Global Market Study on Agarwood Chips: The Future Lies in Premium Personal Care


Agarwood Chips  Market
  • Published On : Jun-2019 |
  • Pages : 250 Pages |
  • Format :

Agarwood Chips Market: Complete Analysis and Opportunity Assessment

Persistence Market Research (PMR) recently published a report on the global agarwood chips market, which evaluates the historical and current market scenario, and provides credible insights on how the agarwood chips market will grow and expand during the period of 2019-2029. The study also exhibits the estimated data for the current year, and forecast the statistics of the agarwood chips market in terms of value (US$ million) and volume (tons).

In this report, readers can expect a wide range of dynamics that can help them gain deeper understanding of the agarwood chips market and make well-informed business decisions. PMR’s study focuses on various aspects and changing trends of the agarwood chips market during the forecast period. The report includes both, the macro- and microeconomic factors that are likely to influence the growth of the agarwood chips market. It also provides comprehensive information regarding the performance of the agarwood chips market across different geographical regions.

The report covers a detailed taxonomy of the agarwood chips market, along with ongoing trends and current opportunities for market vendors. It also offers a thorough analysis of the competitive landscape, and profiles leading players and new entrants in the agarwood chips market, wherein, product innovation and business development strategies of these players have been detailed.

Agarwood Chips Market: Segmentation

PMR’s study assesses the agarwood chips market on the basis of nature, end use, distribution channel, and region. It includes a segmental analysis of the agarwood chips market, and offer in-depth insights on how the various dynamics and trends associated with each segment will impact the growth of the agarwood chips market. 

Nature

End Use

Distribution Channel

Region

Organic

Retail

Business to Business

North America

Conventional

Industrial

Business to Consumer

Latin America

  • Ayurveda Medicines
  • Hypermarkets/Supermarkets

Europe

  • Incense Sticks
  • Specialty Stores

South Asia

  • Personal Care & Cosmetics
  • Online

East Asia

Oceania

Middle East & Africa

What are the Key Questions Answered in the Agarwood Chips Market Report? 

  • How is the legal framework governing the trade of agarwood and its products?
  • Which approaches and constraints are holding the agarwood chips market tight?
  • How are price fluctuations and trade restrictions of raw agarwood affecting market development?
  • What are key opportunities and challenges faced by agarwood chips market players?
  • What are the upcoming commercial prospects of the agarwood chips market?
  • How is the agarwood chips market predicted to develop in the future?
  • What are the key outcomes of the five forces analysis of the agarwood chips market?
  • What are the effective strategies adopted by key manufacturers to increase the production of agarwood chips? 

Research Methodology 

This business intelligence report on the agarwood chips market is a result of a thorough and elaborative research methodology, which involves numerous primary and secondary research resources. With the help of incisive information gathered through and verified by these resources, analysts could offer detailed information and statistics regarding the current and future development of the agarwood chips market.

In the primary phase, analysts have conducted interviews of C-level executives, key opinion leaders, product sales managers, distribution leaders, and sales heads of companies operating in the agarwood chips market, along with key manufacturers, distributors, and investors. The data gathered through these interviews has contributed to the compilation of the report.

For the secondary research, analysts studied various annual report publications, industry association publications, and white papers to gain a deeper understanding of the agarwood chips market and to estimate its future growth prospects. Secondary resources such as the Food and Agricultural Organization (FAO), Fauna & Flora International, ASGAA, CITES, TRAFFIC, Vietnam Agarwood Association, International Fragrance Association (IFRA), Fragrance Creators Association, and Fragrances and Flavours Association of India have also been referred to by the analysts for the development of agarwood chips market report.

Agarwood Chips: Meeting Luxury Needs but Nearing Extinction

In intellectual discussions about nature conservation and deforestation, there is a strong plea for attention to the social and economic relevance of highly-priced non-timber forest products such as agarwood. Naturally produced from the heartwood of Aquilaria trees, agarwood and its products have been gaining immense popularity as highly valuable products, especially for medicine and fragrances purposes. However, the demand for agarwood far exceeds the available supply, which is restricted due to its nature of formation that is associated with the wounding and fungal infection of the Aquilaria trees.

Developments in the non-timber forest products landscape, in general, and the agarwood chips market in particular, warrant an in-depth understanding and unbiased analysis. Persistence Market Research (PMR), in its new offerings, brings to light various aspects and nuances, along with credible insights of the agarwood chips market, which can assist market stakeholders with value-creation and data-driven decision making.

agarwood chips market strategy

Unlocking the History and Current Developments in the Agarwood Chips Market

Non-timber forest products have a very long history, with India being one of the earliest sources of agarwood chips for foreign markets, which are currently traded in larger quantities. In 2018, the worldwide sales of agarwood chips closed in on US$ 30 billion. However, it is pertinent to note that, nearly 75% of these sales remained concentrated in the Middle East & Africa, East Asia, and South Asia. The trade of agarwood chips between these regions is one of the oldest ongoing rituals, while agarwood chips have high cultural value in Arabic countries. As the wealth of consumer countries has steadily increased in recent times, the demand for agarwood chips is significantly exceeding its supply. Currently, the total supply of agarwood chips satisfies only 20% of the demand, causing a huge disruption in the market.

