CBI Product Factsheet:

Sandalwood oil for cosmetics

in Europe

CBI | Market Intelligence Product Factsheet Cloves in Germany | 1

Introduction

Developing country (DC) producers and exporters with a long-term vision have opportunities to cultivate sandalwood
sustainably. Many countries have depleted their natural resources of this slow-growing tree, due to the popularity of its
wood and the highly valued essential oil derived from it. This strong demand and dwindling supplies have increased prices.
Producers can earn an income from secondary economic benefits even before cultivated sandalwood is ready for harvest,
for example from host trees and sandalwood seed oil. There is competition from synthetic sources.

Product description

Sandalwood, of the genus Santalum, is a genus of woody flowering trees and plants. Most species are semi-parasitic and
several produce a highly aromatic wood. The most common species are Indian sandalwood (Santalum album) and
Australian sandalwood (Santalum spicatum), although other species are used for their scent as well.

Different sandalwood species are indigenous to India, Indonesia, Sri Lanka, Bangladesh (S. album), and Australia (S.
spicatum and S. lanceolatum), as well as to several Pacific Islands such as Hawaii (S. ellipticum), Fiji and Tonga (S. yasi),
Papua New Guinea (S. macgregorii), Vanuatu and New Caledonia (S. austrocaledonicum) and French Polynesia (S.
insulare).

The essential oil produced by sandalwood is obtained through steam distillation of the chipped heartwood. The oil is a pale
yellow to yellow viscous liquid that is insoluble in water. Sandalwood oil is used in the perfumery, cosmetics,
aromatherapy, pharmaceutical and food industries. Sandalwood is also used for woodcarving and as an ingredient for
incense.

Traditionally, sandalwood is wild-harvested, since cultivation is difficult. Because of over- and illegal harvesting, supplies of
sandalwood, especially Indian sandalwood, have decreased considerably over the last 10-15 years. Consequently, efforts
to cultivate sandalwood have increased; Australia now has several plantations of Indian sandalwood trees.

Classification of sandalwood oil:

 Chemical Abstract Service (CAS) numbers:
o Santalum album: 84787-70-2
o Santalum spicatum: 8024-35-9
o Santalum austrocaledonicum: 91845-48-6
 Cosing, the European Commission database with information on cosmetic substances and ingredients, lists several
types of sandalwood and their derivatives under their INCI names.
o INCI name: Santalum album oil and wood oil, with masking and perfuming properties
o INCI name: Santalum austrocaledonicum wood oil, with masking, perfuming and flavouring properties.
 UN number: 1993, Class 3
 Harmonised System (HS): within the European Union (EU) and the European Free Trade Association (EFTA)1,
sandalwood oil does not have a separate HS code. Instead it would be classified under 3301.29 – Essential oils other
than citrus and mint oils.

Quality

 The quality of sandalwood oil depends on the level of santalol in the oil. Indian sandalwood is of the highest quality.
Several Pacific sandalwoods are similar in quality, especially sandalwoods from Fiji (Santalum yasi) and New
Caledonia and Vanuatu (Santalum austrocaledonicum). To compare, please refer to Table 1.
 In general, older sandalwood trees have more heartwood and produce higher quality oil, since santalol levels are
higher. High-quality sandalwood oil comes from trees that are at least 30 years old.
 Sandalwood trees normally start producing heartwood at around 10-15 years. Growth of heartwood depends on soil
type, rainfall and level of sun exposure. Trees that grow in shallow soil or in soil with a high level of stone inclusions,
with a distinct annual dry period and exposure to full sun develop heartwood more rapidly and could be harvested
after at least 15-20 years. For trees that grow in deep, fertile soil, with high and evenly distributed rainfall throughout
the year and a shaded canopy, harvesting should be delayed until the trees are at least 30-40 years old.
 To be of optimum quality, sandalwood oil must be 100% natural (i.e., not denatured by addition of any chemicals),
100% pure (i.e., not mixed with any other essential oils with similar characteristics) and 100% integral (meaning that
the totality of the molecules contained in the distilled plant have been collected during the distillation process).
 Given its high price and low availability, there is a high risk of adulteration. Buyers are very wary about buying
sandalwood oil.

