The market potential for kava could be large as more people suffer from anxiety. Picture Getty
Once banned in Australia, kava’s demand could go global according to ASX-listed The Calmer Co
Health & Biotech
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- Kava’s import ban was lifted in early 2022
- The market potential could be large as more people suffer from anxiety
- We speak to The Calmer Co’s CEO, Anthony Noble
For generations, kava has been used as a drink for ceremonies and cultural practices by people in the Pacific Islands. More recently, it has become more widely consumed as a recreational beverage.
Australia meanwhile has had a long and complex history with kava.
In 2007, Australian authorities proposed a total ban on kava “in response to concerns that the abuse of kava was contributing to negative health and social outcomes in some indigenous communities.”
This came as scientists found that when consumed with alcohol or some other medications, kava can cause serious side effects like liver damage.
In January 2022 however, the import ban was officially lifted, as the government sought to forge closer relationships with Pacific Island countries – making it legal for kava to be imported and sold in the country (although still illegal in the NT).
Soon after the announcement, online sales surged which led to the resurgence of companies like the The Calmer Co (ASX:CCO).
Formerly called Fiji Kava (ASX:FIJ), Calmer Co is one of the first foreign companies to be granted approval from the Fijian government to operate in the kava industry.
CEO Anthony Noble explained that although a lot of countries in the world still have a ban on kava, we’re seeing more liberalisation of the product.
“I think there’s a trend that hopefully will see other countries, like Australia has done, legalise drinking kava again,” Noble told Stockhead.
“Hypothetically, if we saw liberalisation of kava regulations in countries like Europe, UK Japan, or other Asian countries, there’s a big opportunity that we’re set up for, which we haven’t tapped into yet.”
Kava’s unique qualities
Native to the Pacific, kava comes from a plant called piper methysticum.
Islanders have known about the plant and used it as a traditional drink for hundreds of years.
Making the drink involved chewing the roots and grinding them into a pulp before adding cold water – with the resulting thick brew often offered to guests and dignitaries visiting the Islands.
Although the plant could be found all along the Pacific Island chain, Fiji and Vanuatu are the two biggest producers.
What’s unique about kava is that it has six main active ingredients in the root, which are called kavalactones.
Clinical studies have shown that 60mg to 280mg of kavalactones can reduce anxiety, promote sleep, and relax muscles.
Randomised trials using the Hamilton Anxiety Rating Scale (HAMA) also demonstrated that using kava reduced anxiety significantly over placebo.
According to Noble, one of the compounds has even been shown to act very much like the antidepressant drug, Xanax. There’s also evidence of a weak interaction between some of the compounds in kava to the the cannabis receptor and CD1 receptor in the brain.
“Unlike pharmaceutical drugs, natural products like kava have multiple therapeutic targets,”Noble said.
“For kava, these therapeutic targets include the cannabis receptor, MAO Xanax pathway in the brain, as well as GABA receptor which is effectively the alcohol receptor – so it has genuine, drug-like effects,” he added.
Serving a growing market
The company believes that its products could potentially serve a fast growing and big market.
Data shows that 74% of young people in the US have felt so stressed they’ve been overwhelmed or unable to cope. Around 61% of people reported feeling both stressed and anxious, while 3x more younger people say they can not manage their stress compared to older people.
The Calmer Co’s products, which are mainly sold online and through retailer Coles, include its best selling Fiji Kava, as well as Taki Mai and Danodan Hempworks – where they are sold as powders, capsules, teas, and dietary shots.
“I always say to people, think of kava as the opposite of ginseng. Ginseng gives you energy whereas kava calms you down,” said Noble, adding that it was the reason why the company changed its name recently to The Calmer Co.
“Everything that we sell is about relaxation, stress relief, and recovery, so we wanted to have a corporate identity that reflected all this.”
Noble says the company is positioning itself as a natural medicine and functional beverage company based on kava. Having said that, he also sees further opportunity in CBD (hemp), ginger, curcumin, magnesium.
‘Impossible to duplicate’
The company is developing its markets in the US, Australia, NZ, Fiji, and China.
Earlier this year, CCO struck an exclusive distribution agreement with global distributor CJ Patel for the Taki Mai range of products.
Noble said the huge Asian market is one he’ll be targeting after a false start due to Covid a couple of years ago, and the Chinese market will be an obvious one.
“At the moment, China is the largest importer of kava in the world, but it transforms it into other products and exports, so there’s currently not a huge amount of domestic consumption of kava in China,” he said.
But now that trade relations are starting to thaw between Australia and China, Noble believes it could be time to talk about going into China again.
“We’ve got a really good distribution partner that we’ve just signed up with, an ASX-listed company called Roolife (ASX:RLG), which help us take our products to China,” said Noble.
Noble said his company has invested around $10m over the last years to build a supply chain in Fiji that would be especially difficult to replicate by competitors.
Laboratories, collection centres, processing sites, and a “nucleus farm” were built all over the island to ensure supplies all year round and to support growth of up to 5x in the coming year.
“We source fresh kava within 24 hours of its harvest, and I think it’d be impossible for people to be able to duplicate the setup we have,” he said.
Noble acknowledged that the company’s share price has taken a battering, just like other small caps.
“But we’ve taken a lot of time to turn the business around, and through this transformation, we’ve become extremely fit and lean and are starting to see profitable growth come through.”
The Calmer Co share price today:
At Stockhead we tell it like it is. While Roolife is a Stockhead advertiser, it did not sponsor this article.
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