sandle wood

8/12/2019 Sandle Wood

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Source: CBI Market Information Database URL:www.cbi.eu Contact:[email protected] www.cbi.eu/disclaimer

CBI Product Factsheet:Sandalwood for

cosmetics in EuropePractical market insights into your product

As a result of the popularity of sandalwood and its highly

valued essential oil, many countries have depleted theirnatural resources of this slow growing tree. Demand remainsstrong and consequently prices are increasing. For producersand exporters with a long-term vision, opportunities exist tocultivate sandalwood sustainably. Secondary economic benefitsfrom host trees and extracting vegetable oil from sandalwoodseeds could provide an income to producers in DevelopingCountries (DCs) before the trees are ready to be harvested.There is competition from synthetic sources.

Product definition

Sandalwood, of the genus Santalum, is a genus of woody flowering trees andplants. Most species are semi-parasitic and several produce a highly aromaticwood. The most common species are Indian sandalwood (Santalum album) andAustralian sandalwood (Santalum spicatum), although other species are used fortheir scent as well.

Different sandalwood species are indigenous to India, Indonesia, Sri Lanka,Bangladesh (S. album), and Australia (S. spicatum and S. lanceolatum), as wellas 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 distillationof 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 forwoodcarving and as an ingredient for incense.

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

Classification of sandalwood oil: Chemical Abstract Service (CAS) numbers:

o Santalum album: 84787-70-2o Santalum spicatum: 8024-35-9o Santalum austrocaledonicum: 91845-48-6

Harmonised System (HS): within the EU / EFTA, sandalwood oil does nothave a separate HS code. Instead it would be classified under:o 3301.29: essential oils other than citrus and mint oils

Sandalwood

oil

Indian sandalwood

tree
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CBI Product factsheet: Sandalwood for cosmetics in Europe


Cosing,the European Commission database with information on cosmeticsubstances and ingredients, lists several types of sandalwood and theirderivates under their INCI names.o INCI name: Santalum album oil and wood oil, with masking and

perfuming propertieso INCI name: Santalum austrocaledonicum wood oil, with masking,

perfuming and flavouring properties. UN number: 1993, Class 3

Product specification

Quality The quality of sandalwood oil depends on the

level of santalol in the oil. Indian sandalwood

is of the highest quality. Several Pacificsandalwoods are similar in quality, especiallysandalwoods from Fiji (Santalum yasi) andNew Caledonia and Vanuatu (Santalumaustrocaledonicum). To compare:

In general, older sandalwood trees havemore heartwood and produce higher qualityoil, since santalol levels are higher. High-quality sandalwood oil comes from trees thatare at least 30 years old.

Sandalwood trees normally start producingheartwood at around 10-15 years. Growth ofheartwood depends on soil type, rainfall andlevel of sun exposure. Trees that grow inshallow soil or in soil with a high level ofstone inclusions, with a distinct annual dryperiod and exposure to full sun developheartwood more rapidly and could beharvested after at least 15-20 years. Fortrees that grow in deep, fertile soil, with highand evenly distributed rainfall throughout theyear and a shaded canopy, harvesting shouldbe delayed until the trees are at least 30-40years old.

To be of optimum quality, sandalwood oilmust be 100% natural (i.e., not denatured byaddition of any chemicals), 100% pure (i.e.,

not mixed with any other essential oils withsimilar characteristics) and 100% integral

Trade name Latin name Santalol content

Indiansandalwood

Santalum album -santalol: 41-55%

-santalol: 16-24%

Fiji sandalwood Santalum yasi -santalol: 37-

39%

-santalol: 26-

28%

New

Caledoniansandalwood

Santalum

austrocaledonicum

-santalol: 48-

49%-santalol: 20-

22%

Australiansandalwood

Santalumspicatum

-santalol: 15-25%

-santalol: 5-20%

Considerations for action: Work together with a local university

department to determine the santalol content

of your sandalwood oil. This should beincluded in your product documentation. Information on the chemical profile by

(accredited) laboratories of the oil isimportant to buyers and should be part ofyour Product Factsheet and specifications.

