The Calmer Co (ASX: CCO): Building supermarket momentum into sustainable growth

At The Calmer Co International (ASX: CCO), we are focused on turning growing consumer demand for kava products into a larger, more resilient business. Our latest Coles expansion, improving sales across our existing supermarket range and new international distribution agreement represent important steps towards that objective.

On 8 October 2026, Coles placed its first order for our Fiji Kava FZZR Piña Colada product, covering an initial rollout across 583 Australian supermarkets. This follows September-quarter sales growth of 27% at Coles and 33% at Woolworths across our existing products, compared with the June quarter.

These developments demonstrate the commercial opportunities available to us as kava becomes more accessible through established retail channels. Our priority now is to convert that growing distribution into repeat purchases, stronger margins and, ultimately, sustainable profitability.

Key numbers

• 583 stores: Initial Coles rollout for Fiji Kava FZZR Piña Colada, representing approximately 66% of Coles' supermarket network.
• A$8.12 million: FY2026 revenue, representing approximately 1% annual growth.
• A$3.81 million: FY2026 net loss, narrowing by approximately 5% year-on-year.
• A$633,000: Cash reserves at 30 June 2026, before subsequent financing.
• A$1.82 million: Gross proceeds raised through the September 2026 entitlement offer.
• Up to A$25 million: Announced minimum purchase commitments under a three-year exclusive international distribution agreement, subject to contractual conditions, including approximately A$5.5 million in the first year.

Expanding our presence in Australian supermarkets

Our latest Coles order is an important milestone for Fiji Kava and our broader retail strategy.

FZZR Piña Colada is designed to make kava more accessible through a convenient, flavoured format combining powders and effervescent granules. The product can be dissolved in water, chewed or consumed directly, giving consumers different ways to use it.

Distribution was scheduled to begin during the week commencing 12 October 2026. The initial order covers 583 Coles supermarkets, although the rollout remains distinct from confirmation that every store has completed stocking the product.

We have been building our supermarket presence over time. Our existing Fiji Kava products are ranged in 837 and 788 Coles stores, while our 50g Noble Root Powder is distributed across 1,006 Woolworths supermarkets.

This established distribution provides a platform from which we can introduce new products, reach more consumers and build awareness without needing to establish our own physical retail network.

FZZR is also listed as a complementary medicine on the Australian Register of Therapeutic Goods and regulated under Australia's Therapeutic Goods Administration framework. This provides an established regulatory framework for the product as we develop its presence in the Australian market.

We recognise that securing supermarket distribution is only one part of building a successful consumer product. Sustained performance depends on how frequently consumers purchase the product, how quickly it sells through stores and whether we can maintain attractive margins after retailer terms, distribution expenses and other costs.

Our focus is therefore on supporting the rollout, monitoring product performance and using the results to guide our next steps in retail expansion.

Building on stronger sales across our existing range

The September quarter provided encouraging evidence of improving demand across our established supermarket products.

Sales increased 33% at Woolworths and 27% at Coles compared with the June quarter. These figures relate to our existing range and provide a useful indication of the momentum we are seeking to build on as FZZR enters the market.

Australian retail revenue also increased approximately 30% during FY2026, becoming our largest revenue channel by the June quarter.

We see this as an important development in our strategy. Supermarkets allow us to reach consumers through familiar retail environments, while our online business and business-to-business ingredient supply activities provide additional channels through which to grow.

However, we are conscious that strong performance in one part of the business does not automatically translate into comparable growth across the group. Consolidated FY2026 revenue increased approximately 1% to A$8.12 million, reflecting the broader performance of our business and the timing of wholesale activity.

Our objective is to build on the strength of Australian retail while developing other revenue streams. That requires us to manage wholesale order timing, product availability and customer demand carefully, rather than relying on a single channel to deliver growth.

We will continue to assess the contribution of each channel and focus on opportunities that can generate recurring sales and improve the quality of our revenue.

Developing our international distribution opportunity

Our growth strategy extends beyond Australian supermarkets.

In August 2026, we secured an exclusive global distribution agreement for specialised kava ingredients, with announced minimum purchase commitments of up to A$25 million over three years across markets including Australia, New Zealand, North America and Southeast Asia. The first-year commitment is approximately A$5.5 million, subject to the agreement's terms and conditions.

We see this arrangement as an opportunity to broaden our commercial reach and develop our business-to-business ingredient supply activities.

The agreement provides a framework for expanding our international presence, but its value will ultimately be determined by execution. The timing of orders, product deliveries, customer demand and fulfilment of contractual conditions will influence how the commitments translate into recognised revenue and cash receipts.

