Sandalwood Market - Global Forecast 2025-2032

The Sandalwood Market size was estimated at USD 442.58 million in 2024 and expected to reach USD 470.72 million in 2025, at a CAGR of 6.63% to reach USD 739.75 million by 2032.

Sandalwood has held a revered position across civilizations for millennia, prized for its warm, woody aroma and its versatile applications in spiritual, cosmetic, and wellness traditions. The essential oil distilled from the heartwood and roots exhibits a rich profile dominated by the sesquiterpene alcohols α- and β-santalol, which not only contribute to its iconic scent but also underpin its therapeutic efficacy in aromatherapy practices. These compounds have been scientifically linked to sedative and anxiolytic effects, modulating neurotransmitter activity in the brain and supporting stress-relief interventions in contemporary wellness regimens. As consumers increasingly seek holistic ingredients that blend sensory appeal with health benefits, sandalwood’s enduring legacy is finding new resonance in modern formulations across skincare, perfumery, and therapeutic products.

In response to mounting environmental pressures and ethical concerns surrounding wild sandalwood harvesting, biotechnology is driving a paradigm shift within the fragrance and wellness industries. Leading innovators have harnessed metabolic engineering to transform microbial strains into living factories that biosynthesize santalol with high purity and consistency, eliminating reliance on slow-growing trees and reducing ecological strain. Fermentation techniques, paired with enzyme biocatalysis, now enable scalable production of core fragrance molecules under controlled conditions, ensuring year-round supply chains while preserving endangered species. This technological evolution is reshaping traditional value chains by embedding sustainability at the molecular level and redefining what it means to be “natural.”

The introduction of a universal 10% tariff on imports effective April 5, 2025, followed by additional reciprocal duties calibrated to bilateral trade deficits, has imposed new cost structures across sandalwood supply chains. Sectors reliant on fragrance oils, extracts, and raw heartwood are adapting procurement strategies to absorb or mitigate these levies, while importers are exploring alternative sourcing corridors and localized production partnerships to shield margins from tariff volatility. This trade policy environment has compelled industry stakeholders to reexamine logistical models, renegotiate supplier agreements, and accelerate diversification into tariff-exempt synthetic and biotechnologically derived sandalwood analogues.

Under current regulations, Indian sandalwood products face an additional 26% duty when entering the U.S., though this surcharge was temporarily suspended until July 9, 2025, offering a limited reprieve for exporters and buyers alike. Despite the suspension, the baseline 10% tariff remains in force, effectively raising import costs for all trade partners and reshaping the competitive landscape for natural sandalwood oil and derivatives. The combined impact has intensified interest in domestic cultivation initiatives and in-country value-addition strategies to circumvent external duties and maintain supply continuity.

Market segmentation by product form reveals a nuanced preference spectrum, with essential oils commanding premium margins in perfumery and aromatherapy applications, powdered forms gaining traction in traditional cosmetic and religious contexts, and chips and extracts reinforcing their utility in homecare and pharmaceutical formulations. Each form aligns with distinct processing requirements, regulatory standards, and quality assessments, necessitating tailored production and supply strategies to optimize performance and compliance across use cases. Grade differentiation further bifurcates offerings into natural and synthetic categories, catering to consumers prioritizing heritage and authenticity versus those valuing consistency, sustainability, and cost-effectiveness.

End-use segmentation underscores aromatherapy’s reliance on high-purity oils for sensory therapeutics, while cosmetics and perfumery drive demand for both natural and lab-engineered isolates to balance olfactory complexity with supply reliability. In food and beverage applications, minute flavoring concentrations harness sandalwood’s warm, spicy nuance to elevate artisanal products, though stringent safety thresholds and labeling requirements continue to shape market entry and innovation. Homecare and pharmaceutical sectors leverage both crude and refined extracts for antimicrobial and anti-inflammatory benefits, integrating sandalwood derivatives into cleaning formulations and topical treatments that meet evolving regulatory frameworks.

Physical distribution channels remain bifurcated between established offline networks-encompassing pharmacies, specialty boutiques, and mass-market retailers-and burgeoning online platforms, where brand-owned websites and third-party e-commerce marketplaces offer global reach and direct consumer engagement. Offline channels prioritize sensory experiences, expert consultations, and regulatory assurances, whereas digital storefronts emphasize convenience, traceability disclosures, and subscription-based replenishment models. This duality compels brands to orchestrate omnichannel strategies that harmonize in-person trust with digital scalability.

In the Americas, robust demand for sandalwood-infused wellness products is underpinned by well-established organic and natural certification frameworks, driving premium price points and incentivizing traceable sourcing partnerships. Regulatory oversight from agencies such as the FDA and EPA shapes permissible uses and labeling, prompting suppliers to bolster quality assurance measures and invest in supply chain transparency solutions. Concurrently, domestic startup ecosystems are accelerating biotech innovation, fostering collaborations between fragrance houses and synthetic biology firms to reduce tariff exposure and secure supply resilience.

Across Europe, the Middle East, and Africa, longstanding perfumery traditions in France, the Gulf states, and South Africa create sophisticated end-use demands, particularly in niche luxury and bespoke formulations. Regulatory regimes such as REACH in the European Union enforce stringent chemical safety evaluations, driving demand for comprehensive compliance data and pushing suppliers toward certified sustainable practices. In response, provenance tracking via blockchain and isotopic provenancing is gaining traction to validate product origins and mitigate the risks of illegal harvesting and adulteration.

To deepen your understanding of current market trajectories, emerging trends, and strategic opportunities within the global sandalwood landscape, connect with Ketan Rohom, Associate Director of Sales & Marketing. Leverage his expertise to tailor insights to your organization’s objectives, access proprietary data analyses, and navigate evolving trade and regulatory environments with confidence. Engage today to secure comprehensive, actionable intelligence that will elevate your competitive positioning and drive sustainable growth in the sandalwood sector.