The Calmer Co rides wave of rising kava demand as younger generations ditch alcohol

The Calmer Co says kava has become a popular drink with younger generations ditiching alcohol
Company has just launched its kava shots in more than 500 Coles supermarkets nationally
The Calmer Co’s ecommerce business in Australia grows by more than 10 times over past 12 months

The Calmer Co International (ASX:CCO) is looking to capitalise on a huge trend of people under the age of 30 not drinking alcohol linked to a boom in health and wellness with its range of popular kava beverages.

Millennials and Gen Z are driving mindful drinking and what has become as the ‘NoLo’ movement (no and low alcohol), increasing demand for alternatives to alcoholic beverages, according to various studies.

The emergence of new sobriety-themed months like Febfast, Dry July, and Ocsober along with the ‘NoLo’ movement is transforming the beverage industry.

CCO CEO Dr Anthony Noble says there is a megatrend of people turning away from alcohol towards what is known as “lifestyles of health and sustainability”.

“You will find a whole bunch of stats in the US, England and Australia about young people not drinking alcohol,” he says.

“It’s around 30 to 40% of people under the age of 30 who don’t want to drink alcohol.”

According to the drinks analytics and research group IWSR, no-alcohol volumes grew 9% in 2022, increasing their share of the overall no/low-alcohol space in the world’s 10 leading no/low markets to 70%, up from 65% in 2018.

Growth in the no/low-alcohol sector is projected to exceed that of the previous four years, with a forecasted volume CAGR of +7% from 2022 to 2026, compared to +5% from 2018 to 2022.

IWSR says no-alcohol beverages are expected to drive growth, constituting over 90% of the predicted total category volume increase.

Millennials are the largest consumers of no/low alcohol beverages in the US and Australia, accounting for 43% and 36% respectively.

According to IWSR, Millennials are also more likely than other age groups to be “Blenders”, switching between alcohol and no/low on the same occasion.

Kava drinks – a popular alcohol alternative

As younger people ditch alcohol in favour of healthier alternatives Noble says it is well positioned with its line of kava beverages to tap into the lucrative market.

“If you look at the US then kava is really trendy and hot,” he says.

“There’s a massive wave of non-alcoholic bars popping up in the US and kava is a key ingredient in what people are drinking in those bars.”

Leveraging its direct-to-farmer supply chain, proprietary water extraction technology and processing facility in Navua, Fiji, CCO can extract cold-pressed kava and bottle it.

Founded by Fijian local and executive director Zane Yoshida, CCO – formerly Fiji Kava (ASX:FIJ) – is the only foreign business in Fiji, licensed to produce and export kava to international markets.

“That is where our commercial success has come from and we’ve tapped into this ‘switch alcohol for kava’ market through our digital marketing, both at home and in the US,” Noble says.

“We buy directly from farmers and work with the iTaukei Trust Fund.”

The fund was established by the Fiji Government to foster advancement of Indigenous Fijians and Rotumans by promoting initiatives that will better their standard of living, while enhancing cultural traditions and values.

“That direct link to the farmer is really unique and what sets us apart and is very important to our founder in terms of the fair trade philosophy of the business.”

Promoting health benefits of Kava

For generations, kava has been integral to Pacific Island cultures, serving as a ceremonial drink.

CCO has a focus on kava to enhance relaxation, support mental and physical tranquillity, and enhance sleep quality.

“Kava has a relaxation and anti-anxiety effect so is an alternative to alcohol,” Noble says.

However, Australia has a complex relationship with kava, which is the root of a plant called piper methysticum.

In 2007, authorities proposed a ban due to concerns about its misuse in indigenous communities. In December 2021, Australia lifted the import ban as part of efforts to strengthen ties with Pacific Island nations.

The decision legalised the import and sale of kava across the country, except for in the Northern Territory, where it remains banned.

“It was always legal for individuals to bring kava into Australia to drink it as a culturally important drink, but it wasn’t legal to commercially sell kava,” Noble says.

“We were the first company to get a licence and started to import kava in January 2022.

“It regulated as a food and can be freely sold online or in retail.”

Kava shots in Coles

Last week CCO launched its kava shots in more than 500 Coles supermarkets nationally, marking the company’s entry into the ready to drink beverage market which will be an increasing focus over future years.

“We don’t call it juice, even though it’s effectively a juice, but we refer to the product as cold-pressed kava shot mostly because it comes from the roots of the plant, not a fruit or vegetable,” Noble says.

“The bioactive molecules in kava, kavalactones, come from the roots of the plant.

“We estimate the cold-pressed kava shot is about five times more potent than the drink made from kava powder being mixed with water and it’s got a beautiful, distinct flavour which comes from the pepper family, so like your black pepper.”

Noble says like that of Sichuan peppercorns – often used in Chinese – cuisine kava can produce a phenomenon called paraesthesia, in which the mouth can feel numb.

“You can get that tingling, numbing feeling in the mouth and the taste is a little like green peppercorns, a bit gingery and very earthy,” he says.

“Our kava shot tastes really different to what you’d have with a powder and is much more vibrant as we capture all the volatile flavour compounds through our process.”

Noble says that’s not to say kava-pressed powder doesn’t have its place in the CCO product line-up.

The company’s 150g pouches of instant drinking kava have also just been introduced to Coles shelves in more than 300 stores nationally.

CCO’s 50g Instant Kava has been nationally distributed in Coles since 2022.

“Coles has been a really good partner for us,” Noble says.

He says 150g pouches are their best-selling product including on Amazon in the US and have also been ranged in Coles alongside the kava shots this month.

“We sell more than $100,000 of that single product through Amazon in the US, monthly,” Noble says.

He’s confident the new kava shots will be a popular product line in Coles.

“It’s super easy and you can drink a shot straight from the bottle or add it to fruit juice or a coffee,” he says.

‘Rapidly approaching profitability’

CCO also see further opportunity in CBD (hemp), ginger, curcumin, magnesium and more.

Noble says the company has more than 30 staff globally with 20 based in its facility Fiji.

“The main growth for us has been in e-commerce and we’re now selling more than $10,000 per day online, between fijikava.com, Amazon and our recent listing on Walmart.com” he says.

“Our ecommerce business has grown by more than 10 times over the past 12 months, so our business has a $5 million run rate annually now, which is more than 3x growth over last financial year.

“We’re rapidly approaching profitability.”