The Calmer Co International (ASX: CCO) has signed an agreement to supply premium carbon dioxide-extracted kava ingredients to an undisclosed US-based kava functional beverage company.
The 24-month deal is expected to deliver $2 million per annum in business-to-business (B2B) revenue to the company.
That figure is subject to a minimum commitment by the customer of $1.58m, allowing for production scheduling, delivery timing, and foreign exchange movements.
The agreement reinforces The Calmer Co’s status as a preferred supplier of premium kava ingredients to international beverage and wellness brands and supports the company’s strategy to expand higher-margin B2B revenues and diversify beyond consumer packaged goods.
B2B Strategy Milestone
Founder and chief executive officer Zane Yoshida said the supply deal represented a significant milestone in the execution of the company’s B2B ingredients strategy.
“Securing minimum contracted revenue provides strong revenue visibility and validates our investment in vertically-integrated sourcing and advanced carbon dioxide extraction capabilities,” he said.
“The structure of this agreement allows both parties to scale volumes over time as demand for kava-based functional beverages continues to expand in the US market.”
The client must purchase any shortfall in the stipulated amount by the end of the 24 month term.
Oversubscribed Capital Raising
The Calmer Co has completed a $1.6m capital raising to accelerate its US expansion amid surging global demand for kava.
The oversubscribed placement, which was supported by new and existing institutional and sophisticated investors, saw the issue of 457.14 million shares priced at $0.0035 each.
The deal also includes one free attaching option per share, exercisable at $0.007 within three years.
Funds will be used to build inventory to support large-scale US wholesale supply contracts, as well as for sales, distribution and, marketing expansion across Amazon US, direct-to-consumer, and Australian retail channels.
Global Kava Market
Analysts valued the global kava extract market at an estimated US$1.6 billion in 2024, forecasting it to grow at a compound annual rate of 14.1% to US$5.6b by 2033.
The US market is experiencing rapid growth driven by increasing consumer demand for functional relaxation products, natural sleep support solutions, and alternatives to alcohol.
Mr Yoshida said The Calmer Co was well-positioned to capitalise on the structural consumer shift, with access to a 15-year vertically-integrated Pacific Island supply chain spanning Fiji, Solomon Islands, and Papua New Guinea.
The company also has proprietary carbon dioxide extraction capabilities and established retail partnerships with Woolworths Group (ASX: WOW) and Coles Group (ASX: COL).
