It might seem that every new beverage claims to be the next non-alcoholic alternative, but kava is the rare entrant in that set trying to translate success from designated on-premise tiki bars into off-premise retail growth.
Having been entrenched in Florida since the early 2000s, kava, a root indigenous to the Pacific Islands that imbues a relaxing effect when consumed, has built a following on-premise among consumers prioritizing alcohol reduction. Despite the drink’s growth in “kava bars” — there are around 75 in Florida and about 180 total across the U.S., retail formats (cans, powders and shots) still struggle to find a foothold in an increasingly competitive functional beverage category.
And it’s not just the exceedingly bitter taste or the still evolving price point that is creating challenges for the drink.
Ingredients like CBD and ashwagandha have flooded the market under the guise of their calm-inducing properties, while kava remains relegated to the on-premise and specialty channels. Kava brands, new and old, are taking new approaches via formulation, format, and marketing in hopes of catching the functional drink wave.
The New-Old Wellness Product
The first kava bar, Navaka, opened in Boca Raton, Fla., in 2002, and since then the tiki-themed establishments have proliferated in the state. The drink has spawned a subculture of its own, with some Florida-based bar franchises like Kava Culture leveraging their following to springboard into CPG (under the brand name Botanical Brewing) with RTDs.
In other parts of the country, like Los Angeles and New York, kava drinking is more closely aligned with wellness. That suits brands like the newcomer Melo, which have pitched themselves as a healthier way to socialize and relax.
Founded by Melbourne, Australia native Amy Bett in early 2023, Melo sources its hero ingredient from family-owned farms on Vanuatu.
Melo currently sells two flavors exclusively online: Passionfruit, Orange & Guava and Banana Cream. The product comes in 6-packs of 12 oz. cans for $34 each, putting it at the upper end of the functional beverage market.
“We’re not pricing it high just because we can; it’s because it costs a lot to produce,” Bett said.
Deciding to launch in the U.S. was an easy decision because, although kava is well-known in Australia and sold in grocery stores, the product cannot be sold as a flavored drink. Depending on food regulatory changes, the brand hopes to have a product in Australia and New Zealand markets in the next 12 months.
Until then, Melo is focused on Los Angeles. There, HiTouch Libations is its distributor, targeting natural channel stores like Bristol Farms, Lazy Acres, Mother’s and Whole Foods.
“The pitch is simple: Kava is a natural beverage like coffee and tea that is relatively untapped and has amazing benefits you can feel,” said HiTouch founder and COO Czar Daniolco.
“The United Nations and International Trade Centre are supporting [brands like] Melo in educating people on what kava is and its attributes, with the primary goal of increasing the kava trade in major markets, which would have positive impacts to the Pacific Islands and their people,” he added.
Adoption Has Been More Air-Balloon Than Rocketship
In the U.S., kava is classified as a dietary supplement by the Food and Drug Administration (FDA), but it hasn’t yet achieved Generally Recognized as Safe (GRAS) status. That’s still being reviewed: in January, the Hawai‘i State Department of Health (DOH) — in collaboration with the University of Hawai‘i — issued a memorandum detailing why kava should be GRAS.
The Hawaiian DOH statement was in response to a 2020 FDA memorandum concerning possible hepatotoxic (liver damage) and carcinogenic effects of kava consumption. Some brands blame this uncertainty around the health effects of the ingredient as impacting a broader consumer adoption of kava products.
While brands have taken various runs at marketing kava in RTD formats in the past, the latest surge in digital conversations about kava began in late 2021, right when non-alc products and relaxation drinks started evolving from niche categories into mainstream adoption, according to a recent Brightfield Group report.
Most of the category’s sales occur online, in foodservice or through small independent retailers. When looked at through measured channels, the category is nearly too small to chart.
In the 52-week period ending May 19, kava functional drink dollar sales reached about $16,500, a 52.4% increase compared to the year-ago period, according to SPINS data. The shot format remains the biggest retail category for kava with dollar sales up 86.7% accounting for about $81,550. Shot unit volumes were also up 86% year-over-year.
Sol Broady launched his kava brand Leilo (pronounced Lay-Low) in 2019 expecting consumers to come flocking.
“I thought kava would be huge in two or three years and we were going to take over the world,” he said.
Since then, Broady has tempered expectations and now sees the timing of widespread adoption to have “appropriately lengthened” to the growth curve of kombucha or yerba mate — meaning many years, if not more than a decade.
In the five years that Leilo has operated it has been through many changes. The relaxation beverage reformulated in early 2022 and was nearly acquired by its ingredient supplier Fiji Kava later in the year before pulling out of the deal. Most recently, Leilo rebranded its packaging with bolder packaging callouts to communicate potential use occasions.