Check the quality standards that theInternational Organisation for Standardisationhas set for sandalwood oil.ISO 3518:2002was developed for Indian sandalwood oil(Santalum album. L.) and can be purchasedfor 40. For Australian sandalwood oil(Santalum spicatum), checkISO22769:2009,which can be purchased for 53. These are indications of the internationalstandard, but individual buyers may set theirown standard.

Before harvesting the trees, you need to testthe levels of heartwood and essential oils bytaking a core sample out of the trees.

Use the extraction method (temperature,pressure, time) consistent with buyers

preferences and specifications. Prevent dilution, adulteration and

contamination by foreign materials (e.g.
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(meaning that the totality of the moleculescontained in the distilled plant have beencollected during the distillation process).

Given its high price and low availability, thereis a high risk of adulteration. Buyers are verywary about buying sandalwood oil.

synthetic sandalwood or African sandalwood)to preserve you reputation. Importersregularly analyse products for adulteration.

Labelling

Facilitate the traceability of individual batches with markings and aregistration system.

Use the English language for labelling unless your buyer has indicatedotherwise.

Labels must include the following:o Product name/INCI nameo Batch codeo Place of origino Name and address of exportero Date of manufactureo Best before dateo Net weighto Recommended storage conditionso 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 oilormyrrh oilo Certificates of analysis, to support the claims of the specification, check

this example of acertificate of analysis of Australian sandalwood oilo Safety Data Sheet (SDS)o GMO certificate (if requested)o Certificate of origino Product information sheet

Sandalwood essential oil is classified as a flammable liquid; include therelevant 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.EUDirective 2001/59/ECelaborates on these and other risk and safety phrases.

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 theEuropean Federation ofEssential Oilson 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.

Legislative requirements

EU Cosmetics Regulation: The CosmeticsRegulation includes, amongst others,requirements (physic-chemical, microbiological &

toxicological) for substances/ingredients to beincluded in each Cosmetic Product Safety report

Considerations for action: Familiarise yourself with EU legislation on

Cosmetic ingredients and products.If youcan provide all the information needed in the

product information file, you can offer yourbuyer a better package. Also ask your buyer

Food grade containers

Hazard

label
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and Product Information File. Cosmeticsmanufacturers and ingredient producersincreasingly place the responsibility forcompliance on their suppliers.

Convention on International Trade inEndangered Species of Wild Fauna and Flora(CITES):CITES regulates the trade in (amongstothers) wild-collected endangered plants andgives a detailed list of species of which the tradeis prohibited, restricted or bound to certain rules.

Globally Harmonised System for theclassification, packaging and labelling ofchemicals: The EU sets requirements for the

packaging of chemical substances, as well as therequired symbols and phrases warning users andproviding safety advice that should be used onthe labels.

REACHmay be relevant in case of essential oils.The burden of proof rests with the EUmanufacturer/importer who wishes to use thisexemption.

CLP: The classification, labelling and packagingof substances and mixtures (EC 1271/2008) isbased on international legislation the GloballyHarmonised System (GHS)

Product Liability Directive: This directivestates that the EU importer is liable for theproducts put on the European market. Inprinciple the EU importer can, however, pass ona claim to the producer/exporter depending oncontracting arrangements.

Packaging and packaging waste: Amongother requirements, EU packaging legislationrestricts the use of certain heavy metals.

for advice on legislative requirements. Formore information on product safety reports,checkEU Regulation 1223/2009.

The sandalwood family (Santalaceae) is listedin Appendix I of CITES. This means that ifyou want to trade sandalwood genera or theirderivatives, you have to comply with theprovisions ofCITES.All trade in Sandalwoodand its derivatives needs to be authorisedthrough a licensing system.