We must also ensure that we can supply customers reliably and manage the associated costs. Production and sourcing expenses, freight, product margins and working capital requirements will all influence the financial contribution of this business.

Alongside the distribution agreement, we have secured additional kava supply arrangements designed to improve sourcing reliability and help manage rising raw material costs.

Reliable supply is essential as we expand. Our focus is on ensuring that commercial growth is supported by appropriate sourcing arrangements, operational discipline and the ability to fulfil customer requirements.

Improving cash generation and financial resilience

While our retail momentum is encouraging, we recognise that our financial performance must continue to improve.

For FY2026, we reported revenue of A$8.12 million and a net loss of A$3.81 million, approximately 5% narrower than the previous year. Operating cash outflows totalled approximately A$3.04 million during the financial year.

In the June quarter, customer receipts increased 15% to A$1.88 million, while net operating cash outflows improved 9% to A$802,000.

Our cash balance was A$633,000 at 30 June 2026. We subsequently raised A$1.82 million in gross proceeds through our September entitlement offer, providing additional funding to support inventory, retail expansion and working capital requirements.

The capital raising has strengthened our funding position relative to the June quarter-end balance. However, we recognise that external funding is not a substitute for building a business that can increasingly support its operations through cash generated from customers.

We must continue to manage expenditure carefully while ensuring that we have sufficient inventory and operational capacity to support our expanding retail presence and fulfil customer orders.

The entitlement offer also increased the number of shares on issue, creating potential dilution for existing shareholders. Our responsibility is to use the capital raised prudently and focus on initiatives that can improve the company's financial performance over time.

We are concentrating on revenue quality, gross margins, operating expenditure and working capital management. These measures will be central to assessing our progress towards cash flow breakeven.

Pricing and sourcing initiatives could support FY2027 margins

Managing raw material costs remains an important part of our operating strategy.

We implemented retail price increases from late May 2026, with the expected margin benefits emerging progressively during FY2027. These adjustments are intended to help offset higher kava sourcing costs and improve the economics of our products.

The benefit will depend on our ability to maintain demand at higher prices, manage product mix and control other costs throughout the supply chain.

We recognise that price increases alone will not deliver sustainable profitability. We need to combine appropriate pricing with reliable supply, efficient operations and continued growth in sales volumes.

Our additional supply arrangements are intended to help improve sourcing reliability and manage raw material cost pressures. As the benefits of these initiatives flow through the business, we will assess their contribution alongside retail sales performance and operating expenditure.

The September-quarter cash flow report, scheduled for 30 October 2026, will provide a more recent view of our cash receipts and operating requirements. Subsequent reporting periods will be important in determining whether stronger supermarket sales and pricing initiatives are translating into improved gross margins and cash generation.

Our priorities: Converting distribution into profitable growth

We believe the combination of expanding supermarket distribution, improving sales across our existing range and developing international ingredient supply provides a foundation for further growth.

However, we measure progress by more than the number of stores carrying our products or the headline value of a distribution agreement.

Our priorities are to build repeat demand, improve margins, strengthen supply reliability and maintain disciplined expenditure. We must also manage working capital carefully as the business grows, particularly where fulfilling larger customer orders requires inventory and cash commitments ahead of receipts.

The Coles rollout provides an opportunity to broaden the reach of FZZR. Our existing supermarket products provide evidence of growing demand, while our international distribution agreement offers another route to expand commercial activity.

The challenge is to translate these opportunities into consistent revenue growth and a stronger financial position.

We are focused on developing a business that can grow while progressively reducing its reliance on external funding. Achieving that requires sustained execution across our retail, online and business-to-business channels, supported by careful management of costs and cash.

Looking ahead

The Calmer Co is entering an important phase as we expand our retail presence and develop additional commercial relationships.

The initial Coles order, stronger September-quarter supermarket sales and international distribution agreement provide opportunities to build on the progress made during FY2026. At the same time, our financial results demonstrate why we must remain focused on profitability and cash generation.

Our next priority is to demonstrate that expanding distribution and improving pricing can deliver better unit economics, stronger gross margins and lower operating cash outflows.

The September-quarter cash flow report, scheduled for 30 October 2026, will be an important milestone in assessing that progress.

We remain focused on building a more resilient business by combining product innovation, wider distribution, reliable sourcing and financial discipline. Our objective is clear: to turn growing demand for our products into sustainable commercial growth and a stronger financial foundation for The Calmer Co.