Sandalwood Oil Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (East Indian Sandalwood Oil, Australian Sandalwood Oil, Others), By End-Use (Cosmetics, Personal Care, Pharmaceuticals, and Others), By Distribution Channel (Online and Offline), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 99.98 Million
CAGR (2026-2031)	7.89%
Fastest Growing Segment	Online
Largest Market	Asia Pacific
Market Size (2031)	USD 157.69 Million

Market Overview

The Global Sandalwood Oil Market will grow from USD 99.98 Million in 2025 to USD 157.69 Million by 2031 at a 7.89% CAGR. Sandalwood oil is a highly valued essential oil extracted primarily through steam distillation from the heartwood of mature Santalum tree species. The Global Sandalwood Oil Market is fundamentally supported by the enduring demand for natural fragrance ingredients in the personal care sector and the oil's indispensable role in religious and cultural rituals across Asia. Furthermore, the increasing consumer preference for therapeutic aromatherapy solutions serves as a robust driver for continued consumption. These foundational elements provide a stable demand base that remains distinct from transient cosmetic trends.

One significant challenge impeding market expansion is the scarcity of raw materials due to over-harvesting, which has necessitated strict conservation regulations and subsequently inflated global prices. This supply constraint forces the industry to navigate complex sustainability compliance measures while combating the prevalence of adulterated alternatives. According to the Forest Products Commission of Western Australia, in 2024, the organization managed a strict harvest quota of up to 2,500 tonnes of wild sandalwood to ensure the long-term viability of the resource. Such limitations, while essential for conservation, inevitably restrict the volume of authentic oil available to meet the growing international demand.

Key Market Drivers

The Escalating Demand for Natural Ingredients in Personal Care and Cosmetics is acting as a primary catalyst for market value, as major beauty brands increasingly prioritize authentic Santalum album for its superior fixative properties. This trend is driven by a sophisticated consumer base that rejects synthetic substitutes in favor of premium, botanical formulations, directly boosting the revenue of established producers. For instance, the financial success of state-owned entities underscores this trajectory; according to The New Indian Express, April 2025, Karnataka Soaps and Detergents Limited (KSDL) reported a record net profit of Rs 415.11 crore for the financial year 2024-25, a performance largely attributed to the surged production and sales of their sandalwood-based personal care portfolio. This robust product demand is further reflected in global trade activity, where, according to Eximpedia, April 2025, India exported 3,652 shipments of sandalwood between March 2023 and February 2024, signaling sustained international appetite despite rising raw material costs.

The Consumer Shift Toward Ethically Sourced and Sustainable Ingredients is fundamentally restructuring the supply chain, necessitating a strategic pivot from wild-harvested wood to certified plantation resources. With natural reserves in Asia critically depleted by over-harvesting, manufacturers are increasingly dependent on managed estates to ensure regulatory compliance and supply continuity for their "clean beauty" lines. This reliance on transparent, sustainable sourcing is evident in the operational adjustments of major industry players who now look abroad to bridge domestic deficits. According to The New Indian Express, October 2025, KSDL is now importing approximately 5,000 kg of sandalwood oil annually from Australian plantations to meet its manufacturing requirements, validating the market's irreversible transition toward traceability and cultivated sustainability.

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Key Market Challenges

The primary challenge hampering the growth of the Global Sandalwood Oil Market is the critical scarcity of raw materials caused by historical over-harvesting, which has led to stringent conservation regulations and soaring global prices. This supply-side constraint directly impacts the market by limiting the volume of authentic oil available for commercial production, thereby forcing manufacturers to operate within tight quotas. Consequently, the inability to scale production to meet rising consumer interest prevents the market from fully capitalizing on the demand for natural ingredients in the personal care and aromatherapy sectors. The high cost of raw wood obliges companies to position sandalwood oil exclusively as a luxury niche product, effectively pricing it out of the mass-market segment and restricting revenue potential to premium tiers.

Furthermore, this scarcity creates a volatile pricing environment that complicates long-term supply chain planning for major fragrance houses. The gap between limited supply and enduring demand drives up the unit value of exports but stifles overall volumetric expansion. According to the Spices Board India, in the fiscal year 2023-24 (data released in 2024), the export value of spice oils and oleoresins—a category comprising high-value extracts including sandalwood—reached USD 498.01 million, illustrating that while the sector generates significant revenue, it remains heavily reliant on high valuations rather than volume growth due to persistent resource limitations. This dynamic forces the industry to focus on value retention rather than broad market penetration, slowing the overall trajectory of market expansion.

Key Market Trends

The Integration into Clinical Dermatological and Hair Care Formulations is elevating the status of sandalwood oil from a traditional fragrance fixative to a recognized bioactive therapeutic agent. Manufacturers are increasingly investing in pharmacological research to validate the oil’s efficacy in treating complex inflammatory skin conditions and wound recovery, effectively repositioning the ingredient for the medical dermatology sector. This strategic pivot allows companies to market medically graded formulations that command higher margins than standard cosmetics. The trend is substantiated by recent scientific advancements; according to the American Chemical Society, January 2024, in the 'ACS Omega' journal, a newly fabricated sandalwood oil nanoemulsion demonstrated significant wound healing acceleration in burn models while maintaining an optimal physiological pH of 5.58, confirming its viability for advanced topical therapies.

