Calmer Co International (ASX:CCO) is expecting good things in FY26

Calmer Co International (ASX:CCO) closed out FY25 with $8m in revenue, which was 86% ahead of 12 months ago. As pleasing as that growth is, what was also pleasing was that sales were generated from a diverse mix of channels – Direct-to-Consumer, Retail, Amazon and Wholesale.

But FY26 promises to be an even bigger year and that is what this article focuses on.

Recap of Calmer Co International (ASX:CCO)

Calmer Co International is a kava company which is the only one listed on the ASX and one of the most prominent in the world. It has 3 brands:

• Fiji Kava – kava powder that can be made into a drink by adding water,
• Taki Mai – Kava shots
• Danodan Hempworks – Organic certified CBD tincture products (in hemp and oil form)

Calmer Co buys kava from farms across Fiji and the South Pacific. It processes the raw material into those products in a Fijian facility, 20km away from Suva. CCO prides itself in using only ‘noble kava’, which is kava cultivars that have long history of safe use as a traditional social beverage, rather than ‘Tu Dei’ (intoxicating) kava or wild kava.

Sales channels include:

• Coles and Woolworths in Australia,
• Tourist channel markets in Fiji such as airports and high-end hotel chains,
• Amazon and Walmart in the USA,
• CCO’s own Shopify outlet,
• Wholesalers for kava bars in the USA, and
• Tmall in China.

Kava is a big opportunity

Kava is a major opportunity for CCO. The fact that CCO is one of the first movers in this space and one of the market’s major players helps, but this would be of little use if the market was not expected to grow. Yet the kava market is expected to grow – it was estimated to be US$1.6bn in 2024 and is expected to grow at a CAGR of 14.11% to $5.6bn by 2033.

Why? It certainly helps that jurisdictions that previously restricted kava have lifted laws that ban importation outright. Moreover Fiji has liberalised export restrictions and is now actively promoting kava as an export opportunity. Last year’s Pacific Islands Forum saw the launch of a Regional Kava Development Strategy (RKDS) that will see member nations standardise the quality of kava across the region, enhance market access, and promote sustainability practices.

But kava is becoming increasingly popular outside the South Pacific. Initially, it was only expat Pacific Islanders sharing kava for special occasions. But it is being embraced in the West as an aid for many health conditions such as anxiety, insomnia, muscle soreness and stress. It is also being embraced by younger generations who are not keen on alcohol but still want special drinks to mark special occasions. The no and low-alcohol industry is worth US$11bn and there is opportunity for kava to take a share of this market.

FY26 will be big

Calmer Co is expecting a big year in FY26. Key to its future growth will be expansion into the US market, particularly amongst kava bars, and the Ready to Drink (RTD) formats. There are over 500 kava bars across the USA which use 20-30kg of kava powder per month. These bars growing because of the popularity of kava.

To aid ambitions to capture this market, CCO has secured a partnership with Leilo, a leading US based functional beverage company specialising in kava based relaxation drinks. This partnership began as a non-binding Memorandum of Understanding (MoU) which is intended to commence as a pilot supply phase where CCO will distribute noble kava powder formats to its kava.

In the months ahead, CCO will launch multi region and multi-currency websites for each of its brands, in conjunction with Acuity. These websites will have customer life-cycle management measures to improve the Average Order Value and Life Time Value including a new loyalty program, retargeting and AI customer support. The company will utilise cross-channel marketing execution with consumer education and brand awareness capabilities.

CCO will also launch a wholesale platform that will provide the company’s entire range of products, making distribution easier for the company’s existing wholesale customers and promote it to potential customers.

Looking down the track, CCO will pursue opportunities in the medicinal segment of the market. CCO believes there is an opportunity for a large scale medicinal business, particularly with high potency formats.

Our friends at Pitt Street Research released an update note on the company this morning. The report values the company at $59.5m in a base case scenario and $77.5m in an optimistic (or bull) case scenario – equating to 1.4c per share and 1.8c per share respectively under the current number of (diluted) shares on issue.

The report reckons that the company can hit $12.8m in sales in FY26, which would be 59% higher than FY25. It also thinks the company can reach operating profitability in the next 12 months. This will be key to any re-rating of the company.

Conclusion

Calmer Co is set for a major FY26. It is the only opportunity on the ASX with exposure to the kava market. We reckon kava could be bound for the same journey as cannabis – previously stigmatised but increasingly embraced. But while cannabis is a highly competitive market, there are only a few kava players and Calmer Co is one of the most prominent of them. It is destined for good things in the years ahead.

Calmer Co is a research client of Pitt Street Research. Pitt Street directors own options in the company. 

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