The global agarwood chip market size was valued at USD 10.7 billion in 2025 and is projected to grow from USD 11.39 billion in 2026 to USD 18.72 billion by 2034, registering a CAGR of 6.41% during the forecast period from 2026 to 2034. North America dominated the agarwood chip market with a market share of 34.5% in 2025.
Agarwood chips are fragrant wood pieces obtained from agarwood trees that produce a natural aromatic resin in response to infection or injury. They are widely used for incense, religious ceremonies, perfumery, and traditional medicine due to their rich and long-lasting fragrance. Growing demand for premium natural fragrances and luxury products is driving the expansion of the agarwood chips market.
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Plantation-Grown Agarwood Is Reshaping the Supply Base
The agarwood chip market trends show that plantation cultivation is shifting supply toward more controlled production through managed trees and resin-induction techniques. This transition is creating a more reliable raw-material base, with CITES reporting around 1,800 hectares of private agarwood plantations in Assam. The outcome is a more organized supply of agarwood chips with lower dependence on wild-sourced material.
Origin-Specific Agarwood Is Strengthening Product Differentiation
The agarwood chip market trends show that differences in aroma and chemical composition across regions are making origin an important quality attribute. This transition is encouraging suppliers to emphasize geographical provenance and distinctive fragrance profiles when grading agarwood chips. The outcome is greater product differentiation and scope for premium positioning based on origin.
Rising Demand for Agarwood Oil and Growth of Value-added Agarwood Products Drive Market
Rising demand for agarwood oil increases the need for resin-rich agarwood chips used in distillation. Fragrance, attar, and perfumery manufacturers rely on suitable chips to produce oil with the desired aroma profile, creating a direct raw-material demand. Assam’s agarwood-processing industry supplies wood and oil for domestic fragrance markets and export-oriented applications. This downstream use encourages processors to maintain a steady supply of suitable chips.
Growth of value-added agarwood products expands the number of applications for agarwood chips beyond direct incense use. Products such as bakhoor, incense, perfumes, attars, and personal-care products create additional outlets for processed agarwood materials. Commercial processing therefore converts more chips into higher-value fragrance and aromatic products, supporting broader chip utilization. The wider product base also gives processors more channels through which agarwood chips can enter the market.
Long Production Cycle and Inconsistent Chip Quality Restrain Market Growth
Long production cycles require producers to wait for sufficient resin formation before commercially valuable agarwood can be harvested. The extended capital-recovery period increases financial risk and limits the ability of producers to respond quickly to changes in chip demand. This constraint slows the expansion of reliable commercial supply.
Inconsistent resin content, aroma intensity, wood characteristics, and processing quality make uniform grading and procurement difficult. Variation in raw-material specifications creates challenges for incense and fragrance manufacturers that require predictable inputs. This uncertainty can limit large-scale adoption and restrict long-term procurement commitments.
International Export Expansion and Processing Clusters Create New Market Opportunities
International export expansion creates opportunities for agarwood growers, chip processors, exporters, and trading companies by connecting producers with Gulf and other overseas buyers. India’s agarwood chip export quota reached 151,080 kg, while Assam’s legally approved 2026 shipments to Saudi Arabia and the UAE create commercial avenues through higher-value international orders and recurring buyer relationships.
Processing clusters create opportunities for local processors, sorting and grading businesses, packaging firms, exporters, and logistics providers by concentrating value-added activities near producing regions. India’s ₹80-crore agarwood value-chain scheme includes processing centres in Assam and Tripura, allowing companies such as MJI Group to expand compliant processing and export services while generating revenue across processing, branding, packaging, and logistics.
Illegal Harvesting and Limited Scientific Data on Wild Agarwood Stocks Hinder Market Growth
Illegal harvesting of wild agarwood creates supply-chain and traceability risks for legitimate traders, making it difficult to verify the legal origin of chips and maintain compliant sourcing. A 2025 study of Indonesia’s former East Kalimantan Province found that illegal trade was estimated to exceed three times the export quota, indicating that enforcement and monitoring gaps can disrupt formal supply channels and increase operating risks for legitimate businesses.
Limited scientific data on wild Aquilaria and Gyrinops populations makes it difficult to establish reliable harvesting levels and plan long-term commercial supply. CITES documents note that agarwood-producing trees occur at very low abundance across parts of their range because of overharvesting and deforestation, while recent CITES records continue to require population assessments and non-detriment findings for sustainable trade. This uncertainty can lead to tighter harvest controls and reduce the availability of legally sourced wild agarwood chips.
The incense and fragrance segment dominated the agarwood chip market with a 46.9% share in 2025, supported by the use of agarwood chips in traditional incense, perfumery, and aromatic products. The oil production segment uses agarwood chips as a raw material for extracting agarwood oil, while the other segment covers additional applications across specialized aromatic and traditional product uses.