Familiarise yourself with theEC Regulation1272/2008on the classification, packagingand labelling of chemicals. You can access

such information through theEuropeanchemical Substances Information System(ESIS).

Familiarise yourself withREACH regulation.The European Chemicals Agency (ECHA)offersguidance on exemptions.

Familiarise yourself with UN GHS and theEC1271/2008,which is aligned with thislegislation.

Be aware that EU importers can pass on aclaim fordefective productsto exporters.

Make sure you comply with theEU legislationon packaging.

Non-legislative requirements

Good Manufacturing Practices:GMP is notobligatory for producers of cosmeticsingredients, but compliance can provide acompetitive advantage on the European market.See the GMP Guide for cosmetic ingredients.

Quality safety management:ISO 9001:2008sets out the criteria for a quality managementsystem. The standard is based on several qualitymanagement principles including a strongcustomer focus, the motivation and support oftop management, the process approach andcontinuous improvement.

International Fragrance Association (IFRA):IFRA Standards form the basis for the globallyaccepted and recognised risk managementsystem for the safe use of fragrance ingredients

Considerations for action: The European Federation for CosmeticIngredients (EFfCI) provides aguidethat

defines specific GMP principles for cosmeticingredient manufacturers. Moreover, ISOGood Manufacturing Practices for Cosmetics(ISO 22716:2007)includes a chapter on howmanufacturers should deal with rawmaterials. Making it easier for your buyer tocomply will provide you with a competitiveadvantage.

Since sandalwood oil is used as a fragrance inthe cosmetic industry, check theIFRA Codeof Practiceon the associations riskmanagement system.
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and are part of theIFRA Code of Practice.

Regulation (EC) 834/2007 on organicagriculture:Standards for organic cosmeticsmentioned below require certain thresholds oforganically certified organic ingredients to beused in certified cosmetics products. Organicingredients need to comply with requirementsregarding the production and labelling fororganic products as established by the EU. Thisregulation legally only applies to food products,but standards for organic cosmetics are based onthis regulation.

Supplier Ethical Data Exchange (SEDEX):

SEDEX offers an online database that allowsmembers to share information on LabourStandards, Health & Safety, The Environmentand Business Ethics depending on the particularindustry and role in supply chain.

Cosmos and NATRUE standards: Thesestandards, and other standards of nationalcertification bodies, specify what cosmeticproducts need to comply with to be certifiednatural and organic. Although not directlyapplicable to ingredient producers, it is importantto be aware of these standards in terms ofpermitted processes and additives.

Documentation:Buyers need well -structuredproduct and company documentation. Buyersgenerally require detailed specificationssupported by certificates of analysis and SafetyData Sheets (SDS). Documentation shouldinclude information on fumigation.

Representative samples: Your samplingmethod should result in lot samples thatrepresent what you can deliver in terms ofquantities, quality and lead time as specified bythe buyer and in your technical data sheet.

Delivery terms: Pay attention to strictcompliance with delivery terms as agreed upon

with your buyer.

Website:European buyers look for crediblesuppliers. You can improve the perceivedcredibility of your company by developing yourwebsite accordingly.

If you choose to obtain a certificate fororganic production, find out more aboutOrganic production and labelling.Frenchbuyers prefer certificates issued byEcocert

Use SEDEX information to familiarise yourselfwith responsible business practices. Shareyour companys information on ethical andresponsible practices, such as self-assessments, audits and certificationsefficiently with your buyers on the onlinedatabase ofSEDEX.

Find out more information on the standardsofCosmosand NATRUE.

Prepare and publish a code of conduct thatdefines your social and environmentalresponsibility as an employer and supplier.

For your own internal purposes, it isadvisable to prepare a more detailed dossierwith all the technical data from both primaryand secondary research.

