Beyond regulatory hurdles and certain misconceptions, kava is having another moment in the sun
\nIn particular, ASX-listed kava product producer The Calmer Co. is starting to see the fruits of its labour
\nGlobal demand for healthier alternatives to alcohol, and various competitive advantages are playing a part<\/p>\n
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In an increasingly anxious world, plant-based recreational beverage kava appears to be growing in popularity. ASX-listed The Calmer Co. believes the time has never been more right for the drink to become a global phenomenon. <\/strong><\/p>\n \u201cRecreational beverage\u201d\u2026 \u201calcohol replacement\u201d\u2026 \u201cmood enhancer\u201d \u2013 more and more, these terms are being marketed to describe kava to the health-conscious among us. Which is just about everyone these days, it seems. Even the odd Stockhead<\/em> journo.<\/p>\n The drink, produced from the ground roots of the plant Piper methysticum, specifically found in islands across the South Pacific, has for generations \u2013 thousands of years actually \u2013 been used socially, and for ceremonial cultural purposes in that beautiful part of the world.<\/p>\n It\u2019s only in more recent times that global markets \u2013 particular the US, but also here in Australia \u2013 have begun to take a greater interest in the drink\u2019s reported benefits, with enterprises such as ASX-listed The Calmer Co. marketing kava-based products as solutions to \u201ccalm nerves, support mind and muscle relaxation and induce sleep\u201d.<\/p>\n In the US, meanwhile, kava bars have been spreading across the country as regulations surrounding the beverage relax in most states, and as younger demographics are shown to be consuming less alcohol \u2013 with some reports suggesting there are more than 500 kava-specific watering holes America-wide and growing.<\/p>\n In Australia, kava\u2019s recent resurgence has come on the back of a long, and complex history \u2013 as Stockhead<\/em> detailed in an August 2023 article<\/a> \u2013 that ultimately saw the government lift an import ban in early 2022.<\/p>\n That was originally in place over concerns that overuse of kava was having detrimental social and health effects in some indigenous communities.<\/p>\n To get more of a handle on the growing kava market, the buzz and misconceptions surrounding the drink and more, Stockhead<\/em> caught up again with Anthony Noble, CEO of an Aussie firm with Fijian origins, The Calmer Co. \u2013 formerly known as Fiji Kava.<\/p>\n \u00a0<\/p>\n The Calmer Co. has seen strong sales growth for its powdered kava drinks over the past several months, says Noble, through a hard-working ecommerce\/online sales model, fervent marketing, as well as turning over increasingly good numbers through its placements in Coles supermarkets Australia-wide.<\/p>\n To quantify some of that, the company\u2019s most recent three-month quarterly report<\/a> to December 31 suggests \u201ccontinued strong sales performance with revenues of $918k in the quarter (+106% vs PCP and +59% vs Q1FY24)\u201d.<\/p>\n Ecommerce Sales grew by 83% quarter on quarter, meanwhile, to a record $658k (vs $359k in Q4Y23) \u2013 \u201cdriven by strong growth in the Australian market\u201d.<\/p>\n The big evolution for Calmer over the past year, notes Noble, is that it\u2019s \u201ctaken the business from being focused on capsules and nutraceuticals sold through pharmacies and supermarkets to one that produces and sells functional beverages.<\/p>\n Those, explains Noble, are simply \u201cdrinks that do something for you\u201d.<\/p>\n \u201cAnd in the sense of our business, it helps people to sleep and unwind and relax. It can be considered really an alcohol replacement.\u201d<\/p>\n \u00a0<\/p>\n \u201cAlcohol replacement\u201d \u2013 does this mean, then that you can get a bit of a buzz from the products The Calmer Co. sells at Coles?<\/p>\n Without saying that specifically, Noble notes:<\/p>\n \u201cKava, in general, has a really beautiful calming effect. It makes your mouth go numb and tingly when you drink it, and you do feel a little bit of a buzz. And then that relaxed effect, that\u2019s similar to Xanax.<\/p>\n \u201cIt interacts with one of the cannabis receptors in the brain \u2013 a weak interactor with CB1 \u2013 so there\u2019s a very slight similarity to cannabis, but nowhere near as intoxicating, and has the benefit of reducing anxiety.\u201d<\/p>\n And presumably resulting in a distinct lack of need to consume eight pizzas with a side of Cheetos while attempting to make some sort of sense of David Lynch\u2019s Eraserhead<\/em>.<\/p>\n \u00a0<\/p>\n We\u2019ve touched on some of kava\u2019s purported health benefits, but we also asked Noble about some of the more negative perceptions kava\u2019s faced. And are some or all of these, in fact, misconceptions?<\/p>\n \u201cKava can<\/em> make you feel intoxicated if taken liberally. But if you drink too much, you just feel sleepy. You don\u2019t get wobbly like being drunk,\u201d said Noble.<\/p>\n \u201cBut there are a few major misconceptions around kava worth noting\u201d he adds.<\/p>\n \u201cThere was a lot of negative publicity surrounding the drink regarding its use in indigenous communities in Australia in the early 2010s when John Howard\u2019s government placed a ban on kava.<\/p>\n \u201cThere\u2019s a lot of misinformation about the misuse of kava in some communities. The reports that came out at the time were actually about people who where mixing kava with methylated spirits to create some sort of super cocktail.<\/p>\n \u201cIt was the methylated spirits that was actually hurting them.\u201d<\/p>\n \u201cKava was actually originally introduced into indigenous communities as a way to help create a shift away from alcohol. When prepared and consumed traditionally, as it is in the Pacific, it has none of the negative effects of alcohol.\u201d<\/p>\n Noble also believes Calmer\u2019s partnership with Coles helps to break down any lingering negativity surrounding indigenous Australian connections with kava, in part due to \u201cColes being the largest employer of indigenous people in Australia.