The exponential increase in the demand for agarwood chips has resulted into the rapid depletion of Aquilaria trees in natural forests, and hence, these trees were listed as endangered on the CITES Appendix II. As these factors, along with trade restrictions in major agarwood producing countries, continue to affect the prices of agarwood chips, the mass plantation of Aquilaria trees has become a sustainable way to obtain agarwood and to protect these endangered species.

Agarwood Chips Market: First Wave of Growth Led by the Fragrance Industry

A notable rise in the demand for agarwood chips goes hand in hand with the expansion of the fragrance industry. Popular for perfuming personal garments in traditional Arabic culture, agarwood chips have captured huge attention as an essential ingredient for the manufacturing high-end perfumes and fragrance products.

The mass marketing of lower-priced perfumes has long been a successful formula for the fragrance industry, but as consumers, especially millennials, became distant from these products and inclined towards luxury and personalized products, a new set of trends brewed in the industry. A number perfume manufacturers are focusing on including at least one custom product and luxury label with exotic ingredients in their portfolios, which directly works to the advantage of agarwood chip suppliers. In addition, considering the range of limitations in agarwood production, the development of the agarwood chips market relative to the fragrance industry remains unaffected by the high cost of products.

In lieu of foraying into other industries, agarwood chips market players are drawing upon the opportunities arising from the cosmetics and fragrance industry to cater to premiumization in personal care products and the increasing use of exotic ingredients in perfumes and fragrances. In addition for offering agarwood chips, oil, and powder, a number of market players such as Po Lou Senko Agarwood Products are also introducing many innovative products using agarwood in the category of personal care. However, the rising demand for agarwood chips in end-use industries has led to overharvesting and persistent illegal trade, as well as the emergence of adulterated and fake agarwood chips, all of which continue to threaten market growth.

agarwood chips market region analysis

Rise and Fall of Agarwood Chips Market Players

As the plantation of Aquilaria trees and agarwood production are restricted to Southeast Asia due to climatic conditions, mass plantation remains a prominent focus area of market players in collaboration with local botanical communities and related partners in the region. Despite great efforts, trial plantations have been successful in terms of growth, but not in agarwood production, or has resulted into low-grade quality. Thereby, farmers and investors have become hesitant to invest in its cultivation. In addition, considering the high value and lucrative nature of agarwood, free exchange of information regarding sustainable production methods has also been restricted. As these factors, along with supply-demand and knowledge gaps persist, agarwood chip manufactures target offering their products specifically in Middle Eastern countries where the cultural demand for these products remain high.

Positioned in the premium category, agrawood chip manufacturers and suppliers continue to significantly export their products to GCC countries, especially the UAE and Saudi Arabia, where the luxury and premium goods market continues to flourish. Sensing the steady influx of tourists for luxury shopping in these countries, in tune with the increase in individual income available for spending on luxury goods, agrawood chips market players are wary about expanding in other regions.

The Competitive Landscape

The global agarwood chips market shows a high level of consolidation, with companies such as Asia Plantation Capital, Sadaharitha plantation Ltd., Agarvina Co. Ltd., Nagaland Agarwood Company, and Assam Aromas, collectively accounting for 40-50% share of the market revenue.

Taking the nature of the product into consideration, high-quality continues to be an influencing factor, and to stay ahead in the market, key players are mainly focusing on offering products under the premium, luxury, and deluxe categories. For instance, in 2019, Hoang Giang Agarwood Ltd launched a new premium product under its lifestyle segment - HAGA Natural Smart Oud- Coil, which provides the experience of modern scent and sophisticated living.

The development of new technologies and establishment of new plantations also remain key focus areas of regional players. Monopoly in the agarwood chips market by South Asian companies has worked to their advantage, but the limited production of agarwood remains a main concern for these players.

agarwood chips market segmentation

The Analyst Viewpoint

Limited scope of agarwood production continues to impact supply and lead to price fluctuations, thereby hindering the global expansion of the agarwood chips market. As the purchasing power and demand for agarwood chips remain high in the Middle East as well as North America and Europe, manufactures will need to target these demanding regions. With new research and technologies, the gap between demand and supply may narrow, but it will not affect the increasing price trends. It will be an understatement to say that, the perfume industry will remain central to the higher growth of the agarwood chips market. The authors of this report strongly feel that, manufactures entering into partnerships with fragrance companies, while simultaneously expanding their product portfolios, will be well-rewarded in the long run.

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Agarwood Chips Market: Introduction

The most expensive wood in the world, agarwood, also known as oud or aloeswood, is the dark and aromatic resin-suffused wood formed in the species of Aquilaria, Gyrinops, and Aetoxylon trees. Generally, the Aquilaria tree is considered to be the leading producer of high-quality agarwood. Agarwood is formed when these trees are infected by a parasitic fungus. To combat this infection, the tree begins to secrete a very special and fragrant resin that slows down the growth of the fungus, and ultimately heals the tree. This resin-soaked wood is called agarwood.

Agarwood cultivation is done in South East Asian countries such as India, Thailand, Malaysia, and Vietnam. Agarwood chips are used in the production of perfumes and incense sticks. Agarwood has cultural and spiritual importance in Middle Eastern countries. Agarwood chips are popular due to their medicinal properties as well. The medicinal use of agarwood has been prominent in China since ancient times.

Agarwood is categorized as an endangered species under the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) regulation. The production of agarwood chips can take longer than expected, and hence, the total production of agarwood satisfies only a few percent of the total demand for agarwood, which ultimately affect the supply of agarwood chips.

On the basis of nature, the global agarwood chips market is segmented as-

  • Organic
  • Conventional

On the basis of end use, the global agarwood chips market is segmented as-

  • Retail
  • Industrial
    • Ayurveda Medicines
    • Incense Sticks
    • Personal Care & Cosmetics

On the basis of distribution channel, the global agarwood chips market is segmented as-

  • Business to Business
  • Business to Consumer
    • Hypermarkets/Supermarkets
    • Specialty Stores
    • Online

On the basis of region, the global agarwood chips market is segmented as-

  • North America
  • Latin America
  • Europe
  • South Asia
  • East Asia
  • Oceania
  • Middle East & Africa 

Use of Agarwood Chips in Personal Care & Accessories Boosting Demand in the International Market

Traditionally, agarwood was used only for the manufacturing of perfumes, incense sticks, and oils. As the number of companies entering the fragrance manufacturing market has increased, manufacturers are now introducing new products using agarwood in the personal care and cosmetics category. This trend is being followed by many companies, and they are introducing new and innovative products made from agarwood, such as jewelry and accessories. Some companies are also offering products such as agarwood soap bars, tea, and biscuits made from agarwood. This increasing product innovation is expected to boost the demand for agarwood chips in the international market.

Agarwood Forestry - A Sustainable Solution to Meet the Global Demand for Agarwood Chips

Agarwood plants are an endangered species under CITES conservation. The production of agarwood is less when compared to its global demand, eventually affecting the production of agarwood chips. Illegal trade is also threatening the agarwood industry, and agarwood chip manufacturers are seeking sustainable ways to find a solution. Agarwood forestry is the latest trend in the agarwood manufacturing industry. A company initiates the plantation of agarwood trees on land, which is owned by the company itself. This solution has environmental as well as commercial benefits for manufacturers. Many companies are now planning and initiating the plantation of agarwood. This trend is expected to increase the production capacity of the industry, and satisfy the increasing demand for agarwood chips across the globe.

Cultural Demand from the UAE Boosting Agarwood Chips Market Growth

Agarwood is an important part of Arabic culture in general. In Arabic countries, people use high-grade agarwood chips and burn them to honor guests. They also have a tradition of using agarwood perfumes for special occasions and while preparing for prayers. The high price of agarwood is considered an indicator of its preciousness and luxury. The quality of the aroma can be viewed as an indication of status and prestige. Agarwood is seen as a part of the heritage and cultural identity of the UAE. Thus, the continuous cultural demand for agarwood chips in the UAE is boosting the market for agarwood chips in the UAE.

Price Fluctuations and Trade Restrictions Resulting in Increased Prices of Agarwood Chips

Most companies try to ensure stable prices for their products to maintain their market niche. Fluctuations in import prices are always reflected on the retail prices of the end products. Agarwood oil and other agarwood-derived perfume prices have been comparatively more stable than agarwood chip prices, as price fluctuation has a direct impact on raw materials, while perfume products include a high percentage of production and other costs. This all results in a rise in the prices of agarwood chips on an annual basis. Trade restrictions in India are the major cause of the rising prices of agarwood chips, as India is a prominent country with whom most of the importing countries have been trading for many years. In isolated cases, the global application of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) is affecting the continuity of supply of agarwood chips, which results in an increase in the prices of agarwood chips.

After an analysis of the agarwood chips market, it has been observed that, agarwood is known as Gold from the Forest. Agarwood plants are now an endangered species, covered under the CITES conservation. Agarwood chips have the highest demand in Middle East countries, as the cultural and spiritual value of agarwood is very high in this region. South Asia is the leading producer and one of the largest consumers of agarwood. Currently, there is monopoly in the agarwood chips production market, as South Asia is the only region that produces agarwood chips. However, the overall agarwood chips market is facing price fluctuations due to high demand and low supply. Rising and fluctuating prices of agarwood chips can eventually hamper the growth of the agarwood chips market.

Companies Profiles

  • Hoang Giang Agarwood Ltd 
  • Lao Agar International Development Co. Ltd. 
  • Asia Plantation Capital Pte Ltd.
  • NAGALAND AGARWOOD COMPANY
  • WEFIVE group
  • K.A.B. Industries
  • Agarvina Co., LTD
  • Green Agro Agarwood Products Sdn. Bhd
  • Sadaharitha Plantations Limited
  • Assam Aromas
  • BINH NGHIA AGARWOOD CO., LTD 
  • Po Luo Senko Agarwood
  • OudAsia
  • Myanma Treasure Co-op., Ltd.
  • Homegrown Concept Sdn Bhd (HGC). 

 

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