan, and Southeast Asian countries. There is a high demand for traditional medicine in India, China, and Japan, creating the need for essential oils derived from agarwood. Moreover, governments of various Asian countries have imposed new policies to improve agarwood cultivation and to prevent overexploitation, causing deforestation from excessive harvesting. The rising disposable income and middle-class population in the region lead to increased demand for high-end perfumes, supporting the regional market growth.
Why is Europe Considered a Significantly Growing Area?
Europe is considered to be a significantly growing area. The growth of the agarwood chips market in Europe is driven by the rising demand for luxurious and unique fragrances, in which agarwood is highly preferred. Europe values sustainability sourcing, reducing the over-harvesting and illegal logging of agarwood. Countries like Germany, France, and the UK are at the forefront of developing luxury perfumes, driving the demand for agarwood chips.
France Agarwood Chips Market Trends
The market in France is driven by the growing demand for luxury perfumes and niche fragrances, where agarwood is prized for its unique, rich aroma. The rise in interest towards natural and sustainable ingredients in the fragrance industry is encouraging the use of high-quality agarwood in artisanal and high-end perfumes. Additionally, France's strong market for incense and wellness products, coupled with increasing awareness of agarwood's cultural and therapeutic benefits, is boosting its popularity among consumers seeking premium, exotic products.
What Potentiates the Growth of the Latin America Agarwood Chips Market?
The market in Latin America is driven by rising demand for luxury fragrances, incense, and wellness products, as consumers increasingly seek natural, high-quality aromatic ingredients. The regional market's growth is also fueled by increasing consumer interest in high-value ingredients. Furthermore, trade agreements and export opportunities with high-demand markets, such as the Middle East and Europe, are further bolstering Latin America's position in the agarwood industry.
What Opportunities Exist in the Middle East and Africa for the Agarwood Chips Market?
The Middle East and Africa (MEA) present significant opportunities for the market, driven by the region's long-standing cultural and religious affinity for agarwood in incense, perfumes, and traditional practices. Countries like Saudi Arabia and the UAE are major consumers of agarwood chips and oil. With the growing adoption of premium fragrances, there is a high demand for agarwood, which is a key ingredient in luxury perfumes.
Saudi Arabia Agarwood Chips Market Trends
In Saudi Arabia, the market is seeing strong growth driven by the deep cultural significance of agarwood in religious rituals, traditional practices, and luxury fragrances. The increasing demand for high-end perfumes, particularly oud-based scents, is fueling the market, as Saudi consumers are known for their preference for premium, exotic aromas.
Recent Developments
- In February 2024, the Tripura Forest Department announced a plan to establish a full-fledged Agar market in North Tripura's Kadamtala. The purpose of this initiative is to improve the availability of agar-based products for incense sticks and organic fertilizer. (Source: https://theprint.in)
- In December 2024, Davis Commodities Limited announced the signing of a Memorandum of Understanding (MOU) with Dadvance Agarwood Solutions Sdn. Bhd., Malaysia's foremost agarwood biotech company. This partnership positions Davis Commodities as the exclusive distribution partner for Dadvance's premium-grade agarwood oil, with the agreement valued at USD 15 million. (Source: https://ir.daviscl.com)
Agarwood Chips Market Companies
- Hoang Giang Agarwood Ltd
- Lao Agar International Development
- Asia Plantation Capital Pte Ltd.
- K.A.B. Industries
- Arista Agarvina Co. Ltd.
- Green Agro Sadaharitha Plantations Limited
- ASSAM AROMAS
- BINH NGHIA AGARWOOD CO., Ltd.
- Myanmar Treasure Co-op Ltd.
- Sai Export India
THE MJI GROUP - NHANG THIEN JOINT STOCK COMPANY
- Homegrown Concept Sdn Bhd.
Segments Covered in the Report
By Application
- Oil Production
- Incense and Fragrance
- Others
By Distribution Channel
- Direct
- Indirect
By Region
- North America
- Asia Pacific
- Europe
- Latin America
- Middle East & Africa
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