Preparing a Safety Data Sheet (SDS) canpose technical challenges, especially for newingredients. Consider seeking qualifiedadvice. Check websites of Europeancompanies for examples of an SDS, e.g.TheSoap KitchenorEramex.

Buyers will appreciate a commerciallyoriented Product Data Sheet with photos,information on origin and bibliographicreferences, where available.

Familiarise yourself withinternationaldelivery terms

Ensure that your customers receive a copy ofyour terms and conditions of sale beforeagreeing the sales contract. See the websitesofEarthoil,AzelisandSeatonsfor examplesof terms and conditions.

TheSynthitewebsite provides a goodexample of a website that enhances thecredibility of a company. This website has aprofessional image with clear and relevantinformation on the company and its productrange.
http://www.cbi.eu/http://www.cbi.eu/http://www.cbi.eu/mailto:[email protected]:[email protected]:[email protected]://www.cbi.eu/disclaimerhttp://www.cbi.eu/disclaimerhttp://www.ifraorg.org/view_document.aspx?docId=22083http://www.cbi.eu/marketinfo/cbi/docs/eu_legislation_organic_production_and_labellinghttp://www.cbi.eu/marketinfo/cbi/docs/eu_legislation_organic_production_and_labellinghttp://www.ecocert.com/http://www.ecocert.com/http://www.ecocert.com/http://www.sedexglobal.com/http://www.sedexglobal.com/http://www.sedexglobal.com/http://www.cosmos-standard.org/http://www.cosmos-standard.org/http://www.cosmos-standard.org/http://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.eramex.de/index.php?id=145&L=2http://www.eramex.de/index.php?id=145&L=2http://www.eramex.de/index.php?id=145&L=2http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.earthoil.com/Terms-And-Conditions-of-Sale-3525http://www.earthoil.com/Terms-And-Conditions-of-Sale-3525http://www.earthoil.com/Terms-And-Conditions-of-Sale-3525http://azelis.propserver5.com/terms.phphttp://azelis.propserver5.com/terms.phphttp://azelis.propserver5.com/terms.phphttp://www.seatons-uk.co.uk/home.aspx?s=62&r=111&p=305http://www.seatons-uk.co.uk/home.aspx?s=62&r=111&p=305http://www.seatons-uk.co.uk/home.aspx?s=62&r=111&p=305http://synthite.com/http://synthite.com/http://synthite.com/http://synthite.com/http://www.seatons-uk.co.uk/home.aspx?s=62&r=111&p=305http://azelis.propserver5.com/terms.phphttp://www.earthoil.com/Terms-And-Conditions-of-Sale-3525http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/http://www.eramex.de/index.php?id=145&L=2http://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.thesoapkitchen.co.uk/msds_and_safety_information.htmhttp://www.cosmos-standard.org/http://www.sedexglobal.com/http://www.ecocert.com/http://www.cbi.eu/marketinfo/cbi/docs/eu_legislation_organic_production_and_labellinghttp://www.ifraorg.org/view_document.aspx?docId=22083http://www.cbi.eu/disclaimermailto:[email protected]://www.cbi.eu/


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Trade and Macro-Economic Statistics

(!) No specific trade statistics are available for sandalwood oil. They are includedin the trade data on essential oils, non-deterpenated, other than those of citrusfruit, mint, niaouli and ylang-ylang.

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

Supply levels of Australian and Indiansandalwood Traditionally, most sandalwood and

sandalwood essential oil comes from Indiaand Australia. India is reported to producearound 95% of Indian sandalwood.

World market demand for the differentsandalwood species and their derivatives isestimated at 4,000-7,000 tonnes per year.However, since official data on sandalwoodproduction does not take illegal harvestinginto account, actual demand and productionmay be much higher.

Official harvest figures for Indian sandalwoodin India are around 400-1,000 tonnes peryear. These numbers are based on auctionsof sandalwood, where supply is controlled bythe government. Unofficial harvesting, wheresandalwood products are smuggled to othercountries, possibly adds another 3,000-4,000tonnes per year to the total production.