The oil production segment is expected to grow at a CAGR of 8.4% during the forecast period 2026-2034, driven by increasing use of agarwood oil in fragrances, personal care products, and other aroma-based formulations. The incense and fragrance segment continues to support demand through established cultural and commercial uses, while the other segment serves smaller application areas with specific agarwood requirements.
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The indirect channels segment dominated the agarwood chip market with a 61.3% share in 2025, supported by the broader market reach provided through distributors, wholesalers, retailers, and other intermediaries. The direct channel segment enables producers and suppliers to sell agarwood chips directly to end users, supporting closer customer relationships and more controlled transactions.
The indirect channels segment is expected to grow at a CAGR of 8.1% during the forecast period 2026-2034, driven by expanding distribution networks, wider geographic availability, and increasing access to agarwood products through established intermediaries. The direct channel segment continues to serve buyers seeking direct sourcing and supplier interaction.
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The North America agarwood chip market accounted for the largest regional share of 34.5% in 2025, supported by rising demand for premium fragrances, luxury incense products, and agarwood-based wellness applications, along with growing consumer interest in natural and high-value aromatic products. The U.S. agarwood chip market is supported by the USDA’s finding that high-value agricultural imports reached 98% of total U.S. agricultural import value in 2025 and have grown at an average annual rate of 6.4% since 2001, while continued demand for essential oils and other high-value aromatic products supports future opportunities for imported agarwood chips used in fragrance and incense applications.
The Canada agarwood chip market is supported by Statistics Canada’s projection that the country’s population could reach 59.3 million by 2074 under its medium-growth scenario, while Health Canada identifies essential oils and botanical extracts as ingredients used in fragrances, cosmetics, air-care, and natural health products, supporting long-term demand for premium botanical aromatic materials such as agarwood.
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The Asia-Pacific agarwood chip market is expected to grow at a CAGR of 9.2% during the forecast period 2026-2034, showcasing the fastest-growing regional market, supported by expanding fragrance and incense consumption, strong cultural use of agarwood across Asian markets, and continued demand for premium natural aromatic products. The Japan agarwood chip market is supported by Japan’s established incense industry, with the government reporting that Awaji Island accounts for about 70% of Japan’s incense production, while Japan’s population aged 65 and above is projected to reach about 35% by 2040, supporting continued demand for traditional incense and premium aromatic products such as agarwood.
The China agarwood chip market is supported by Guangdong’s target to expand artificial agarwood plantations to 700,000 mu and annual agarwood output to 15,000 tonnes by 2030, with the province targeting more than CNY 100 billion in total agarwood industry output by 2030, supporting future demand for agarwood chips and downstream incense, essential-oil, and traditional-medicine products.
The Europe agarwood chip market accounted for a 24.2% share and is expected to grow at a CAGR of 7.1% during the forecast period 2026-2034, supported by growing demand for agarwood-derived ingredients in cosmetics and perfumery, expanding European imports of aromatic plant materials, and increasing use of agarwood in premium fragrances and incense products. The U.K. agarwood chip market is supported by the country’s projected population growth from 69.3 million in 2024 to 71.0 million by 2034, according to the Office for National Statistics, alongside continued demand for perfumes and other cosmetic products, which are regulated as established consumer-product categories in Great Britain, supporting future demand for premium aromatic ingredients such as agarwood.
The Germany agarwood chip market is supported by Destatis projections that one-quarter of Germany’s population will be aged 67 or older by 2035, while the number of people aged 67 and above is expected to increase by at least 3.8 million by 2038, supporting sustained demand for traditional incense, wellness, and premium aromatic products among an aging consumer base.
The agarwood chip market competitive landscape is fragmented, with competition comprising agarwood plantation operators, growers, chip processors, exporters, fragrance suppliers, and regional traders. Key players such as Hoang Giang Agarwood Ltd., Lao Agar International Development, Asia Plantation Capital Pte Ltd., K.A.B. Industries, and Arista Agarvina Co. Ltd. are among the prominent participants in the market. Publicly available primary and trade data do not provide a sufficiently reliable basis for assigning a cumulative global market-share percentage to these five companies.
Established players compete primarily on agarwood quality, resin content, supply reliability, and processing capabilities. Emerging and specialized players in the agarwood chip market ecosystem compete through cultivated agarwood, traceable sourcing, specialized grading, and value-added processing.
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Author's Details
Research Analyst
Preeti Bhagat is a research professional with around 2.5 years of experience in the market research industry, specializing in market analysis, secondary research, market estimation, forecasting, and competitive intelligence. She has developed expertise across industries including Packaging and Consumer Goods, supporting businesses with data-driven insights into market dynamics, industry trends, competitive landscapes, and growth opportunities.
Her experience includes conducting comprehensive secondary research, market sizing, demand analysis, company profiling, competitive benchmarking, and trend assessment. She has hands-on experience with structured research methodologies, including top-down and bottom-up approaches, to assess market potential, growth opportunities, and future market performance.
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