The Calmer Co. (ASX:CCO): Why we’re so excited about this growth stock!

The Calmer Co. (ASX:CCO)

This article is about a company, called The Calmer Co. (ASX:CCO), in which we at Stocks Down Under hold some options. We published an in-depth research report on CCO in November 2024.

At Stocks Down Under we are big fans of The Calmer Co.’s product, a non-alcoholic beverage called kava. If you ever went on holiday in Fiji you might have been offered some, because Fijians and other South Sea Islanders drink a lot of it, often at ceremonies to commemorate significant events like weddings, funerals and the birth of children. King Charles drank some in Samoa when he and Queen Camilla were there last October on an official visit.

The drink is made from the ground roots of the kava plant Piper methysticum. To be honest, kava doesn’t taste great, which is why in Fiji they drink it off in one gulp. But soon after you drink it, you get this calm feeling come over you that lasts for quite a while.

 

A noble drink

Around 2010, a Brisbane-based entrepreneur, named Zane Yoshida who hails from Fiji, set out to build a business out of kava. He reckoned the day was coming when kava would mainstream as a drink and be consumed all over the world. The key,  Zane argued, was only making kava from a cultivar called ‘Noble’, that had a long history of safe use as a traditional social beverage, rather than ‘Tu Dei’ or wild kava, which is linked to unpleasant side effects, including nausea.

Once the product was right and the regulators realised that it wasn’t the dangerous drug they used to think it was – that’s more or less happened in many jurisdictions in recent years – it was simply a matter of pitching it to consumers as a pleasant alternative to alcohol. By 2018 Zane was ready and his company, then called Fiji Kava, went public on ASX in December of that year. The name change to The Calmer Co. to reflect the widely-researched anti-anxiety properties of kava happened two years ago.

The 2018 IPO was, in retrospect, a false start, but around 2021 The Calmer Co. started to get it right. It had been selling kava as a medicine-style capsule, but went back to emphasising kava as a beverage. It started innovating around the product offering. Most importantly, it focused on getting its online sales  and marketing working properly and at the optimal price points. This started to pay off from mid-2023 and sales have generally risen each quarter since then.

 

Watch our recent interview with CEO Zane Yoshida!

 

A product for the sober curious

What we particularly like about The Calmer Co. is that the market is now coming its way. One of the more astounding findings of our research is that Americans have started to enjoy kava in a serious way. As in, there are something like 500 kava bars in that country with names like the Kava Luv Social Lounge (in Naples, Fl.) or the Colorado Mountain Kava Company (Longmont, Co). Back in 2017 there were only about 100. The US-based Kava Coalition estimates that over 21 million Americans are drinking kava today, which is about 6% of the population, and they’re likely to be immune to increased prices due to tariffs on imported kava since the patrons of those bars tend not mind paying US$5 or US$6 for a shot.

Why are Americans increasingly enjoying a drink as foul-tasting as kava? Well, for one thing, over there it’s not an acquired taste because you can routinely get it flavoured, unlike in Australia where you have to buy it as a raw powder and then mix it.

More importantly, there’s a trend towards sobriety going on in America as well as a lot of other places in the world. Generation Z – the people born between 1997 to 2012 – on average drink about one-third less beer and wine than previous generations, driving a 10% decline in alcohol use among US adults aged 18 to 34 in the last decade. Kava fits nicely with this ‘sober curious’ phenomenon and is driving what we think can be a mainstreaming of the drink, like the one Zane Yoshida anticipated 15 years ago. The Calmer Co. recently quoted third-party research postulating that global kava sales will grow at over 16% annually into the near future.

 

Not just Coles, but Woolworths … and Amazon!

At the moment The Calmer Co. is a ‘nano-cap’ that isn’t on many investors’ radar screens. We think there’s a reasonable chance that will change. For one thing, the rate of growth lately has been strong. In the six months to December 2024 The Calmer Co.’s revenues at $4m were triple the level of the previous corresponding period. For another, the distribution channels continue to build out. We usually get the light blue coloured instant powder branded ‘FijiKava’ from Coles, which picked up the product in 2023. Coles more recently started selling Calmer Co.’s  ‘Taki Mai’ kava shots. In April 2025 Calmer Co. announced that Woolworths would be stocking instant powder as well and the first sales were made there in mid-June.

And then there’s Amazon. The reason Amazon got to be The Everything Store, and one of the reasons it got so big, was that it made it easy for companies to sell on the platform and make a reasonable return after they’d paid their dues to Bezos & Co. The Calmer Co. is now working to build a significant presence on The Everything Store, and clearly the team is succeeding because in May of this year the Calmer Co. announced that its sales on the platform had doubled year-on-year. The company reckons it is now the leader on Amazon in the instant kava category and it is now working to lead the rest of the kava market with the Taki Mai shots as well as tinctures that can be mixed into other drinks.

 

Leveraged to other company’s growth

A third platform for growth is B2B sales. A lot of companies are now realising that kava is a drink people want more of and it turns out that it’s even more profitable for The Calmer Co. to sell kava raw ingredients wholesale.

The Calmer Co. believes it is the world’s most reliable supplier. Early on, Zane Yoshida insisted on sourcing kava from more than one country in the Pacific in order to avoid a disaster like 2016’s Cyclone Winston, which devastated the kava crop in Fiji. The company has developed high quality standards and its production processes are seeing a gradual decline in costs and a corresponding improvement in margins.

 

Would Peter Lynch like this product?

We see potential for The Calmer Co. to re-rate from here. The stock has been weak lately in part because of a 2-for-7 rights issue at 0.3 cents to raise $2m to fund continued growth that is currently completing. At the other end of that, if recent history is any guide, there’s likely to be a steady stream of new product launches and quarterly sales numbers that, potentially, can see further strong growth on Amazon among other channels.

Peter Lynch, the investing genius whose Magellan Fund famously returned more than 29% per year from 1977 to 1990, taught that the best research he could do on prospective investments was to try the product and then invest in those that he liked where the product had scale potential. We believe The Calmer Co. has this kind of quality. The company is not without risk, since we’re still up to 18 months away from seeing it at cash-flow break even. However, if it works, our research suggests this stock is a multi-bagger from here. Please check out that research, preferably with some FijiKava or Taki Mai on hand.

 

Check out a video we recorded with The Calmer Co. HERE!

 

Disclosure: Pitt Street Research / Stocks Down Under directors own options in CCO.

The Calmer Co. is a research client of Pitt Street Research.

 

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