Relaxation Beverage Brand Leilo Acquired by Fiji Kava

As the relaxation beverage category has expanded, multiple brands within the space have made a concerted effort to diversify their ingredients beyond a single source, whether CBD, L-theanine or another additive.

That’s not the case with Leilo. Tying its identity to its hero ingredient, the kava-based drink maker has agreed to a share-swap arrangement that will see it acquired by vertically-integrated Australian kava producer Fiji Kava in a deal that is expected to close on November 1.

“We knew that we wanted to grow with kava overall and really define ourselves as the kava brand,” said Leilo founder and CEO Sol Broady.

As one of just a few companies operating in the commercial kava market, Broady said that he and Fiji Kava CEO Anthony Noble had previously discussed their respective ambitions, with Leilo targeting retail and Fiji Kava facing challenges distributing to the growing network of on-premise kava-centric bars. The Brisbane-based supplier is the only kava cultivator and exporter approved by the Fijian government to source from the region, and has developed a range of products based around the ingredient’s purported benefits, which include promoting sleep, calm, muscle relaxation and mental relaxation.

With about half of its business coming specifically from kava bars, Leilo will be well-positioned to help drive Fiji Kava’s products through that channel, while the Australian company’s production efficiencies will allow Leilo to accelerate its innovation pipeline while reducing costs by up to 50%. The brand currently markets its flagship sparkling line in 12 oz. cans in four SKUs — Lemon Ginger, Tango Berry, Raspberry Hibiscus and Blackberry Orange — as well as two other varieties: zero-sugar Leilo Lite and Leilo Luna, which contains melatonin, in an 8.4 oz. can.

Leilo’s strategy depends heavily on the continued success and development of on-premise kava consumption. When the brand launched in 2020, Broady said there were about 100 to 150 kava-centric bars across the U.S.; now, that number is closer to 400. Yet without dedicated DSD partners to serve those customers, Leilo has been self-distributing to kava bars, hauling heavy boxes and liquids to each location. With few viable alternatives, the company leaned into its role and began showing up with multiple products, including higher margin items from other brands, and essentially became a distributor itself.

With Fiji Kava’s operational muscle behind it, Broady sees an opportunity to truly embrace that role. While the RTD product will continue to be sold in those venues, the idea is to become a true partner with kava bars, which he said prefer to market their own creations rather than branded products from elsewhere.

“What we’re hoping to be is that one-stop solution for the kava bars, so the input ingredients, raw kava, kava extract, nano-emulsion or whatever they need,” said Broady. “And so instead of kind of fighting them on that, we’re saying we want to be a part of this journey with you, we want to support you and help you grow. And in turn, you’ll grow kava awareness across the country, and we’ll be able to really benefit from that in mass retail.”

As for its own production, Leilo will be transitioning from its current suppliers to Fiji Kava over the coming months.

On the retail side, Leilo will continue to support its flagship RTDs — sold in around 700 retailers, including Erehwon and a smattering of independents — while introducing a new product specifically for the space: a line of 2 oz. kava shots. It’s a category Fiji Kava knows well: the company previously introduced a 4 oz. shot in the U.S. under the brand Taki Mai, which was eventually discontinued. That underscores the challenge in educating U.S. consumers about kava and kava drinks, a category which also includes names like Kin and Psychedelic Water.

But with the high cost of funding consumer education, Broady sees Leilo gradually expanding its presence on the back of word-of-mouth from enthusiastic fans; “We have an inherent advantage in that these kava bars are evangelizing the ingredient for us to a large extent,” he said.

”It was important for us, as we get bigger and as the capital implication gets bigger, that we align with people who are really, really committed to the ingredient, and also really want to do it the right way,” he added.