<\/p>\n \u201cTo get on the shelves at Coles, we had to go through all sorts of legal and regulatory doors, but we also had to get clearance through Coles\u2019 Indigenous Affairs Committee.\u201d<\/p>\n And then, the other main misconception about kava, says Noble, is that it\u2019s \u201csomething that could be potentially dangerous to consume\u201d.<\/p>\n He refers specifically to reports in the early 2000s in Germany about a supposed connection to liver damage \u2013 the details around which have since been debunked, he says, clarifying:<\/p>\n \u201cIn fact, the World Health Organisation has since released a \u2018codex\u2019 confirming that kava is completely safe.<\/p>\n \u201cBut that preconception about kava and liver damage persists all over the internet. It\u2019s a lot of effort and we\u2019re working really hard to educate people that it\u2019s simply not true. It did hit the industry really hard.\u201d<\/p>\n \u00a0<\/p>\n Persistent misconceptions aside, then, why is now<\/em> the time for a kava boom?<\/p>\n The cumulative effect of shifting consumer trends towards healthier lifestyles, that\u2019s been happening for many years now, is a primary reason, says Noble.<\/p>\n And, in particular, he mentions the shift to lower consumption of alcohol that\u2019s reportedly prevalent in younger generations coming through.<\/p>\n \u201cStudies have shown that around about a third of people under 30, are just not drinkers. That used to be more like about 2 to 5%. There\u2019s been this huge growth in younger people shifting away from consuming alcohol.<\/p>\n \u201cIt\u2019s a massive demographic shift, and that\u2019s backed up by all the low\/no-alcohol product category growth.\u201d<\/p>\n And on the health shift, \u201csleep and stress are two of the top categories of health focus at the moment,\u201d adds The Calmer Co. boss.<\/p>\n \u201cI think the pandemic has also played a role. It did make more people begin to think about taking better care of themselves and dealing better with stress.\u201d<\/p>\n \u00a0<\/p>\n There are still significant regulatory barriers that companies such as Calmer face around the world for promoting and selling kava as a drink. It\u2019s still prohibited for sale across Europe, for instance, although Noble says he\u2019s hearing some rumours that could change in the UK before too long.<\/p>\n The US, he says, provides a huge opportunity, however, and that\u2019s partly because it\u2019s less tightly regulated than, for instance, here in Australia and the Pacific.<\/p>\n \u201cOver there, we can introduce things like different flavoured kava drinks. It\u2019s definitely the no. 1 market for kava at present. The trend towards it there is massive with kava bars all through Florida, Georgia, New York and up and down the west coast.\u201d<\/p>\n The company is also dipping a toe cautiously into China, which could be another potentially huge market opportunity, once Australian and US opportunities are fully developed, says Noble.<\/p>\n \u00a0<\/p>\n One of the biggest competitive advantages that Calmer has, says Noble, is its supply chain in Fiji.<\/p>\n \u201cThe industry is very fragmented and populated by middlemen. But we have a completely transparent supply chain, buying directly from farmers. We\u2019re the only kava company that does that.<\/p>\n \u201cWe process fresh, green kava within 24 to 48 hours of harvest within our facility in Fiji. We pay the highest price in the market as a result of that \u2013 so we have a price advantage by buying direct, but we also pay the most money back to the farmers.\u201d<\/p>\n It\u2019s a digitised supply chain, says Noble, that also enables the company to qualify and quantify its provenance.<\/p>\n \u201cAnd having a stamp of approval from the Indigenous Trust Fund board, which is the land-owning trust in Fiji \u2013 that\u2019s been really important for building a good relationship with the farmers,\u201d he adds.<\/p>\n \u201cWe\u2019re the only foreign company with a licence to operate in the industry in Fiji, because that\u2019s where we started our business.\u201d<\/p>\n \u00a0<\/p>\n The rapid approach of the company\u2019s break-even point after a difficult start and lengthy turnaround for the industry as a whole, says Noble, and then progression into a stronger position through the establishment and evolution of recent partnerships.<\/p>\n Much of Calmer\u2019s recent growth as a company has come in the form of multiple recently formed strategic deals, including launching into China via a \u201cTmall Global Flagship store\u201d, which is a \u201ccross-border\u201d ecommerce enterprise connected to retail behemoth Alibaba.<\/p>\n The company also has a b2b relationship with IMCD Network Nutrition, which manages all the company\u2019s b2b selling into pharmaceutical grade kava customers globally.<\/p>\n And a global distribution deal with Leilo \u2013 a sparkling kava drink in the US \u2013 is another important focus, in which Calmer distributes the product globally, starting with a launch in Fiji.<\/p>\n There are more, including a large Pacific distribution operation with CJ Patel and an ongoing and evolving sponsorship of Fiji Rugby.<\/p>\n Generally speaking, though, Noble is looking forward to what he believes will be \u201can explosive 12 months\u201d for The Calmer Co. and kava more generally.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n <\/span><\/p>\n The post Why the buzz for kava is growing, and how The Calmer Co. is capitalising<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"\u2018Functional beverages\u2019 \u2013 Calmer\u2019s evolution<\/strong><\/h2>\n
There\u2019s a buzz about kava \u2013 does it also give one?<\/strong><\/h2>\n
Negative perceptions and misconceptions<\/strong><\/h2>\n
Global demand \u2013 why kava could boom<\/strong><\/h2>\n
Regulatory barriers? Other markets? <\/strong><\/h2>\n
Supply chain advantage<\/strong><\/h2>\n
What next for The Calmer Co.? <\/strong><\/h2>\n