1
Member States of EFTA are Iceland, Liechtenstein, Norway and Switzerland.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 2
Table 1: Santalol content in sandalwood species
Trade name Latin name Santalol content
Indian Santalum album α-santalol: 41-55%
sandalwood β-santalol: 16-24%

Fiji sandalwood Santalum yasi α-santalol: 37-39%

β-santalol: 26-28%

New Caledonian Santalum α-santalol: 48-49%

sandalwood austrocaledonicum β-santalol: 20-22%

Australian Santalum α-santalol: 15-25%

sandalwood spicatum β-santalol: 5-20%

Tips:
 Work together with a local university department to determine the santalol content of your sandalwood
oil. This should be included in your product documentation.
 Include information on the chemical profile of your oil, as determined by accredited laboratories, in the
Product Factsheet and specifications.
 Check the quality standards that the International Organisation for Standardisation has set for
sandalwood oil. ISO 3518:2002 was developed for Indian sandalwood oil (Santalum album. L.) and can
be purchased for € 40. For Australian sandalwood oil (Santalum spicatum), check ISO 22769:2009,
which can be purchased for € 53. These are indications of the international standard, but individual
buyers may set their own standard.
 Before harvesting the trees, test the levels of heartwood and essential oils by taking a core sample out
of the trees.
 Use the extraction method (temperature, pressure, time) consistent with buyer’s preferences and
specifications.
 Prevent dilution, adulteration and contamination by foreign materials (e.g. synthetic sandalwood or
African sandalwood) to preserve you reputation. Importers regularly analyse products for adulteration.

Labelling

 Facilitate the traceability of individual batches with markings and a registration system.
 Use the English language for labelling unless your buyer has indicated otherwise.
 Labels must include the following:
o Product name/INCI name
o Batch code
o Place of origin
o Name and address of exporter
o Date of manufacture
o Best before date
o Net weight
o Recommended storage conditions
 Organic: Name/code of the inspection body and certification number.
 Ensure the buyer can access the following documentation:
o Technical Data Sheet (TDS) or Specification, check this example of a frankincense oil or myrrh oil
o Certificates of analysis, to support the claims of the specification, check this example of a certificate of analysis
of Australian sandalwood oil
o Safety Data Sheet (SDS)
o GMO certificate (if requested)
o Certificate of origin
o Product information sheet

Hazard label

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 3
  Sandalwood essential oil is classified as a flammable liquid; include the relevant hazard symbol (as shown on the
right).
 Also include the risk phrases with the following numbers: R10-36/38-43-65-, and the safety phrases with the
following numbers: S02-24/25-36-45. EU Directive 2001/59/EC elaborates on these and other risk and safety
phrases.
 Refer to CBI Buyer Requirements for information on classification, labelling and packaging (CLP).

Packaging

 Always consult with your buyer for specific packaging requirements.

 Use UN approved packaging, as specified by your buyer. For more information, check the details provided by the
European Federation of Essential Oils on the transport of dangerous goods.
 Ensure the preservation of quality of sandalwood oil by:
o Using containers of a material that does not react with constituents of the oil (e.g. lacquered or lined steel,
aluminium).
o Cleaning and drying the containers before filling them with oil.
o Filling the headspace in the container with a gas that does not react with constituents of the oil (e.g. nitrogen
or carbon dioxide).
 Facilitate the re-use or recycling of packaging materials by, for example, using containers of recyclable material (e.g.
metal).
 Store the containers in a dry, cool place to prevent quality deterioration.
 Organic oils should remain physically separated from conventional oils.
 Refer to CBI Buyer Requirements for information on classification, labelling and packaging (CLP).

What is the demand for sandalwood oil in Europe?

(!) No specific trade statistics are available for sandalwood oil. They are included in the trade data on ‘essential oils, non-
deterpenated, other than those of citrus fruit, mint, niaouli and ylang-ylang’.

(!!) Please note that official production data from India is much lower than actual production data, due to the high levels of
illegal harvesting and smuggling. It is estimated that about 80% of the sandalwood harvest in India is illegal.

Supply levels of Australian and Indian sandalwood

Traditionally, most sandalwood and sandalwood essential oil comes from India and Australia. India is reported to produce
around 95% of Indian sandalwood. India has banned the exportation of sandalwood and sandalwood essential oil because
of the religious significance of sandalwood oil. However, the high price of the oil on the international market has led to
illegal exports.

Tip:
 If you are based outside the traditional supplying countries, emphasise that you offer an alternative
source to sandalwood oil in your promotional material.

World market demand for the different sandalwood species and their derivatives is estimated at 4,000-7,000 tonnes per
year. However, since official data on sandalwood production does not take illegal harvesting into account, actual demand
and production may be much higher.

The Indian government regulates both the harvest of sandalwood and the distillation of the wood’s essential oil. Exports of
both products are banned. Official harvest figures for Indian sandalwood in India are around 400-1,000 tonnes per year.
These numbers are based on auctions of sandalwood, where supply is controlled by the government. Unofficial harvesting,
where sandalwood products are smuggled to other countries, possibly adds another 3,000-4,000 tonnes per year to the
total production.

Indonesia used to be another major source of wild Indian sandalwood, but currently supplies are non-existent. Interest in
cultivating the trees is low, as trees can take 30 years before they can be harvested for the essential oil. Indonesia is not
expected to provide significant volumes of sandalwood over the coming 20 years.

Wild-harvested Pacific sandalwoods are approaching exhaustion. However, several sandalwood plantations have been
established. The heartwood from these species is mainly exported to Asia.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 4
 Tip:
 Keep a close watch on the future production of sandalwood in Indonesia and other Pacific Islands. You
may request such information from your buyers. These countries can become competitors if they start
to cultivate sandalwood.

Australia produces around 30 tonnes of Australian sandalwood oil per annum. Industry sources indicate that supplies of
Australian sandalwood oil are likely to increase in the future to fill the gap in the supplies of Indian sandalwood.
Sandalwood is both cultivated and wild-harvested in Australia.

Future production of Indian sandalwood in Australia may affect global supply. Commercial harvests from Australia are
expected to start in 2016-2017. The aim is to produce 60% of the global supplies of Indian sandalwood by 2029. However,
it is not expected that these supplies will saturate the market. There are some recent plantations in China; much of this
production may be for domestic consumption.

Tip:
 If you produce Indian sandalwood (outside India), monitor production levels in Australia. Check the
website of the main producer of Indian sandalwood in Australia, TFS.

Since sandalwood cannot be grown in Europe, demand is met by imports.

In Europe, the UK and France are estimated to be the largest importers of sandalwood and its derivatives. France is the
largest importer in terms of sandalwood essential oil.

Tip:
 Focus your exports on the cosmetic industry in the UK and France.

In Western markets, demand for sandalwood oil with its rich woody fragrance is mostly for use as an ingredient in perfume
(especially men’s fragrance), aromatherapy and fragrant body care products.

Tip:
 Refer to CBI Trade Statistics for natural ingredients for cosmetics for more trade statistics.

What trends offer opportunities on the European market for sandalwood oil?

Natural ingredients: in Europe, there is increasing consumer interest for natural ingredients in cosmetics. Global sales of
natural cosmetics were close to $ 30 billion (€ 22.3 billion), growing by 10.6% in 2013, according to market research
conducted by the Kline Group (Cosmetics Design Europe, 2014). However, sufficient supplies at a commercially viable price
need to be guaranteed.

Tip:
 Emphasise the potential of the use of sandalwood oil in natural cosmetics in your promotional material.
Determine whether you can deliver sufficient supplies of the oil.

Synthetic ingredients: the development of synthetic alternatives, which have improved performance and lowered costs,
has put pressure on natural sandalwood oil. While synthetic sandalwood notes are widely used in the global fragrance
industry this is predominantly in lower cost products such as soaps and household items where cheap synthetics are
favoured. Higher quality products sometimes use synthetic sandalwood notes to complement natural sandalwood oil.
However, natural oil is known to have fixative properties (helping a fragrance to last longer), a complex aroma profile, and
therapeutic and psychological properties.

Exotic ingredients: the ongoing consumer interest in speciality exotic ingredients forms an opportunity for sandalwood
oil. It has “exotic”, “mystical” or luxury connotations.

