Global Agarwood Chips Market Outlook, 2031

Agarwood is the dark, resin-saturated heartwood that forms inside trees of the genera Aquilaria and Gyrinops, and it is sold as oud in Arabic, gaharu in Malay and Indonesian, and chenxiang in Chinese. Healthy wood is pale and almost odourless. Resin builds up only after the tree is wounded or infected by fungi, a process that takes several years, so one tree may yield anything from a few grams to several kilograms of usable wood. Chips are the main traded form: small fragments split from infected heartwood, burned on charcoal or electric heaters, distilled into oud oil, or ground into powder for incense and medicine. Published trade studies put chips and powder at more than 80% of recorded volume. Supply passes from collectors and plantation growers to exporters and traders in hubs such as Dubai, Hong Kong, Singapore and Jakarta, and then to perfumers, incense makers and consumers. Price depends on resin density, aroma and origin. Vietnam, Cambodia, Laos and Thailand rely heavily on plantations, Indonesia and Papua New Guinea keep more wild collection, and India (Assam) and Malaysia are expanding cultivated supply. Gulf perfumers, Japanese incense houses and Chinese traders sit alongside thousands of small family firms.

The market is at an inflection point because supply is shifting from forest to farm while legal oversight tightens. All Aquilaria and Gyrinops species have been listed in CITES Appendix II since 2005, and national export quotas, non-detriment findings and the CITES Plants Committee guidance work now shape who can ship legally. Studies from 2025 show that wild trees still supply a large part of high-value wood, so verification of origin has become a commercial issue as well as a conservation one. Inoculation techniques are improving, and young plantations planted in the 2010s are reaching harvest age through 2026 to 2031. At the same time, counterfeit and dyed wood, chemically treated chips and synthetic oud accords weaken buyer confidence, which pushes demand for DNA testing, isotope analysis and batch tracking. Researchers should watch four variables through 2031: how fast inoculated plantations reach consistent quality, whether quota systems such as India's 2024 to 2027 allocation are renewed and enforced, how Gulf and Chinese buyers treat certified cultivated wood against wild stock, and whether producer countries move from raw chips towards oil and finished fragrance products.

Drivers •Cultural Depth of Oud in Gulf and Asian Consumption Agarwood is woven into daily and ceremonial life across the Arabian Peninsula, China, Japan, Taiwan and South Asia. Bakhoor and chip burning in homes, offices and shops, perfume layering and gifting at weddings and religious occasions create repeat purchases that do not depend on fashion cycles. Rising incomes among younger consumers have widened use from special events to regular home fragrance, and Western niche perfumery has added oud notes to mainstream collections. This broad, long-standing consumption base supports demand across several price tiers, from simple burning chips to collector grade wood.

•Plantation Expansion and Better Inoculation Trees planted in Vietnam, Malaysia, Indonesia, Thailand and Assam over the past two decades are now producing harvestable wood. Fungal, chemical and mechanical wounding methods shorten the time needed to form resin, from many decades in the wild to roughly three to eight years in managed stands. Plantations give exporters documented origin, steadier volumes and legal CITES permits, which matters to larger buyers. Government programmes that legalise cultivation and export, along with growing private nursery networks, are drawing smallholders into the trade and slowly reducing dependence on forest collection.

Challenges •Wild Depletion, Illegal Trade and Weak Traceability Heavy harvesting has left several species threatened, and Aquilaria malaccensis is assessed as critically endangered. Customs and CITES records often fail to match, and some agarwood species fall outside the CITES listing altogether. Mixed batches of wild and cultivated wood are hard to separate by eye, so illegal wood can be passed through legal channels. Many national non-detriment findings are more than a decade old. Border agencies lack routine tools such as DNA barcoding, which slows enforcement and exposes legitimate exporters to delays, seizures and reputational damage.



•Adulteration, Quality Variability and Price Opacity Buyers face dyed wood, chips soaked in oils or chemicals, and low-resin wood sold as premium. Grading has no single global standard, so the same chip may be priced very differently across Dubai, Hong Kong and Tokyo. Inoculated wood can differ widely in aroma depending on method, species and tree age, and some buyers still mistrust it. Small traders have limited access to laboratory testing, and price information is private. This uncertainty raises transaction costs, favours established dealers and can discourage new plantation investors.

Trends •Certification, Testing and Digital Traceability Exporters and trade bodies are beginning to adopt batch codes, QR-linked plantation records and laboratory tests that measure resin markers such as chromones through chromatography. Customs and research teams are testing DNA barcoding and isotope methods to separate wild from cultivated wood. Buyers in the Gulf, Japan and Europe increasingly ask for CITES permits with supporting origin papers. These practices are still patchy, but they are moving from premium lots towards standard commercial shipments and will shape supplier selection by 2031.

