Agarwood Essential Oil Market Size, Share, Growth & Industry Analysis, By Nature (Organic and Conventional), By Application (Therapeutic, Cosmetic & Personal Care Industry, Food and Beverage Industry, and Others), and Regional Analysis, 2024-2031

Agarwood Essential Oil Market Size

Global Agarwood Essential Oil Market size was recorded at USD 235.9 million in 2023, which is estimated to be at USD 249.5 million in 2024 and projected to reach USD 388.5 million by 2031, growing at a CAGR of 6.53% from 2024 to 2031. In the scope of work, the report includes products offered by companies such as Aromaaz International, Augustus Oils Ltd., Binh Nghia Agarwood Co., Ltd, Biofinest LLC, Escentia, Essential Oils Company, Essentially Natural, Hoang Giang Agarwood Ltd., Sai Export India, Sva Naturals and others.

The agarwood essential oil market is predominantly influenced by the increasing consumer demand for natural and organic products. Health-conscious consumers are increasingly preferring essential oils due to their therapeutic benefits, which is fueling market expansion. Moreover, the rising awareness regarding agarwood oil's anti-inflammatory and anti-microbial properties promotes its use in pharmaceuticals and personal care products.

Additionally, the burgeoning aromatherapy and spa industry suuports market growth. The oil's unique, woody fragrance is highly sought after in perfumery, further driving demand. Moreover, the growing interest in traditional and alternative medicine contributes to market development, as agarwood oil is often used in these practices due to its various health benefits.

The market is experiencing notable growth, characterized by increasing demand across various sectors, including cosmetics, pharmaceuticals, and aromatherapy. The Asia-Pacific region, particularly countries such as India and China, holds a prominent market positionattributed to the rich tradition of agarwood use and significant production capabilities. However, the Middle East and Africa is witnessing robust expansion, mainly fueled by booming perfumery industry and historical utilization of ‘oud’.

The market is highly competitive, with numerous small and medium-sized enterprises (SMEs) and larger corporations vying for market share. Innovations in extraction techniques and sustainable sourcing play a crucial role in fostering the growth of the market by enhancing oil quality and addressing environmental concerns associated with agarwood harvesting.

Agarwood essential oil, also known as oud oil, is derived from the resinous heartwood of Aquilaria trees, which is primarily cultivated in Southeast Asia. The oil is extracted through processes such as steam distillation and supercritical carbon dioxide fluid extraction. The essential oil is known for its distinctive, complex aroma, and is widely used in high-end perfumery, aromatherapy, and traditional medicine.

Its therapeutic properties, including anti-inflammatory, anti-microbial, and antioxidant effects, make it a valuable ingredient in health and wellness products. The market encompasses various grades of oil, with quality and price depending on factors such as tree species, age, and extraction method. Sustainable practices and regulatory standards are critical in ensuring the market's long-term viability.

Analyst’s Review

Manufacturers in the Agarwood essential oil market are actively investing in sustainable sourcing and advanced extraction technologies to meet the growing consumer demand for high-quality, natural products. Companies are increasingly focusing on organic certification and eco-friendly practices to attract health-conscious buyers. New products, such as blends that incorporate agarwood oil with other essential oils, are gaining significant popularity in the wellness sector.

Additionally, there is a noticeable trend toward luxury and niche markets, with high-end perfumes and personal care products incorporating agarwood oil. Manufacturers should continue to prioritize sustainability and innovation. Emphasizing traceability and ethical sourcing will help enhance brand reputation and ensure long-term market growth, while expanding into emerging markets will provide new opportunities for revenue.

Agarwood Essential Oil Market Growth Factors

The increasing consumer preference for natural and organic products is a key factor boosting the growth of the market. Consumers are increasingly becoming health-conscious and are actively seeking alternatives to synthetic products. Agarwood oil, known for its natural origin and therapeutic benefits, is a suitable option for this preference. Its use in aromatherapy, skincare, and traditional medicine is growing as people prioritize holistic wellness.

Additionally, the rising demand for oil in the luxury perfume industry is fueled by its unique fragrance. This notable trend toward natural products is prompting manufacturers to invest in sustainable and eco-friendly production methods, thus ensuring the long-term growth and stability of the Agarwood essential oil market.

• In April 2023, the U.S. Department of Agriculture (USDA) announced a USD 75 million investment in conservation assistance for producers transitioning to organic production. This investment was a part of the Organic Transition Initiative (OTI). Financial and technical assistance was provided by USDA’s Natural Resources Conservation Service (NRCS), which included partnerships with organic technical experts to enhance staff capacity and expertise. This initiative supported the rising popularity of organic products by building new markets, strengthening food systems, and promoting climate-smart agriculture.

A major challenge in the Agarwood essential oil market is the overharvesting of Aquilaria trees, leading to their depletion and growing sustainability concerns. This unsustainable harvesting poses a threat to the species and its ecosystem, as well as causing disruptions in the market supply. To overcome these challenges, industry players are implementing sustainable cultivation practices.

Promoting the use of certified, sustainably sourced agarwood ensures the conservation of natural resources. Additionally, increased investments in plantation programs and promotion of responsible harvesting methods helps maintain the ecological balance. Regulatory frameworks and certification programs further support these efforts, ensuring benefits to both the environment and the market.