Tip:
 In your promotional material; focus on the exotic connotation that consumers have of sandalwood oil.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 5
Ethical products: a growing interest in ethically sourced and sustainable products provides an opportunity for fair trade
and organically certified sandalwood oil. Especially for sandalwood, with its dwindling supplies and high degree of illegal
harvesting in India, sustainability and traceability are major issues. In addition, consumers are interested in the story
behind ethical certification. In their marketing, cosmetics producers actively communicate the best stories for their
ingredients to improve the connection with the consumer. Communication takes place using images, with short stories on
the product, or using the producer’s corporate image.

Tips:
 Check your opportunities for obtaining certification for ethical sourcing. Refer to the section on market
segments for more information.
 In addition to certification, focus on the story behind your sandalwood oil in your promotional material.
It is an advantage to help cosmetics producers communicate these stories, for example by providing
pictures.
 If your sandalwood oil is produced sustainably, include this fact in your promotional material.
 Refer to CBI Trends for Essential Oils for more market trends.

What requirements should sandalwood oil comply with to be allowed on the European
market?

EU Cosmetics Regulation: Cosmetics Regulation includes requirements (physical-chemical, microbiological and

toxicological) for substances/ingredients to be included in each ‘Cosmetic Product Safety Report’ and ‘Product Information
File’. Cosmetic manufacturers and ingredient producers are increasingly making compliance with this regulation the
responsibility of their suppliers.

Tips:
 Check with your buyers what information they require and in what format.
 Comply with relevant legislation. Read more about the Marketing conditions for cosmetic products and
the Cosmetics Regulation on the EU Export Helpdesk.
 Refer to the CBI Buyer Requirements module for a full list of requirements for cosmetic ingredients.

REACH: In principle, essential oils are bound to legislation on chemical substances. Therefore, with few exceptions, they
need to be registered with the European Chemicals Agency under REACH (Registration Evaluation and Authorisation of
Chemicals) legislation. If volumes remain lower than 1 tonne per importer, registration is not required. In all cases, the
burden of proof lies with the EU manufacturer/importer that wishes to use this exemption (an absence of information on
the properties of a substance does not mean an absence of hazardous properties).

Tips:
 Familiarise yourself with REACH regulation, annexes IV and V list details of exemptions from
registration. The European Chemicals Agency (ECHA) offers guidance on exemptions.
 Check the REACH registration status of your cosmetic ingredient. If your product is not registered, it
may need to be (subject to exemption status). REACH registration is an expensive procedure and must
be initiated by European manufacturers, EU importers or by an Only Representative of a non-EU
manufacturer (hazardous chemicals imported or manufactured in the highest volumes have to
registered as a priority).

Classification, Labelling and Packaging of chemicals (CLP): The EU sets requirements on the packaging of chemical
substances, as well as required symbols and phrases warning users and providing safety advice that should be used on the
labels. These requirements have been adopted from the United Nations´ Globally Harmonised Systems (GHS).

Tips:
 Refer to the website of the ECHA, which includes a database on classification and labelling. You can
use this database to determine which symbols and warning phrases apply to your product.
Additionally, you can access information on CLP through the European chemical Substances
Information System (ESIS).
 Refer to the EU Export helpdesk for more information on REACH and CLP.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 6
Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES): CITES regulates the
trade in (among other things) wild-collected endangered plants and gives a detailed list of species for which trade is
prohibited, restricted or bound to certain rules. If a product is listed on Annex A and B of Regulation (EC) 338/97, you
need to obtain export and import permits before you can export it.

Tip:
 Although sandalwood is not mentioned in the CITES Annexes, it is mentioned on the IUCN Red List For
more information on the requirements and procedures of CITES in Europe, refer to the information on
CITES from the EU Export Helpdesk.