Concurrently, the Emergence of Bio-Synthetic and Lab-Created Market Segments is structurally reshaping the industry by providing a consistent supply alternative to resource-constrained natural wood. As conservation quotas limit the availability of wild-harvested oil, biotechnology firms are utilizing microbial fermentation to produce nature-identical santalol, thereby ensuring price stability and volume security for mass-market industrial applications. This diversification is essential to bridge the widening deficit between supply and demand; according to the Multidisciplinary Digital Publishing Institute (MDPI), August 2024, in the 'Biomolecules' journal, the annual global consumption of Indian sandalwood is approximately 4,000 tonnes, a volume that significantly exceeds current sustainable natural extraction capabilities. This reliance on biosynthetic alternatives ensures that authentic oil remains preserved for the ultra-premium luxury tier.

Segmental Insights

The Online segment is the fastest growing category in the Global Sandalwood Oil Market, primarily due to the global expansion of e-commerce infrastructure. This channel is expanding rapidly as consumers increasingly value the convenience of browsing diverse product portfolios from remote locations. The shift is further supported by the availability of comprehensive product specifications and authenticity certifications on digital platforms, which directly addresses buyer concerns regarding purity. Additionally, the direct distribution model utilized by online retailers reduces supply chain complexities, ensuring competitive pricing and timely delivery to a broader international audience.

Regional Insights

The Asia Pacific region holds the leading position in the Global Sandalwood Oil Market, largely due to the extensive cultivation of Santalum species in major producing nations such as India and Australia. This dominance is underpinned by a deep-rooted cultural heritage where sandalwood is indispensable for religious rituals and traditional Ayurvedic remedies, ensuring consistent domestic consumption. Furthermore, the region’s expanding personal care and fragrance manufacturing sectors drive substantial industrial demand. Strategic government initiatives promoting sustainable forestry and established export networks further solidify Asia Pacific’s status as the central hub for global sandalwood oil supply.

Recent Developments

• In June 2025, the Australian forestry company Silvalis (formerly known as WA Sandalwood Plantations) announced that it had become the country's largest private exporter of sandalwood products. The company revealed that its exports were expected to reach 1,400 tonnes for the year, driven by surging demand from Asian markets, particularly China and India, for its sustainably plantation-grown Santalum spicatum. This announcement marked a significant shift in the market landscape, positioning Silvalis as a dominant player in the global supply chain following the restructuring of other major industry competitors.
• In May 2025, Mercer International Inc. published its 2024 Sustainability Report, which provided a comprehensive update on the operations of its subsidiary, Santanol. The report outlined the environmental achievements of Santanol’s East Indian Sandalwood (Santalum album) plantations in the Ord River Irrigation Area of Australia. It highlighted the company's "Resilience by Design" strategy, noting that their sustainable forestry practices and water management systems have significantly contributed to local biodiversity and carbon sequestration goals while securing a consistent supply of pharmaceutical-grade oil.
• In February 2025, the smart home fragrance company Pura announced a strategic collaboration with Dutjahn Sandalwood Oils and the K Farmer Dutjahn Foundation. This partnership resulted in the launch of the "Pura x Dutjahn" home fragrance collection, which features Australian Sandalwood oil distilled by the Aboriginal-owned enterprise. The new product line was designed to celebrate the olfactory heritage of the Martu people and guarantee that a portion of the proceeds supports Indigenous-led conservation and community projects in the Western Australian desert.
• In October 2024, The Estée Lauder Companies released its Fiscal 2024 Social Impact and Sustainability Report, which prominently highlighted its long-standing sourcing partnership with Dutjahn Sandalwood Oils. The report detailed how this collaboration supports the Kutkabubba Aboriginal Community in Western Australia, ensuring the ethical and sustainable wild harvest of Santalum spicatum for use in the beauty giant's prestige products. The document emphasized the importance of this 15-year relationship in promoting biodiversity and economic stability for the Indigenous custodians of the sandalwood resource.

Key Market Players

• Eden Botanicals, LLC
• Blossom Kochhar Beauty Products Pvt. Ltd.
• Khadi Natural
• Mercer International Inc.
• BASF SE
• PerfumersWorld Ltd.
• Quintis (Australia) Pty Ltd.
• Plant Therapy, Inc.
• Kanta Enterprises Private Limited

By Type	By End-Use	By Distribution Channel	By Region
East Indian Sandalwood Oil Australian Sandalwood Oil Others	Cosmetics Personal Care Pharmaceuticals Others	Online and Offline	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Sandalwood Oil Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Sandalwood Oil Market, By Type:

• East Indian Sandalwood Oil
• Australian Sandalwood Oil
• Others

• Sandalwood Oil Market, By End-Use:

• Cosmetics
• Personal Care
• Pharmaceuticals
• Others

• Sandalwood Oil Market, By Distribution Channel:

• Online and Offline

• Sandalwood Oil Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE