A recent market study published by Persistence Market Research (PMR) opines that the global sales of agarwood chips reached US$ 30 billion in 2018, and the market is expected to witness impressive growth in the coming years. The PMR study mainly attributes the rise in demand for agarwood chips in the fragrance industry for the incremental growth of the market, and projects that the potential growth opportunities in the Middle East will further improve the sales potential of agarwood chips in the coming years.
The PMR study thoroughly assesses the impact of various macro and microeconomic factors on the growth prospects of the agarwood chips market during the period 2019-2029, and forecasts that the market will grow 2X during the course of the study. In 2018, Middle East and Africa accounted for more than half the revenue share of the global market for agarwood chips, and it will continue to remain an important regional market for stakeholders in the coming years, opines the PMR study.
Cultural factors remain the growth triggers for the agarwood chips market in the Middle Eastern countries, such as UAE, as agarwood is an integral part of the Middle Eastern culture. The ancient traditions of using perfuming garments and burning high-grade agarwood on special occasions are the indication and reflection of social status in the Arabic countries. Being an indispensable part of the Middle Eastern culture and lifestyle, the demand for agarwood chips is likely to remain high in the region, creating lucrative sales opportunities for market players in the coming years, projects the PMR study.
Restrictions on the Production and Trade of Agarwood Impacts the Market Growth
In most countries, agarwood plants are considered endangered species and are protected by stringent governmental laws of forest conservation. With the natural supply of agarwood being limited and changing climate slowing the growth of the agarwood trees in many countries, governing bodies have imposed stringent regulations and rules on the production of agarwood products, including agarwood chips. Furthermore, agarwood trees are only found in countries such as India, Malaysia, Thailand, Singapore, Vietnam, Loa PDR, and Cambodia, and this coupled with strict restrictions on the production leads to a significant imbalance between supply and demand for agarwood chips, finds the PMR study.
The study also opines that the availability of adulterated or fake agarwood products is increasing incessantly in the agarwood chips market. This is leading to the imposition of trade restrictions on various agarwood products. While the price of agarwood chips is already high due to the scarcity of natural agarwood supply, it will further increase with the implementation of strict trade regulations of agarwood chips, opines the PMR study.
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However, lucrative sales opportunities for agarwood chips in the fragrance industry and their high demand in the personal care sector is expected to attract a mounting number of new entrants in the agarwood chips market. The PMR study opines that the agarwood chips market will continue to remain a moderately fragmented market with a mounting number of small business sprouting up across countries, and this will further contribute to the expansion of the market along with the rise of new trends in the landscape.