Quality: European buyers expect a good, reliable level of quality; most of them expect suppliers to follow the Hazard
Analysis & Critical Control Points (HACCP) principles for food processing. The following requirements are also often referred
to.
 Good Manufacturing Practices (GMP) are not obligatory for cosmetic ingredient producers, but compliance can provide
a competitive advantage.
 Good Agricultural and Collection Practices (GACP), even though legally binding for medicinal plants, are common
practice for farming and wild collection of cosmetic ingredients, prior to processing.
 Quality standards such as ISO are referred to in buyers’ product specifications, to assure the quality of cosmetic
ingredients. ISO22716 is a good reference. Even though it is intended for finished cosmetic products, it also includes
guidelines for ingredients that manufacturers need to refer to.
 International Fragrance Association (IFRA) Standards form the basis of the globally accepted and recognised risk
management system for the safe use of fragrance ingredients.
 Buyers will also have their own requirements

Tips:
 At the very least, follow HACCP principles.
 Ascertain whether you can help your buyer comply with GMP principles for producers of cosmetics. This
may give you a competitive advantage. The guide developed by the European Federation for Cosmetic
Ingredients (EFfCI) gives a detailed explanation of these principles.
 Comply with the World Health Organisation’s GACP guidelines, even though they are only legally
binding for medicinal plants. Compliance gives you a competitive advantage from a marketing
perspective.
 For compliance with the IFRA Standards, refer to the IFRA Code of Practice, which lists information on
specific requirements and practices.

Sustainability: European buyers prefer suppliers that can demonstrate good standards in sustainability. This involves
social and environmental responsibility as well as sustainable sourcing practices. Buyers may not require compliance with
certification standards to prove sustainability. However, they are looking for suppliers who demonstrate that they have
incorporated sustainability into their operations.

Tips:
 Assess your performance in terms of sustainability with regard to sourcing, social and environmental
responsibility. Demonstrate to your buyers how you have incorporated sustainability into your
operations.
 Prepare and publish a code of conduct that defines your social and environmental responsibility as an
employer and supplier. For more information on responsible business practices, use the online
database of Supplier Ethical Data EXchange (SEDEX) as an example, where members can share
information on ethical and responsible practices.

Documentation: Buyers need well-structured product and company documentation. Buyers generally require detailed
specifications supported by certificates of analysis and Safety Data Sheets (SDS). Documentation should include
information on allergens. The allergen declaration for essential oils should be made according to cosmetic regulations and
IFRA standards.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 7
 Tips:
 Create a commercially oriented Product Data Sheet for your buyers, with photos, information on origin
and bibliographic references, where available. For your own internal purposes, prepare a more detailed
dossier with all the technical data from both primary and secondary research.
 Consider seeking qualified advice in preparing an SDS. Check websites of European companies for
examples of an SDS, e.g. The Soap Kitchen.

Additional requirements

Natural cosmetics: In cosmetics, the definition of natural cosmetics has been driven by private sector standards,
specifically NaTrue and Cosmos. These specify what cosmetic products need to comply with to be certified natural and
organic. Often, natural cosmetics are defined as having a certain amount of natural ingredients. Although not directly
applicable to ingredient producers, it is important to be aware of these standards in terms of permitted processes and
additives.

Organic: EU legislation specifies what organic production and labelling entails. This legislation is only applicable to food
products, but forms the basis of private standards for organic labelling. Examples of such standards are Soil Association
(UK), Ecocert (France) and BDiH (Germany).

Tip:
 For more information on the market opportunities for organically certified ingredients, refer to Market
Trends below.

Fair production: Several standards exist to certify socially sustainable production of natural ingredients for cosmetics.
Examples of consumer labels that guarantee fair social practices include Fairtrade and FairWild (wild-collected ingredients).

Tips:
 Refer to the ITC Standards map database for more information on different voluntary standards and
their requirements, including organic and fair production.
 For more information on the market opportunities for social sustainably certified ingredients, refer to
the Market Trends.

What competition do I face on the European market for sandalwood oil?

Market entry – Challenges in obtaining raw material

 Access to sufficient raw material for the commercial production of sandalwood oil is the main entry barrier to the
market. Sandalwood is traditionally wild-harvested. Overharvesting, deforestation and spike disease have
considerably decreased supplies of wild sandalwood in countries such as India and Indonesia. See the next section for
information on the cultivation of sandalwood.
 As production of sandalwood oil requires limited know-how, technological barriers to market entry for sandalwood oil
are relatively low. However, the steam distillation equipment needed to produce sandalwood essential oil requires
substantial investment.