Indonesia used to be another major source ofwild Indian sandalwood, but currentlysupplies are non-existent. Interest incultivating the trees is low. Indonesia is notexpected to provide significant volumes ofsandalwood over the coming 20 years.

Wild-harvested Pacific sandalwoods areapproaching exhaustion. However, severalsandalwood plantations have beenestablished. The heartwood from thesespecies is mainly exported to Asia.

Australia produces around 2,000 tonnes ofAustralian sandalwood per year. Of this,around 500 tonnes are destined for essentialoil production, producing around 10 tonnes of

oil. Australian sandalwood is both cultivatedand wild-harvested.

Future production of Indian sandalwood inAustralia may affect global supply. The firstharvests from Australia are expected in2013-2014. The aim is to produce 60% of theglobal supplies of Indian sandalwood by2029. However, it is not expected that thesesupplies will saturate the market. There aresome recent plantations in China; much ofthis production may be for domesticconsumption.

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

In Europe, the UK and France are estimatedto be the largest importers of sandalwoodand its derivatives. France is the largestimporter in terms of sandalwood essential oil.

Considerations for action:

If you are based outside the traditionalsupplying countries, emphasise that you offeran alternative source to sandalwood oil inyour promotional material.

Keep a close watch on the future productionof sandalwood in Indonesia and other PacificIslands. You may request such informationfrom your buyers. These countries canbecome competitors if they start to cultivatesandalwood.

If you produce Indian sandalwood, monitorproduction levels in Australia. Check thewebsite of the main producer of Indiansandalwood in Australia,TFS.

Focus your exports on the cosmetic industryin the UK and France.

Please refer toCBI Tradewatch for natural
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In Western markets, demand for sandalwoodoil with its rich woody fragrance is mostly foruse as an ingredient in perfume (especiallymens fragrance), aromatherapy and fragrantbody care products.

ingredients for cosmeticsfor more tradestatistics.

Market trends

Natural ingredients: in Europe, there isincreasing consumer interest for naturalingredients in cosmetics, and the globalnatural cosmetics sector is estimated to growannually by 5-9%. However, sufficient

supplies at a commercially viable price needto be guaranteed.

Synthetic ingredients: the development ofsynthetic alternatives, which have improvedperformance and lowered costs, has putpressure on natural sandalwood oil. Whilesynthetic sandalwood notes are widely usedin the global fragrance industry this ispredominantly in lower cost products such assoaps and household items where cheapsynthetics are favoured. Higher quality prod-ucts sometimes use synthetic sandalwoodnotes to complement natural sandalwood oil.However, natural oil is known to have fixativeproperties (helping a fragrance to last

longer), a complex aroma profile, andtherapeutic and psychological properties.

Exotic ingredients: the ongoing consumerinterest in speciality exotic ingredients formsan opportunity for sandalwood oil. It has

exotic,mystical or luxury connotations. Ethical products: a growing interest in

ethically sourced and sustainable productsprovides an opportunity for fair trade andorganically certified sandalwood oil.Especially for sandalwood, with its dwindlingsupplies and high degree of illegal harvestingin India, sustainability and traceability aremajor issues. In addition, consumers areinterested in the story behind ethical

certification. In their marketing, cosmeticsproducers actively communicate the beststories for their ingredients to improve theconnection with the consumer.Communication takes place using images,with short stories on the product, or usingthe producers corporate image.

Considerations for action: Emphasise the potential of the use of

sandalwood oil in natural cosmetics in yourpromotional material. Determine whether youcan deliver sufficient supplies of the oil.

In your promotional material, focus on theexotic connotation that consumers have ofsandalwood oil.

Check your opportunities for obtainingcertification for ethical sourcing. Please referto the section on market segments for moreinformation.