•Value Addition at Origin Producer governments and companies want to export oil, fragrance blends and branded incense instead of raw chips. Malaysian officials have set this goal publicly in 2026, and Indian states are building processing and distillation capacity. Local distilleries, small-batch perfumers and artisan incense makers in Southeast Asia now sell directly to online and boutique buyers. This shift raises returns for growers, but it also creates competition for Gulf and Japanese processors who have historically captured most of the downstream margin.

Artificially inoculated plantations are the supply segment gaining most ground, because they offer legal, documented and repeatable output within a few years, which suits CITES permitting and large buyers that need consistent volumes. Wild-harvested agarwood remains the reference point for quality. Collectors search natural forests in Indonesia, Papua New Guinea, Laos and Myanmar for trees with visible dark resin, and the wood commands the highest per-gram prices because buyers believe it has deeper, more complex aroma. Studies of 2010 to 2020 trade show that wild sources still supplied a high share of Aquilaria filaria and a bit more than half of Aquilaria malaccensis, which explains the pressure on forests. Plantation and cultivated trees with natural infection, common in home gardens and smallholdings in Assam, Thailand and Cambodia, produce modest resin after insect damage, storms or accidental injury, and the output is irregular but valued as close to natural. Artificially inoculated plantations use fungal cultures, chemical injections or drilled holes to start resin formation, and managed stands in Vietnam, Malaysia and Indonesia can yield saleable chips within roughly three to eight years. Aquilaria crassna trade is estimated at over 99% plantation sourced. Salvaged and stockpiled wood, including fallen trees, old harvest residue and long-held trader inventory, is a smaller but important pool, since aged stock is prized by Gulf and Japanese collectors. By 2031 the balance should tilt towards inoculated stands as 2010s plantings mature, while wild supply narrows to a premium niche under stricter quota control.

Medium grade chips account for the largest volume because incense makers, oil distillers and everyday burners need affordable, fragrant wood, while premium high-resin material is smaller in volume but sets reputation and price benchmarks. Grading is based on resin content, density, colour, aroma when heated and place of origin, and there is no single worldwide standard. Experienced buyers test wood by flame, by smell and by whether it sinks in water, and laboratories increasingly check resin markers. Super-premium and collector pieces, often wild wood from old trees, are sold by the gram and sometimes kept as investments or gifts; they are a very small share of volume. Premium high-resin chips are dark, oily and sink readily, and they serve Gulf households, Japanese incense practice and high-end perfumers who need a rich oil yield. Medium grade chips have partial resin, burn with a pleasant but less layered scent, and are the workhorse of the trade, bought by distillers who want predictable output per kilogram and by wholesale traders who blend lots. Low grade and commercial material, with pale wood and light resin, is crushed for incense sticks, coils, powders, and sometimes for medicine, where price matters more than depth of aroma. Mislabelling across grades is a known problem, so many buyers now request samples or lab results. Through 2031, improved inoculation should lift the average resin level of plantation wood, narrowing the gap between medium and premium tiers while wild-origin premium lots remain scarce.

Incense and fragrance burning leads chip demand because chips can be used directly, need no further processing and fit daily home, shop and hospitality use across the Gulf, China, Japan, Taiwan and South Asia. Incense and fragrance burning covers chips heated on charcoal or electric burners, stick and coil incense, and bakhoor blends in which chips are mixed with sugar, resins and perfume oils. It is the most visible use and relies on mid-priced wood. Oud oil and perfumery draws on hydro or steam distillation, which can take days and typically gives a small oil yield from each kilogram of chips; the oil is sold in tola bottles of about 11.7 grams and also supplies fine fragrance houses that blend it with rose, amber and musk. Traditional medicine and wellness is centred on Chinese, Tibetan, Ayurvedic and Unani practice, where agarwood is used in formulas for pain, digestion and calming, and in tea or powder; this segment is steadier and less tied to fashion. Religious and ceremonial use includes burning in mosques, temples, tea ceremonies and the Japanese way of incense, and the wood is also used for prayer beads and carved objects. Others cover aromatherapy, spa and hospitality scenting, car and home diffusers, and craft use. Distillers and perfumers pay the most per kilogram of high-resin wood, yet burning remains the volume anchor. Through 2031, wellness and premium home fragrance are likely to attract new consumers in Europe, North America and Southeast Asia.