Tips:
 Investigate your ability to obtain the raw material for sandalwood oil, either through wild harvesting or
cultivation.
 You should use sustainable practices for wild harvesting. You can look into the possibilities of FairWild
certification, but always discuss this option with your buyers first to ascertain whether they regard
such certification as important.
 Cooperate with other sandalwood oil producers to share the costs of investment in distillation
equipment. Note in addition that once you have mastered steam distillation of one essential oil, you
can use the same equipment to distil other plants for essential oils.

Several countries have put restrictions on the harvesting of sandalwood trees to protect the trees from extinction. For
example, in India only the government is allowed to own and harvest sandalwood trees and a license is required to
produce sandalwood oil. Moreover, the country has banned exports of sandalwood oil. The government recently allowed
trees grown on private property to be harvested and sold to government agencies. As a result of the restrictions imposed

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 8
by the Indian government and the common practice of poaching and illegal harvesting, India is not a good country for new
market entrants. New producers of sandalwood have better opportunities outside India.

Australia has developed legislation specifying the size at which Australian sandalwood trees may be harvested.

Tip:
 Determine the requirements governing the harvesting of sandalwood and production of the essential
oil in your country. Be aware that there is a risk of poaching and illegal harvesting of sandalwood trees
in India. Some plantations need 24/7 security to prevent this.

Market entry – cultivation of sandalwood

Producers can cultivate sandalwood trees to overcome the challenges associated with wild-collection. Although this
requires significant investment and is very time-consuming, producers can also gain secondary economic benefits from
host trees and sandalwood seeds.
 Sandalwood producers can benefit from the host trees that are used to support the growth of sandalwood trees until
the latter are ready for harvesting. Some sources have identified citrus fruit trees or pigeon peas as good hosts,
stating that the fruits or peas of these trees can be sold. It is difficult to verify this, however. Other trees such as
fragrant rosewood or Acacia species can be sold for timber.
 Sandalwood seeds provide an additional financial benefit for the growers until the trees are ready for harvesting. Oil
is extracted from the seeds with the aid of solvents; this process requires significant investment, however. Australian
sandalwood seed oil contains high levels of oleic acid (omega-9, which has emollient and emulsifying properties) and
xymenynic acid. Indian sandalwood seed oil contains arachidonic acids (omega-6) and oleic acids (omega-9). Both
types of seed oils have emollient and skin conditioning properties. The seed oils and their compounds have potential
for use in the cosmetics industry. Trees start producing seeds when they are 4-5 years old, while the wood cannot be
harvested until the tree is at least 15-20 years old and often only after the tree is 30 years old.

Tips:
 Plant a variety of host trees, which supports the growth of sandalwood. Preferably choose trees that
are native to the region and produce fruits or nuts of commercial value.
 Determine your options for selling other parts of the sandalwood tree to complement essential oil
production. Not only the heartwood of sandalwood and its essential oil are valuable; other parts of the
tree can be sold as well, such as timber, tannin from the bark and heartwood powder for incense.
 Use the properties of sandalwood seed oil listed in Cosing in your promotional materials. (In fact, this
database only lists the skin conditioning properties of seed oil from Indian sandalwood at present.)
 Check the Cosing database and Cosmetics Design Europe for the latest information about research on
seed oils from other sandalwood species. Be aware that seed oils from species not registered in Cosing
will need significant investment in additional testing before they can be used in cosmetic products.
 Investigate your ability to produce sandalwood seed oil. Please note that solvent extraction is more
complex than steam distillation and requires additional investment. As sandalwood seed oil is a new
product, you might need to educate your buyers in its uses.

Product competition

Sandalwood oil faces competition from cheaper synthetic sandalwood oil, which avoids the environmental issues associated
with the harvesting of natural resources. It is predominately used in low-budget soaps and perfumes.

Tip:
 Stress the special features of your natural sandalwood oil as compared with competing synthetics in
your promotional material. You can for instance focus on the origin and ethical and sustainable
sourcing of your product. Aim your sales pitch at producers of high-end cosmetics.