In addition to certification, focus on the storybehind your sandalwood oil in yourpromotional material. It is an advantage tohelp cosmetics producers communicate thesestories, for example by providing pictures.

If your sandalwood oil is producedsustainably, include this fact in yourpromotional material.

Please refer toCBI Trendmappingfor moremarket trends.
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Market Channels and Segments

Market channels

Figure 1: Major market channels for sandalwood oil

Please refer toCBI Market channels and Segmentsfor more information

Export of processed oils and timber Sandalwood for the use of cosmetics is

generally exported in the form of oil. Thegovernment in India has banned the exportof sandalwood in the form of timber toincrease the production of the essential oil.

Sandalwood oil can be processed further, forexample by refining the oil in the country oforigin, so cosmetics manufacturers can use itdirectly. The oil is not processed further untilit is prepared for use in fragrances by the enduser.

Considerations for action: Benefit from the experience and knowledge

of specialised European importers and agentsinstead of approaching end users directly.Especially for exporting specialised products,traders are the most suitable distributionchannels.

Before setting up installations to refinesandalwood oil, for example for decolouring,make sure that you can meet therequirements of your buyer in terms ofquality, composition, quantity and cost of theoil.

Market segments

Table 1: Major cosmetic segments and applications for sandalwood oil

Segment Sub-segment Benefits of applying sandalwood oil

Fragrances Perfume Fixative (when used in smallamounts)

FragranceSkin care Facial skin care, body care,

moisturiser, anti-aging

Skin conditioning properties Use on dry, cracked and chapped

skin

Hair care Shampoo, conditioner FragranceToiletries 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 specificscent and is often used as a base note. Inthis segment, consumers tend to be morewilling to pay a higher price. Therefore, the

high price of sandalwood oil is less of anissue. When the oil is used as a fixative in

Considerations for action: Emphasise the potential of the use

sandalwood oil in perfumery. For perfumes,focus on the specific scent and fixativeproperties of sandalwood oil.

Domesticprocessors

Europeanprocessor

EU ingredientdistributors

Traders(importers,

agents, brokers)

Collectors andfarmers

Cosmetic producers

Developing country European market Segments
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perfumes, it is used in smaller proportions. Indian sandalwood oil and wood powder have

some skin conditioning properties. It isimportant to note that applications in thissegment are fairly insignificant due to thehigh price of the oil.

For toiletries that have a delicate scent, smallproportions of sandalwood oil can be used asfixatives. It is assumed that small amounts ofthe lower-priced natural or syntheticsandalwood oils are used in this segment.These sandalwood oils are also used as afragrance in toiletries and hair care products.

There is a market for fairly tradedsandalwood oil. In terms of marketing, these

oils do not necessarily need to be certified.Consumers and cosmetics producers areincreasingly interested in the story behindethically sourced and processed finalproducts. Whether fair trade certification isnecessary depends on your buyerspreferences. Even if certification is lessrelevant for a marketing aspect, it can be anassurance of legal harvesting or ethicalsourcing for buyers. Be aware that fair tradecertification is only available for cultivatedproducts, not for wild-harvested sandalwood.

There is a market for organically certifiedsandalwood oil. However, this dependsheavily on your prospective buyer. Pleasenote that sandalwood oil from India cannotbe certified organic, the production sites aretoo diverse to be certified. It is possible inother countries, however, where monitoringof the production sites is more feasible orwhere sandalwood is cultivated.

It is important to focus on the story behindethical certification. In your promotional

material, emphasise the social benefits tolocal communities of your production. If you want to obtain Fairtrade certification,

check the requirements of theFairtradestandard.Always discuss these opportunitieswith your buyers.

Discuss the opportunities for organicallycertified sandalwood oil with your buyers.

Prices

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. Indian sandalwood is valuedat the high end of the price range ($ 2,300-2,400 per kg), with Fiji sandalwood and New

Caledonian sandalwood in the middle (around$ 1,200-1,500 per kg), and Australiansandalwood towards the lower end (over$ 1,000 per kg).