Direct trade and exporters carry the largest share because most chips move in bulk from growers and collectors to overseas buyers under CITES permits, with wholesalers and traders in trading hubs handling the rest. Direct trade starts with collectors, cooperatives and plantation owners who sell to licensed exporters, and in some cases ship straight to distillers or incense makers in the Gulf, China and Japan. Exporters hold the CITES documentation, sort chips by grade and arrange shipping from ports such as Jakarta, Ho Chi Minh City, Port Klang and Guwahati airport. Wholesalers and specialty traders in places such as Dubai, Hong Kong, Singapore and Taipei buy mixed lots, regrade them and sell onward in smaller quantities, and they hold ageing stock that has its own value. Their relationships and ability to judge wood by smell remain a key advantage in a market with no fixed price list. Online and e-commerce channels, from marketplace stores to specialist oud websites and social media sellers, serve small buyers, hobbyists and diaspora communities, and they have grown since 2020, although they raise questions over authenticity and cross-border permit compliance. Retail and fragrance houses sell packaged chips, bakhoor, incense and oil through boutiques, department stores and branded shops, adding design, gift packaging and trust. Through 2031, buyers are likely to ask for traceable lots, which may let certified exporters sell more directly to brands and shorten trader chains.

Asia-Pacific leads because it holds most producing countries and the largest base of incense, medicine and ceremonial buyers in China, Japan, Taiwan and India, while the Middle East imports heavily and Western regions are smaller niche markets. North America is a small but valued import market, led by the United States and followed by Canada. Demand comes from Arab, South Asian, Southeast Asian and East Asian communities, along with niche perfume buyers, incense hobbyists and wellness consumers who buy through online stores and specialist boutiques. Imports of Aquilaria and Gyrinops products are controlled under CITES, and the United States Fish and Wildlife Service issues and checks permits at designated ports, while the Lacey Act adds a plant declaration duty for many wood products. Small commercial parcels and personal shipments are checked closely, which can delay online orders and discourages some casual sellers. Chips are mostly bought for home burning, with bakhoor kits and oud oil as the premium add-ons. Cities with large Gulf and South Asian populations, such as Houston, Dearborn, Toronto and New York, support specialist shops and importers. North American brands usually blend imported oud oil or use synthetic accords in mainstream scents, so wood chips remain a niche. Growth through 2031 depends on clearer permit procedures for small buyers, on stronger interest in artisanal and ethical fragrance, and on how tariffs and customs checks affect parcels from Asia.

Europe is a mature, regulation-led consumer market in which France, the United Kingdom, Germany, Italy, Spain and the Netherlands are the main entry points. Agarwood trade falls under the EU Wildlife Trade Regulations, with Aquilaria and Gyrinops listed in Annex B, so importers need CITES documents and checks by national management authorities, and the United Kingdom applies its own system after Brexit. French and British houses introduced oud to European perfumery in the early 2000s, and niche brands in Paris, London and Milan now treat it as a signature note. Most of the oud in mass products is synthetic or a blend, and fragrance suppliers in France and Switzerland work on sustainable sourcing and molecule alternatives. Real chips are bought by collectors, Muslim communities in cities such as London, Paris and Birmingham, and an expanding group of wellness users. Distribution is split between specialist importers, perfumery ateliers and online shops, and many want proof of origin and cultivated status. Environmental claims, supply chain due diligence rules and IFRA ingredient standards shape how brands describe oud. Through 2031, European demand is likely to favour traceable plantation wood, fewer but higher-value purchases and transparent sourcing stories.

Asia-Pacific is both the origin of nearly all agarwood and the largest consuming area, which gives it a unique role. India, mainly Assam, Tripura, Nagaland and Manipur, has moved towards legal cultivation and export under a state policy adopted in 2020. Vietnam, with plantations in Khanh Hoa and Ha Tinh, Cambodia, Laos and Thailand rely on Aquilaria crassna estates, while Indonesia, Malaysia and Papua New Guinea combine cultivated and wild supply. China consumes chenxiang in medicine, incense and tea culture, produces its own Aquilaria sinensis in Guangdong, Hainan and Guangxi, and is a major buyer of imports through Hong Kong. Japan buys high-grade wood for kodo and sells finished incense through well-known houses, and Taiwan has a large temple and tea culture market. Singapore and Hong Kong are trading and re-export centres. Regional trade rules differ, and informal cross-border movement still occurs along mainland Southeast Asian borders. Papua New Guinea and other Pacific producers add small supplies of Gyrinops wood, and Korea is a smaller buyer of oriental medicine ingredients. Rising middle-class incomes, plantation maturity between 2026 and 2031 and efforts to add value at origin are likely to keep this region ahead in both supply and consumption.

