Investors say ‘Bula’ to Fiji Kava outlook (ASX:FIJ) – The Market Herald

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  • Australian government allows kava to be imported into Australia after nearly 15-year ban
  • An expected boost of $10-30 million for the local multi-billion dollar herbal medicine market
  • Australia’s global Kava company, Fiji Kava (FIJ), will benefit from market revitalization
  • The company operates its own kava farm in Fiji and has sales and distribution agreements in Fiji, Australia and New Zealand.
  • FijiKava will build on success overseas in its bid to dominate the Australian market.

For any Australian who has ever been to Fiji, their very first kava ceremony is a truly joyful and memorable occasion. You begin to see the role this mystical potion plays in making Fijians one of the “happiest people in the world”, the way it brings families and communities together every night, and the contribution it makes to many sweet and sweet dreams and deep and deep sleep. .

But there’s so much more to Kava than its “simple” ability to unite communities, make people smile, and create a wonderful experience for tourists.

A natural product for the plant market

A plant with almost magical therapeutic properties, without the drawbacks of side effects or addiction, Kava was always going to be a natural for users of complementary and alternative medicine. This is a global market estimated to be worth more than US$82 billion (AUD$109.7 billion) in 2020 and expected to grow by more than 20% per year. In Australia, the so-called plant market is estimated at between 1.5 and 2.5 billion dollars per year. A market that the local company Fiji Kava (FIJ) has been keen to dominate since the commercial import of Kava resumed in December 2021.

Fiji Kava: big player in a bull market

It is estimated that when Australia’s federal kava import ban came into force in 2007, the loss to Pacific economies was between $10 million and $30 million a year – an indicator of the drink’s popularity in Australia. The federal government estimates that 70 tonnes of kava were consumed in Australia in 2000, the year before the ban came into effect. Since the ban was implemented, the number of Australian residents with South Pacific Islander heritage has more than doubled, greatly increasing the potential market.

The Federal Government has legislated to allow the importation of kava for personal and commercial use from December 2021. Beneficiaries of this change include members of Australia’s Pacific Island communities who have missed their regular kava ceremonies, and people who recognize the benefits of taking Kava as a muscle relaxant, anxiety treatment and sleep promoter.

But the big winners will be the companies best placed to take advantage of the newly revived market for kava and kava-related products – and that puts Fiji Kava in the spotlight. In fact, around 60% of the volume of drinking kava imported into Australia was via the Australian branch of Fiji Kava, which was previously licensed to import medicinal kava extracts and therefore well prepared to navigate the new regulations of import.

A producer ready to continue growing

An Australian-based company that is still the only overseas company approved by the Fijian government to operate in the kava industry, Fiji Kava is already a global supplier with markets in the United States, Fiji and New Zealand. With over a decade of research into kava botany and technology, Fiji Kava has earned a reputation as the world’s most trusted “noble” kava supplier. Food Standards Australia and New Zealand have recently updated the regulations regarding kava as a food and drink in Australia and now require that only noble varieties of kava be permitted.

Fiji Kava CEO Dr Anthony Noble said that while the Australian Fijian people are expected to help keep sales high for the immediate future, the real growth will be in raising awareness of the benefits of Noble Fijian Kava to the Australian population as a whole.

“We see over 300 kava bars currently operating in the United States. These not only serve Pacific Island communities, but a wide range of the population looking for non-alcoholic ways to relax and socialise,” Dr Noble said.

“The number of people under the age of thirty looking to live an alcohol-free life has increased several times over the past decade and now comprises more than a quarter of this age group. It’s a huge market for alternatives to alcohol, and given kava’s health benefits and thousands of years as a recreational drink, our opportunity to tap into this market is huge.

A comprehensive expansion plan

Including the local market in its global expansion plans means that Fiji Kava can apply some of the tactics successfully deployed in overseas markets to the Australian market.

Bringing together a unique product range with an established international business presence and proven manufacturing, distribution and sales strategies, as well as a reliable quality supply from its own network of Fijian farmers, Fiji Kava has a significant lead over other companies, according to Dr. Noble. .

“This is exactly what we expected and expected,” he told the Market Herald.

“The team has spent years refining our processes for selecting Noble Kava varieties and blending drinking kava to enhance taste and maximize effectiveness, what Fijian consumers call ‘the kick’. Here , in Australia and the United States, our team has a strong track record of developing and commercializing successful consumer products and brands for a range of markets,” said Dr Noble.

“Coles was an early adopter of our products, and we have a well-established partnership with Chemist Warehouse, which is also our second largest investor. We also sell kava raw materials to a number of well-known brands in the United States through the large IMCD Network Nutrition group, which is becoming an increasingly important business partner for us. In the US, we have rebranded The Calmer Co, to reflect our broader ambitions there. Our plans in the US focus on creating a range of functional beverages for the retail, B2B and DTC channels. We recently acquired a proprietary technology and boutique CBD company, Danodan. The acquisition accelerates our progress into beverage and liquid formats and adds a great new ingredient to our product development toolkit. We are on track to continue the growth trajectory set by our record sales results in the first and second quarters of 2022.”

Fiji Kava ended trading last week at 6.2 cents per share.