The price of Indian sandalwood oil hasincreased almost tenfold over the last 10years. This rise is due to both a lack insupplies and an increase of demand, both inIndia and across the world.

Research has indicated that the essential oilyield of Indian sandalwood from Australia ismuch lower than the essential oil yield ofwild-grown sandalwood in India. This isprobably related to the growing pace of thetrees. Faster growing trees produce more

sapwood while slow-growing trees producemore heartwood. As a result, oil yield fromfast growing trees is estimated to be lower.

Considerations for action: Monitor harvests in major production

countries to anticipate price developments foryour specific sandalwood oil. You mayrequest such information from importers.

Ensure that your prices reflect the quality ofyour product. Different santalol levels in the

oil result in different quality and you shouldadjust your price accordingly.
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The roots and lower trunk of the sandalwoodtree yield up to 10% more essential oil. Inthese parts of the tree, the proportion ofheartwood is higher than in other parts(upper trunk and branches).

The host trees used in sandalwood cultivationaffect the heartwood growth andconsequently the yield of the essential oil. InChina, fragrant rosewood (Dalbergiaodorifera) has been identified as a good host,whereas pigeon pea (Cajanus cajan) is agood host that grows on the Indiansubcontinent.

The following price breakdown shows whichcosts and margins are applied to sandalwood

oil before it reaches the end user.

Optimise the yield of sandalwood cultivationand distillation to lower your cost price. Usehost trees that increase the growth ofheartwood. For distillation, use the roots andlower trunk of the tree to increase the yieldof essential oil.

Figure 2: Price breakdown for sandalwood oil, mark-ups in %

Source: ProFound, 2013

If agents are involved, they typically receivea commission of a few (2-5) percent.However, their actual profit margin stronglydepends on volumes sold and gross margin.They will normally lower their gross marginfor big volumes.

Importers add a margin of up to 25-100% tothe product depending on the activitiesundertaken, such as testing and stocking.

Considerations for action: Agents are particularly interesting if you do

not have a strong sales network. However,once you have established a traderelationship through an agent, you cannotestablish a direct relationship with the buyeranymore. The sales network of the agent isprotected by law.

You can add value by improving the quality ofyour production. Harvest the trees when theyhave matured and have a high content ofsantalol.

Market competitiveness

Challenges in obtaining raw material Access to sufficient raw material for the

commercial production of sandalwood oil isthe main entry barrier to the market. This isa long-term investment. Sandalwood istraditionally wild-harvested. Overharvesting,deforestation and spike disease haveconsiderably decreased supplies of wildsandalwood in countries such as India andIndonesia.

Several countries have put restrictions on theharvesting of sandalwood trees to protect the

trees from extinction. For example, in India

only the government is allowed to own andharvest sandalwood trees and a license isrequired to produce sandalwood oil. Recently

Considerations for action: Investigate your potential to obtain the raw

material for sandalwood oil, either throughwild harvesting or cultivation.

For wild harvesting, use sustainablepractices. You can look into the possibilitiesof theFairWildcertification scheme.

Determine under which conditions you areallowed to harvest sandalwood and produce

the essential oil in your country.

Be aware that there is a risk of poaching inIndia. Some plantations need 24/7 security toprevent this.

+1% +5% +30%

Export Air cargo Import Sales
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the country has allowed trees grown onprivate property to be harvested and sold togovernment agencies. Australia hasdeveloped legislation specifying the size atwhich Australian sandalwood may beharvested.

Cultivation of sandalwood trees iscomplicated and requires long-terminvestments. The slow-growing trees needproper management during growth, adequatedrainage, and host trees to survive.Nevertheless, the number of plantations ofboth Indian and Australian sandalwood isgrowing steadily in Australia. Other countries,including China, have also begun cultivation.

Research has suggested, however, thatChinese cultivated sandalwood trees containlow levels of santalol.