Latin America is a small and emerging market for agarwood chips, supplied almost entirely by imports. Brazil, Mexico, Argentina and Chile have the largest consumer bases, supported by long-established Lebanese and Syrian communities, growing interest in Eastern incense, wellness practice and niche perfumery. Local fragrance makers, especially in Brazil, are among the world's most active in fine fragrance, and oud notes appear in premium launches, although these are generally based on oil, blends or synthetic accords rather than chips. Import rules follow CITES through national authorities such as IBAMA in Brazil and SEMARNAT in Mexico, which adds paperwork for small importers and limits informal imports. Trial plantings of Aquilaria in tropical parts of the region have been reported, but there is no significant export supply, and the species needs a humid tropical climate similar to Southeast Asia. Sales are made through specialist importers, online sellers and gift shops in large cities such as Sao Paulo, Mexico City and Buenos Aires. Currency swings and import duties affect prices. Customs delays and long shipping routes from Asia also raise landed costs, so buyers tend to hold larger stocks. By 2031 the region is likely to remain import-dependent, with gradual rises in wellness and fragrance interest.

The Middle East and Africa is the heartland of oud culture and a leading import destination, with demand centred on Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Qatar and Bahrain. Chips are burned as bakhoor in homes, majlis rooms, shops and hotels, and are layered with oud oil perfumes, so demand rises around Ramadan, Eid, weddings, Umrah and Hajj seasons. Dubai and Sharjah act as re-export and trading centres, with long-established souqs where traders judge wood by smell, and Gulf houses such as Ajmal, Arabian Oud, Rasasi and Abdul Samad Al Qurashi sell blended and branded products worldwide. Gulf buyers are known for willingness to pay for aged wood and wild-origin pieces, and they are also the main audience for Assam's new legal shipments. Customs and CITES controls apply, but the volume of imports and the large traditional trading base make enforcement difficult. In Africa, consumption is smaller and found in North Africa, the Horn of Africa and East African coastal communities with Arab influence, and informal flows are harder to track than in Gulf ports. Through 2031, Gulf diversification, local oud factories and higher interest in certified wood should shape the region.

September 2026 – Malaysia urges shift from raw chips to premium products: Plantation and Commodities Minister Noraini Ahmad said Malaysia should move from wood to essential oils, fragrances and premium brands, noting that woodchip exports reached almost 95,000 kg in 2025.

August 2026 – Assam forms task force for a dedicated agarwood policy: The Assam government held the first meeting of a multi-departmental task force to prepare a roadmap and a dedicated policy covering cultivation, processing, value addition and exports.

May 2026 – Assam ships first legal agarwood chips to the Gulf: A first consignment of agarwood chips left Guwahati for Saudi Arabia and the United Arab Emirates under the Assam Agarwood Promotion Policy, with CITES permits and DGFT export licences.

March 2025 – Study finds trade still reliant on wild threatened trees: Researchers at Kadoorie Farm and Botanic Garden published a study in Global Ecology and Conservation using 2010 to 2020 data, showing that about 70% of trade depended on Aquilaria malaccensis and Aquilaria filaria and that CITES and customs records often did not match.

July 2024 – CITES Plants Committee continues agarwood guidance work: At its 27th meeting the Plants Committee continued a working group on agarwood trade guidance covering Aquilaria and Gyrinops, in which India took part.

April 2024 – India receives CITES export quotas for agarwood: India's cultivated Aquilaria malaccensis was kept out of the Review of Significant Trade, and quotas for 2024 to 2027 of about 151,080 kg of chips and powder and 7,050 kg of oil per year were notified.

2020 – Assam adopts Agarwood Promotion Policy: The state introduced a policy to legalise and regulate cultivation, processing and export of agarwood from private land, creating the legal base for later export permits.


Considered in this report
• Historic Year: 2020
• Base Year: 2025
• Estimated Year: 2026
• Forecast Year: 2031

Aspects covered in this report
• Global Agarwood Chips Market with its segments and regional outlook
• Various drivers and challenges
• Ongoing trends and developments
• Key developments and regulatory milestones

By Source
• •Wild-harvested
• •Plantation and cultivated with natural infection
• •Artificially inoculated plantation
• •Salvaged and stockpiled wood

By Quality Grade
• •Super-premium and collector grade
• •Premium high-resin
• •Medium grade
• •Low grade and commercial

By Application
• •Incense and fragrance burning
• •Oud oil and perfumery
• •Traditional medicine and wellness
• •Religious and ceremonial use
• •Others

By Distribution Channel
• •Direct trade and exporters
• •Wholesalers and specialty traders
• •Online and e-commerce
• •Retail and fragrance houses