Calmer Co secures $2 million annual revenue through strategic kava supply deal
The Calmer Co International Limited (ASX: CCO) has signed a 24-month Master Supply Agreement with a leading U.S.-based kava functional beverage company, securing a minimum contracted commitment of AU$1,581,884 over the term. The Calmer Co Kava Supply Agreement is anticipated to deliver approximately $2 million in revenue per annum based on the customer’s quarterly inventory requirements, positioning CCO as a premium supplier of CO₂-extracted kava ingredients to the expanding U.S. functional beverage market.
The agreement provides CCO with material revenue visibility over a 24-month period. The deal is structured with quarterly supply obligations aligned to the customer’s production planning, with USD-denominated pricing subject to review mechanisms linked to raw material movements. The non-exclusive arrangement preserves CCO’s ability to supply other global customers while fulfilling this commitment.
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Understanding CO₂ kava extraction and why it commands premium pricing
CO₂ extraction is a specialised process that uses pressurised carbon dioxide to isolate active compounds from plant material. This method produces kava extract with higher kavalactone purity compared to traditional water or ethanol-based extraction techniques. Kavalactones are the active compounds in kava responsible for its calming and relaxation effects.
The CO₂ extraction process delivers several commercial advantages for CCO as a B2B ingredient supplier:
- Superior purity levels enable consistent product specifications batch-to-batch
- Higher kavalactone concentration allows customers to use less material per serving
- Scalable production capacity supports growing order volumes without quality degradation
- Premium market positioning differentiates CCO from commodity kava suppliers
The agreement includes pricing adjustments based on the kavalactone purity delivered by CCO, creating a direct link between product quality and revenue realisation. This structure rewards CCO’s investment in advanced extraction infrastructure and positions the company for higher-margin B2B relationships in the functional beverage supply chain.
Contract mechanics and revenue recognition framework
The agreement establishes a quarterly supply framework aligned to the customer’s production planning cycles. While the contract does not require that the customer purchase a minimum quantity of products quarterly, CCO has agreed to maintain a minimum stipulated quarterly inventory of the products at the customer’s request. This inventory management approach provides the customer with supply security whilst creating predictable production planning for CCO.
A critical risk mitigation feature is the “make-good” provision. The customer must purchase any shortfall in the AU$1,581,884 minimum commitment by the end of the 24-month term if not already purchased during the agreement period. This structure de-risks the minimum revenue commitment for CCO shareholders.
| Contract Element | Detail |
|---|---|
| Term | 24 months |
| Minimum Commitment | AU$1,581,884 |
| Anticipated Annual Revenue | ~$2 million |
| Pricing Currency | USD |
| Exclusivity | Non-exclusive |
The agreement includes standard commercial supply terms such as mutual warranties, insurance requirements, deposits on order placement, payment terms and sale price adjustment based on the purity of kavalactone delivered by the company. The contract may be terminated on 30 days’ notice for an unremedied breach, providing both parties with recourse whilst maintaining commercial flexibility.
The non-exclusive structure preserves strategic optionality for CCO to pursue additional B2B partnerships with other international beverage and wellness brands. This positions the company to scale its ingredients business beyond a single customer relationship.
CEO Zane Yoshida on the strategic milestone
Zane Yoshida, Founder and CEO
“This agreement represents a significant milestone in the execution of our B2B ingredients strategy. Securing minimum contracted revenue provides strong revenue visibility and validates our investment in vertically integrated sourcing and advanced CO₂ extraction capability. The structure of the agreement allows both parties to scale volumes over time as demand for kava-based functional beverages continues to expand in the U.S. market.”
Strategic positioning in the U.S. functional beverage market
The Calmer Co Kava Supply Agreement advances CCO’s strategy to expand higher-margin B2B revenues and diversify beyond consumer packaged goods.
CCO operates a vertically integrated business model spanning farm-to-shelf supply chain capabilities. The company’s existing consumer brands and distribution channels include:
- Fiji Kava® drinking powders, natural and flavoured kava shots, concentrates and capsules
- Taki Mai® kava-based relaxation products
- Danodan Hempworks hemp-derived wellness products
- Distribution reach: E-commerce channels and blue-chip retail distribution partners across the USA, Australia, New Zealand, China, and Pacific Islands
This vertical integration provides CCO with sourcing reliability and quality control advantages that pure-play ingredient suppliers cannot replicate. The company’s existing farm relationships and extraction infrastructure enable it to scale B2B supply without compromising its consumer product commitments.
The agreement positions CCO as a preferred supplier of premium kava ingredients to international beverage and wellness brands, supporting the company’s strategy to capture growing demand for natural, non-alcoholic relaxation alternatives in the U.S. functional beverage sector.
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Outlook and revenue recognition considerations
Revenue recognition under the agreement depends on purchase order timing, production schedules and delivery under the agreement. The quarterly inventory framework provides visibility into expected order flow, but actual revenue timing will follow contractual delivery milestones.
Foreign exchange movements will impact reported AUD revenue given the USD-denominated pricing structure. Investors should monitor quarterly cash flow reports for confirmation of revenue conversion and the timing of cash receipts under the agreement.
CCO expects the agreement to contribute materially to B2B revenue growth over the 24-month term. The minimum commitment of AU$1,581,884 establishes a revenue floor, whilst the anticipated $2 million per annum based on customer inventory requests indicates potential upside if demand tracks management expectations.
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