Company competition

Cultivation of sandalwood trees is complicated and requires long-term investment. The slow-growing trees need proper
management during growth, adequate drainage, and host trees to survive. Nevertheless, the number of plantations of
both Indian and Australian sandalwood is growing steadily in Australia. Other countries, including China, have also begun
cultivation. Research has suggested, however, that sandalwood trees cultivated in China contain low levels of santalol, the
substance which determines the oil’s quality.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 9
The first commercial harvest of Indian sandalwood from Australia is expected in 2016-2017. If this production is
successful, Australia will become a considerable competitor over the coming years. On the other hand, the extensive
research on sandalwood cultivation carried out in Australia is also helpful for DC producers.

Tips:
 Keep up to date on trends in cultivation practices in countries such as China and Australia. The
Australian Sandalwood Network provides information on Australian sandalwood plantations.
 Refer to CBI Competition for Essential Oils for more information.

What do the trade channels and market segments of interest for sandalwood oil in
Europe look like?

Market channels

Please refer to the CBI Module Market Channels and Segments for Essential Oils, which gives an overview of the market
channels in essential oils for cosmetics together with information on important trends and developments in these market
channels.

Export of processed oils

Sandalwood for the use of cosmetics is generally exported in the form of oil. Sandalwood oil can be processed further, for
example by refining the oil in the country of origin, so cosmetics manufacturers can use it directly. The oil is not processed
further until it is prepared for use in fragrances by the end user.

Tips:
 Before setting up installations to refine sandalwood oil, for example for decolouring, make sure that
you can meet the requirements of your buyer in terms of quality, composition, quantity and cost of the
oil. Determine which installations are necessary to meet buyer requirements and research whether you
can expect a sufficient return on investment.
 Benefit from the experience and knowledge of specialised European importers and agents instead of
approaching end users directly. Especially for exporting specialised products, traders are the most
suitable distribution channels.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 10
Market segments

Table 2: Major cosmetic segments and applications for sandalwood oil

Segment Sub-segment Benefits of applying sandalwood oil

Fragrances Perfume Fixative (when used in small amounts)

Fragrance

Skin care Facial skin care, body care, Skin conditioning properties
moisturiser, anti-aging Use on dry, cracked and chapped skin

Hair care Shampoo, conditioner Fragrance

Toiletries Soap, body wash, bath salts Used in small amounts as a fixative
Fragrance

Best opportunities in fragrances

Sandalwood oil has the highest potential for use in the fragrances market. It has a specific scent and is often used as a
base note. In this segment, consumers tend to be more willing to pay a higher price. Therefore, the high price of
sandalwood oil is less of an issue.

When the oil is used as a fixative in perfumes, it is used in smaller proportions.

Tip:
 Emphasise the potential of the use sandalwood oil in perfumery. For perfumes, focus on the specific
scent and fixative properties of sandalwood oil.

Indian sandalwood oil and wood powder have some skin conditioning properties. It is important to note that applications in
this segment are fairly insignificant due to the high price of the oil.

For toiletries that have a delicate scent, small proportions of sandalwood oil can be used as fixatives. It is assumed that
small amounts of the lower-priced natural or synthetic sandalwood oils are used in this segment. These sandalwood oils
are also used as a fragrance in toiletries and hair care products.

There is a market for fairly traded sandalwood oil. In terms of marketing, these oils do not necessarily need to be certified.
Consumers and cosmetics producers are increasingly interested in the story behind ethically sourced and processed final
products. Whether fair trade certification is necessary depends on your buyer’s preferences. Even if certification is less
relevant for a marketing aspect, it can be an assurance of legal harvesting or ethical sourcing for buyers. Be aware that
fair trade certification is only available for cultivated products, not for wild-harvested sandalwood.

Tips:
 Focus on the story behind ethical certification in your promotional material, stressing the social
benefits to local communities of your production. You can for example explain how Fairtrade practices
allow these communities to earn fair living wages.
 If you want to obtain Fairtrade certification, check the requirements of the Fairtrade standard. Always
discuss these opportunities with your buyers.

There is a market for organically certified sandalwood oil. However, this depends heavily on your prospective buyer. Please
note that sandalwood oil from India cannot be certified organic, the production sites are too diverse to be certified. It is
possible in other countries, however, where monitoring of the production sites is more feasible or where sandalwood is
cultivated.

