Sandalwood Oil Market - Global Forecast 2026-2032

The Sandalwood Oil Market size was estimated at USD 166.12 million in 2025 and expected to reach USD 178.67 million in 2026, at a CAGR of 6.06% to reach USD 250.84 million by 2032.

The timeless allure of sandalwood oil, derived from the heartwood of Santalum album and Santalum spicatum, has anchored its status as a premium botanical extract across diverse industries ranging from perfumery to pharmaceuticals. As a cornerstone of traditional Ayurvedic remedies and high-end fragrances, its unique chemical profile-dominated by sesquiterpenic alcohols such as α-santalol and β-santalol-ensures both olfactory richness and therapeutic value. In recent years, this dual appeal has intensified global interest, positioning sandalwood oil not just as an aromatic ingredient but as a symbol of natural luxury and wellness.

Against a backdrop of escalating consumer demand for clean, plant-derived actives, sandalwood oil’s market reach has expanded into emerging applications in functional foods, nutraceuticals, and advanced cosmeceuticals. Fueled by a surge in disposable incomes, especially in Asia-Pacific, and a cultural renaissance of holistic health practices in North America and Europe, sandalwood oil now features prominently in premium skincare formulations, niche perfumes, and therapeutic aromatherapy products. This convergence of heritage, science, and modern wellness trends underscores the essential context for this research and sets the stage for deeper exploration of supply dynamics, regulatory factors, and strategic imperatives shaping the sector’s trajectory.

The sandalwood oil landscape is being fundamentally reshaped by a confluence of supply-side constraints, sustainability imperatives, and technological breakthroughs that collectively redefine value chains. A primary challenge remains the inherent biology of sandalwood trees, which require 15 to 20 years to reach harvest-ready maturity and demand up to 70 kilograms of heartwood to yield a single kilogram of oil. This extended cultivation cycle, compounded by strict licensing requirements under India’s Wildlife Protection Act, has fueled persistent supply bottlenecks, price volatility, and illicit logging activities that undermine industry integrity.

In response, leading stakeholders have championed regenerative agroforestry models and advanced cultivation techniques such as tissue culture propagation to accelerate tree growth and ensure genetic consistency. Concurrently, operators are deploying digital traceability platforms, leveraging blockchain to verify origin, purity, and sustainable harvesting credentials throughout the value chain. On the processing front, supercritical CO₂ extraction is gaining prominence, delivering superior yield, aroma retention, and solvent-free purity, while emerging equipment innovations enable precise parameter control to optimize compound profiles. These transformative shifts, from ethical sourcing frameworks to green extraction technologies, are driving a more resilient, transparent, and innovation-driven market ecosystem.

The United States’ 2025 tariff landscape introduces a layered tariff regime that significantly impacts import economics for sandalwood oil. Under HTS code 3301.29.51.39, sandalwood oil faces a base duty rate of 1.8% ad valorem, alongside a 15% column-two rate for goods that do not qualify for trade agreement preferences. Imports from certain partner nations such as Australia are eligible for a zero special rate; however, this preferential status does not shield the product from broader policy measures.

In April 2025, a universal reciprocal tariff of 10% was enacted across all imported goods, irrespective of origin, to bolster domestic manufacturing and address trade imbalances. This universal levy is applied in addition to existing duties, resulting in a combined effective tariff of at least 11.8% on sandalwood oil entering the U.S. market post-April 5, 2025. Complicating the tariff environment further, Executive Order 14245 authorizes a discretionary 25% tariff on all imports from any country deemed to be importing Venezuelan oil, with implementation at the Secretary of State’s discretion. Since India continues to import Venezuelan crude, sandalwood oil sourced from Indian origins could face this supplemental 25% levy, pushing the cumulative duty burden to approximately 36.8% when stacked with the general and reciprocal tariffs.

Collectively, these measures create a significant tariff premium that reshapes sourcing strategies, incentivizes diversification toward tariff-exempt origins, and underscores the importance of tariff advisory and compliance measures in maintaining cost competitiveness within the U.S. market.

Segmentation by application reveals a spectrum of end-use dynamics, ranging from the calming benefits of aromatherapy to the functional incorporation of sandalwood oil in pharmaceutical formulations. Meanwhile, the cosmetics and perfumery industries capitalize on its premium woody fragrance and skin-beneficial properties. Delineation by sales channel highlights the critical role of offline distribution through direct sales, retail storefronts, and wholesalers in establishing brand presence, contrasted with the growing momentum of online channels encompassing dedicated company websites and third-party e-commerce platforms that deliver wider market reach. Product type segmentation underscores a bifurcation between blends and pure sandalwood oil, with pure oil further classified by extraction method-supercritical CO₂, solvent extraction, or steam distillation-each offering distinct quality and cost implications. Regional source differentiation between Indian sandalwood (Santalum album) and Australian sandalwood (Santalum spicatum) informs geographic value propositions tied to species-specific aroma profiles. Finally, grade segmentation spans cosmetic, food, perfume, and therapeutic classifications, delineating quality thresholds that align with regulatory requirements and end-user expectations.

The Americas represent a mature consumption landscape, led by the United States, where heightened consumer preference for natural, organic skincare and wellness products drives demand for premium sandalwood oil across personal care and aromatherapy channels. North American buyers are increasingly seeking sustainably and ethically sourced inventories, spurring suppliers to adapt certification and traceability measures to meet rigorous procurement standards. Latin American markets, though smaller, display growing interest in artisanal fragrances and local participation in cultivation projects aimed at boosting regional self-sufficiency.

In Europe, Middle East & Africa, stringent regulatory frameworks such as the EU Cosmetics Regulation (EC 1223/2009), REACH, and the CITES restrictions on Santalum album underpin the market’s emphasis on compliance and quality assurance. Voluntary natural and organic certifications including NaTrue and Cosmos, alongside FairWild and FSC eco-labels, have become decisive purchase factors. Certified suppliers, particularly from Australia, report expedited market access and premium pricing in key EU and Gulf Cooperation Council markets, reflecting the region’s prioritization of sustainability credentials.

Asia-Pacific remains the fastest evolving region, driven by deep-rooted cultural traditions in India and China, expanding personal care sectors, and rising disposable incomes. The region’s extensive sandalwood plantations and emerging tissue culture programs supply both domestic processing hubs and export channels. Data indicates over 600 cargo shipments of sandalwood oil were recorded globally in the trailing twelve months, with Indonesia, Australia, and India accounting for the majority of export volumes, and a 12% year-over-year increase in shipments through early 2024. Market participants in APAC continue to invest in plantation renewal, capacity expansion, and downstream value-additions, reinforcing the region’s pivotal role in global supply.

Key players in the sandalwood oil market are executing diverse strategies to navigate supply pressures and capitalize on premium positioning. Quintis, leveraging its vertically integrated plantation and distillation platform, focuses on genetic selection programs to enhance oil yield and quality consistency. Santanol has prioritized sustainable community partnerships in Australia, securing Forest Stewardship Council accreditation to serve high-end fragrance brands. RK-Essential Oils and Meena Perfumery underscore organic cultivation and fair-trade practices in India, while Naresh International advances solvent-free extraction technologies aimed at reducing environmental impact. Essentially Australia and Sandalwood Forest are strengthening their global footprint through strategic alliances and direct-to-consumer digital channels. Emerging exporters such as Katyani Exports and Jiangxi Jishui Natural Essential Oil Factory are scaling production capacity and pursuing specialty niche applications in therapeutics and functional foods. Collectively, these companies highlight a competitive landscape where sustainability credentials, technological leadership, and market diversification constitute the cornerstones of corporate differentiation.

Industry leaders should prioritize investment in regenerative cultivation and community-based agroforestry to secure long-term supply while strengthening local stakeholder partnerships. Embedding blockchain-enabled traceability solutions will enhance transparency, mitigate adulteration risks, and meet escalating ESG mandates. To optimize extraction efficiency and product quality, stakeholders are advised to evaluate supercritical CO₂ systems and other green technologies that deliver superior yield and purity. Strategic sourcing from tariff-exempt regions-such as Australian origins under free special rates-can buffer the impact of U.S. reciprocal and discretionary duties. Additionally, companies should expand their online sales footprint via brand e-commerce and digital marketplaces to tap into evolving consumer journeys. Finally, a continuous engagement with regulatory developments-particularly in CITES listings, REACH updates, and U.S. tariff evolutions-will ensure compliance and enable proactive advocacy, positioning organizations to capitalize on emerging opportunities in the dynamic sandalwood oil market.

This research integrates primary insights gleaned from in-depth interviews with industry executives, plantation managers, and regulatory experts, alongside a comprehensive review of secondary sources including the U.S. Harmonized Tariff Schedule, Federal Register proclamations, trade flow data, and specialized industry publications. Import-export volumes were cross-verified with global shipment databases and national customs records. Tariff impact analysis leverages legal instruments such as Executive Order 14245 and HTS heading 3301.29.51.39 to quantify cumulative duty exposures. Market segmentation and competitive profiles rely on validated corporate disclosures, sustainability certification registries, and extraction technology case studies. Data triangulation ensures robustness and accuracy, while trend extrapolations are grounded in documented shifts in consumer behavior, regulatory frameworks, and technological adoption documented through reputable industry and academic publications.

In summary, the sandalwood oil market of 2025 presents a unique confluence of heritage-driven demand and forward-looking innovation, all unfolding under the scrutiny of evolving sustainability standards and complex tariff environments. Although supply constraints rooted in the biology of sandalwood trees impose inherent challenges, emerging cultivation and propagation technologies, coupled with greener extraction methods, offer pathways to sustainable expansion. Meanwhile, layered U.S. tariff regimes underscore the strategic importance of sourcing agility and compliance acuity. Regional dynamics reveal a multi-speed market, with Asia-Pacific leading supply expansion, the Americas driving premium demand, and EMEA enforcing rigorous quality and certification thresholds. Against this backdrop, proactive investment in regenerative sourcing, extraction innovation, digital transparency, and tariff optimization will delineate the next generation of leaders in this storied botanical sector.

To unlock the full potential of your strategic and operational decisions in the burgeoning sandalwood oil market, reach out directly to Ketan Rohom, Associate Director of Sales & Marketing, to discuss how our comprehensive market intelligence can be tailored to your organization’s objectives. By partnering with our team, you will gain exclusive access to in-depth analyses, proprietary datasets, and actionable roadmaps that enable you to navigate supply constraints, regulatory shifts, and tariff complexities with confidence. Engage with Ketan Rohom to secure your copy of the complete research report and ensure your leadership in one of the most dynamic natural ingredients markets today.