The first commercial harvest of Indiansandalwood from Australia is expected in2013-2014. If this production is successful,Australia will become a considerablecompetitor over the coming years. On theother hand, the extensive research onsandalwood cultivation is helpful forproducers in DCs as well.

Sandalwood oil faces competition fromcheaper synthetic sandalwood oil, whichavoids the environmental issues associatedwith the harvesting of natural resources. It ispredominately used in low-budget soaps andperfumes.

As production of sandalwood oil requireslimited know-how, technological barriers toenter the markets for sandalwood oil arerelatively low. However, steam distillationrequires significant investments.

Producers of sandalwood can benefit from thehost trees that are used until sandalwoodtrees are ready for harvesting. Some sourceshave identified citrus fruit trees or pigeonpeas as good hosts, stating that the fruits orpeas of these trees can be sold. However, itis difficult to verify this. Other trees such asfragrant rosewood or Acacia species can be

sold for timber. Sandalwood seeds provide an additional

financial benefit for the growers until thetrees are ready for harvesting. Oil isextracted from the seeds with solvents, whichrequires significant investments. Australiansandalwood seed oil contains high levels ofoleic acid (omega-9; emollient andemulsifying properties) and xymenynic acid.Indian sandalwood seed oil containsarachidonic acids (omega-6) and oleic acids(omega-9). Both types of seed oils haveemollient and skin conditioning properties.The seed oils and their compounds havepotential for use in the cosmetic industry.

Trees start producing seeds when they are 4-5 years old.

Besides providing essential oil, sandalwood

As a result of the restrictions of the Indiangovernment and poaching, India is not agood country for new entrants in the market.New producers of sandalwood have betteropportunities outside India.

Stay up to date with developments incultivation practices in countries such asChina and Australia. TheAustralianSandalwood Networkprovides information onAustralian sandalwood plantations.

In your promotional material, make sure todifferentiate your natural sandalwood oil fromcompeting synthetics. For instance, focus onorigin and ethical and sustainable sourcing ofthe product. Direct your sales at producers ofhigh-end cosmetics.

Producers of sandalwood oil can cooperate toshare the investment in distillationequipment. Additionally, when you mastersteam distillation of one essential oil, thesame machinery can be used to distil otherplants for essential oils.

In terms of host trees, it is important to planta variety of trees, which benefits the growthof sandalwood. Preferably choose trees thatare native to the region and produce fruits ornuts of commercial value.

Not only the heartwood of sandalwood and itsessential oil are valuable; other parts of thetree can be sold as well.

Cosinglists the skin conditioning propertiesof seed oil from Indian sandalwood, but otherseed oils are not listed. Be aware that seedoils from other species will need significantinvestments in additional testing before theycan be used in cosmetic products. Keep up todate with the research on these oils; you canalso checkCosmetics Design Europe.

Investigate your potential to producesandalwood seed oil. Please note that solventextraction is more complex than steam

distillation and requires additionalinvestments. As sandalwood seed oil is a newproduct, you might need to educate your
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trees can be used for other products as well.Examples are timber, tannin from the barkand heartwood powder for incense.

buyers in its uses. Please refer toCBI Market Competitiveness

for more information.

Useful sources

Trade fairs

Visiting and especially participating in trade fairs is highly recommended as oneof the most efficient methods for testing market receptivity, obtaining marketinformation and finding prospective business partners. The most relevant tradefairs in Europe for exporters of sandalwood oil are: In-Cosmetics (http://www.in-cosmetics.com/)in Paris, France Beyond Beauty (http://www.beyondbeautyparis.com)in Paris, France SANA (http://www.sana.it/en)in Bologna, Italy Vivaness (http://www.biofach.de)in Nuremberg, Germany (for organic

producers)

This survey was compiled for CBI by ProFound Advisers InDevelopment in collaboration with Sector Expert Andrew Jones

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