Tip:
 Discuss the opportunities for organically certified sandalwood oil with your buyers before launching into
a product development plan to source organic raw material.

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 11
What are the end market prices for sandalwood oil?

High price of sandalwood oil

The price of sandalwood oil depends on the level of santalol and yield potential.

Sandalwood oil is rather expensive, but prices vary per species. The following prices are global prices, which have been
converted into Euros:
 Indian sandalwood is valued at the high end of the price range, at around € 2080-2171 ($ 2,300-2,400) per kg.
 Fiji sandalwood and New Caledonian sandalwood are in the middle of the price range, at around € 1085-1357
($ 1,200-1,500) per kg.
 Australian sandalwood is valued towards the lower end of the price range, at around € 905 ($ 1,000) per kg.

Tip:
 Ensure that your prices reflect the quality of your product. Different santalol levels in the oil result in
different quality and you should adjust your price accordingly.

The price of Indian sandalwood oil has increased almost tenfold over the last 10 years. This rise is due to both a lack in
supplies and an increase of demand, both in India and across the world. Prices are expected to remain stable or to rise
slightly in the short term. However, future price levels will depend strongly on the availability of commercial supplies of
cultivated Indian sandalwood, notably from Australia.

Tip:
 Monitor harvests in major production countries to anticipate price developments for your specific
sandalwood oil, especially in upcoming producers of Indian sandalwood such as Australia. You may
request such information from importers.

Research has indicated that the essential oil yield of Indian sandalwood from Australia is much lower than the essential oil
yield of wild-grown sandalwood in India. This is probably related to the growing pace of the trees. Faster growing trees
produce more sapwood while slow-growing trees produce more heartwood. As a result, oil yield from fast growing trees is
estimated to be lower.

The roots and lower trunk of the sandalwood tree yield up to 10% more essential oil. In these parts of the tree, the
proportion of heartwood is higher than in other parts (upper trunk and branches).

The host trees used in sandalwood cultivation affect the heartwood growth and consequently the yield of the essential oil.
In China, fragrant rosewood (Dalbergia odorifera) has been identified as a good host, whereas pigeon pea (Cajanus cajan)
is a good host that grows on the Indian subcontinent.

Tip:
 Optimise the yield of sandalwood cultivation and distillation to lower your cost price:
o Use host trees that increase the growth of sandalwood heartwood.
o Use the heartwood from the roots and lower trunk of the tree for distillation, to increase the
yield of essential oil.

The following price breakdown shows which costs and margins are applied to sandalwood oil before it reaches the end
user.

Figure 1: Price breakdown for sandalwood oil, mark-ups in %

Export Air cargo Import Sales

+1% +5% +30%

Source: ProFound, 2014

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 12
Useful sources

Trade fairs

Visiting and especially participating in trade fairs is highly recommended as one of the most efficient methods for testing
market receptivity, obtaining market information and finding prospective business partners. The most relevant trade fairs
in Europe for exporters of sandalwood oil are:
 in-cosmetics, travelling trade fair
 Beyond Beauty in Paris, France
 SANA in Bologna, Italy
 Vivaness in Nuremberg, Germany (for organic producers)

More information

CBI market information: Promising EU export markets.

EU Expanding Exports Helpdesk - http://exporthelp.europa.eu - go to ‘trade statistics’.
Eurostat - http://epp.eurostat.ec.europa.eu/newxtweb - statistical database of the EU. Several queries are possible. For
trade, choose ‘EU27 Trade Since 1995 By CN8’. Use the guide ‘Understanding Eurostat: Quick guide to easy comext’
(http://epp.eurostat.ec.europa.eu/newxtweb/setuphelp.do?keepsessionkey=true) for instructions.
International Trade Statistics - http://www.trademap.org – you have to register

CBI | Market Intelligence Product Factsheet Sandalwood oil for cosmetics in Europe | 13
CBI Market Intelligence

P.O. Box 93144

2509 AC The Hague
The Netherlands

www.cbi.eu/market-information

marketintel@cbi.eu

This survey was compiled for CBI by ProFound – Advisers In Development

in collaboration with CBI sector expert Andrew Jones

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

November 2015