• A project by the Department of Wildlife and Biodiversity, Forestry Administration (Cambodia) aimed at restoring native Agarwood species in Southwestern Cambodia's Community Forestry sites was implemented. The estimated duration of the project was from May 2023 to April 2026. This project focused on rehabilitating agarwood ecosystems, raising awareness about restoration efforts, and supporting family-scale and private sector plantations. It aimed to restore 28 hectares of agarwood, thereby contributing to Cambodia's National Forest Program. This initiative aligns with AFoCO’s priorities by enhancing local livelihoods through forestry-related activities and technology transfers.

Agarwood Essential Oil Market Trends

The increasing adoption of advanced extraction technologies is gaining prominence in the agarwood essential oil market. Companies are investing heavily in methods such as supercritical fluid extraction to improve oil yield and quality. These techniques are efficient and environmentally friendly, thereby reducing the ecological impact of commercial essential oil production.

Enhancements in the purity and potency of agarwood oil enable these advanced methods to meet the rising consumer demand for high-quality, natural products. Additionally, technological advancements are enabling the extraction of oil from younger trees, which aids in conserving older, more valuable trees and supports sustainable practices in the industry.

The growing popularity of agarwood oil in aromatherapy and wellness sectors is influencing the essential oil sector. This is due to the growing consumer awareness regarding the benefits of essential oils for mental and physical well-being, which has resulted in growing recognition of agarwood oil.

Wellness centers, spas, and aromatherapy practitioners are increasingly incorporating agarwood oil into their offerings. This is driven by a broader trend toward holistic health and natural remedies. Furthermore, the unique and luxurious fragrance of agarwood oil is attracting a high-end clientele, thereby expanding its market reach and boosting demand in the luxury wellness market.

Segmentation Analysis

The global market is segmented based on nature, application, and geography.

By Nature

Based on nature, the market is categorized into organic and conventional. The conventional segment led the agarwood essential oil market in 2023, reaching a valuation of USD 198.9 million. Conventional agarwood oil production involves established extraction methods that are both cost-effective and widely recognized within the industry. This familiarity reduces production costs and facilitates large-scale manufacturing, thus contributing to the growth of the segment.

Moreover, conventional agarwood oil maintains high quality standards, meeting the demand for reliable and affordable products in various applications such as perfumery and incense. Despite the rising interest in organic products, the established supply chains and lower price points of conventional agarwood oil are bolstering its dominance in the industry.

By Application

Based on application, the agarwood essential oil market is classified into therapeutic, cosmetic & personal care industry, food and beverage industry, and others. The therapeutic segment is poised to witness significant growth, registering a CAGR of 7.37% through the forecast period (2024-2031). This growth is primarily propelled by the rising awareness regarding the health benefits associated with essential oils.

Consumers are increasingly turning to natural remedies for their physical and mental well-being, thereby boosting demand for therapeutic uses of agarwood oil. Its renowned anti-inflammatory, anti-microbial, and calming properties make it a popular choice in aromatherapy and alternative medicine. Additionally, the growing trend toward holistic health practices and the increasing number of wellness centers and spas incorporating essential oils are propelling the expansion of the segment.

Agarwood Essential Oil Market Regional Analysis

Based on region, the global market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

The Asia-Pacific Agarwood Essential Oil Market share stood around 34.55% in 2023 in the global market, with a valuation of USD 81.5 million. The region is home to the primary sources of agarwood, particularly in countries such as India, Vietnam, and Thailand, where Aquilaria trees are native. This geographical advantage allows for easy access to raw materials, thereby reducing costs and ensuring a steady supply of agarwood.

Additionally, the region boasts a rich cultural heritage of using agarwood in traditional medicine, perfumery, and religious rituals, leading to the increasing local demand. Established extraction techniques and skilled labor further contribute to the region’s dominance, making it the leading producer and consumer of agarwood essential oil.

North America is poised to experience the fastest growth, registering a CAGR of 7.51% over the forecast period. This rapid expansion is primarily fostered by the increasing consumer preference for natural and organic products in the region. The growing awareness regarding the therapeutic benefits of agarwood oil, such as its use in aromatherapy and alternative medicine, is boosting demand.

Additionally, the luxury perfume and personal care industries in North America are adopting agarwood oil for its unique fragrance and high-end appeal. The region's strong distribution networks and rising disposable incomes further support North America agarwood essential oil market growth.

Competitive Landscape

The agarwood essential oil market report will provide valuable insight with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions. Manufacturers are adopting a range of strategic initiatives, including investments in R&D activities, the establishment of new manufacturing facilities, and supply chain optimization, to strengthen their market standing.

List of Key Companies in Agarwood Essential Oil Market

• Aromaaz International
• Augustus Oils Ltd.
• Binh Nghia Agarwood Co., Ltd
• Biofinest LLC
• Escentia
• Essential Oils Company
• Essentially Natural
• Hoang Giang Agarwood Ltd.
• Sai Export India
• Sva Naturals 

The global agarwood essential oil market is segmented as:

By Nature

• Organic
• Conventional

By Application

• Therapeutic
• Cosmetic & Personal Care Industry
• Food and Beverage Industry
• Others

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • U.K.
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia-Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America