The global agarwood chips market size is calculated at USD 44.29 billion in 2025 and is forecasted to reach around USD 84.91 billion by 2034, accelerating at a CAGR of 7.51% from 2025 to 2034. The North America market size surpassed USD 16.48 billion in 2024 and is expanding at a CAGR of 7.63% during the forecast period. The market sizing and forecasts are revenue-based (USD Million/Billion), with 2024 as the base year.
The global agarwood chips market size accounted for USD 41.2 billion in 2024 and is predicted to increase from USD 44.29 billion in 2025 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.
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.
The U.S. agarwood chips market size was exhibited at USD 12.36 billion in 2024 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.
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.
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.
| Report Coverage | Details |
| Market Size by 2034 | USD 84.91 Billion |
| Market Size in 2025 | USD 44.29 Billion |
| Market Size in 2024 | USD 41.2 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 |
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.
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.
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.
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.
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.
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