The brand has four Relaxation flavors (Lemon Ginger, Raspberry Hibiscus, Tango Berry and Blackberry Orange) and a Pina Colada 0% ABV Cocktail variety in 12 oz. slim cans, all packing 225mg of kava. Leilo also offers a 8.4 oz. Luna Sleep canned option, 2 oz. shots (Relax and Sleep) as well as powders, drops and capsules.
Leilo has focused its sales resources away from established markets in Los Angeles, New York and Florida, where competition and jostling for shelf-space and distributor buy-in is more difficult. Instead, the brand has pursued growth in small markets like Des Moines, Iowa, and Billings, Mont., where kava culture is seeping into the regional zeitgeist.
In Kava Roots, one of Leilo’s on-premise outlets in Billings, the brand has seen 5% week-over-week growth since the outlet moved out of a smaller location into a new 4,000-square-foot space. The clientele is looking for a socializing environment somewhere between a coffeeshop and a bar, according to owner Koby Jeffers.
“People have kava because it produces endorphins in the brain, similar to alcohol, producing that relaxed, chilled-out feeling socially,” said Jeffers, who started using kava when he practiced mixed-martial arts in Florida.
Powder Is Cheaper Than Liquid
Diversifying product formats to meet different use occasions is a growing strategy for many kava brands. One growing format is ready-to-mix, which is easier on new consumers’ wallets.
In an effort to reposition the brand around its hero ingredients, relaxation beverage brand Psychedelic Water released Good Mood powder mixes in three flavors — Fruit Punch, Watermelon and Blue Raspberry — last October. The 14-powder stick packages sell for $29.99 online.
The new line is the company’s first non-caffeinated product and now makes up about 80% of the company’s sales, mostly in DTC. The drink maker distributes its RTDs in about 700 locations, from specialty grocery stores like Erewhon and Foxtrot to other, larger retailers like Walmart, Nugget Markets, Bristol Farms and Urban Outfitters. It has seen the most buy-in among retailers that cater to THC and CBD users, however.
“The easiest retail expansion for us so far has been in the vape shops or CBD stores that are a little bit more familiar with drugs,” said Psychedelic Water’s president, Matt Warren. “Those customers are happy to try things that are a little bit more out there.”
Psychedelic Water has gone through different changes to grow buy-in since its 2021 launch: it’s reformulated, dropping damiana leaf for velvet bean extract to “accentuate” the effects of kava, and also transitioning away from a holographic RTD package that was both costly and a technical hurdle for its supply chain and co-packers. In July 2022, the drink maker launched a microdosed mushroom shot, which it has since paused: it “confused people too much,” Warren said.
As the company gears up for a new RTD production run, it is focusing its retail approach on c-stores and the premium natural grocers — where customers might be willing to accept the higher $5.50 SRP per 12 oz. can.
An Unlikely Partnership Of Kava And Kratom
One of the biggest emerging trends for kava beverages has been pairing the hero ingredient with kratom, an ingredient that can induce opioid- and stimulant-like effects, according to the National Institute of Drug Abuse.
Unlike kava, kratom, derived from the leaf of a coffee relative, is not classified by the FDA as a dietary supplement and remains unscheduled by the Drug Enforcement Administration.
Kratom has been growing much faster than kava, with consumers flocking to the ingredient in both smoke shops and other retail formats.
Last year, kratom company Botanic Tonics LLC, makers of Feel Free Wellness Tonics, came under fire when $3 million of products were seized by U.S. Marshals and a class action lawsuit was filed about misleading consumers on the addictive qualities of the ingredient.
Botanic Tonics is also growing fast: now in more than 20,000 stores, its sales increased 286% last year, according to NielsenIQ figures cited by the company.
Beverage brand New Brew uses a mix of kratom and kava in its offerings and markets its products for adults over the age of 21. Another kava drink maker that has blurred the lines between the two plants is Fort Myers, Fla.-based Mitra9.
Founded in October 2021, Mitra9 separates its kava and kratom in the RTD and powder stick formats but adds them together in a 2 oz. shot.
“We’re riding three waves that just kind of hit us all in the last several years,” said Mitra9 co-founder and CEO Dallas Vasquez. “The functional beverage wave, this non-alcoholic explosion wave, and then this better-for-you botanical plant-based wave, and we feel like kratom and kava fit into all three of those.”
Sales are split about 80% for kratom products and 20% for kava across the brand’s 32-state distribution network, but it does differ by region, Vasquez said.
“Kava has been around for a long time, but it did not catch a lot of traction and it’s mostly available in the natural food stores, which is a little different than kratom,” he said.
Some distributors, credit card processors and banks are being cautious about working with kratom operators until there is a federal framework in place, Vasquez said.
Some kava drink makers, like Leilo and Psychedelic Water, are staying away from the leaf even as kratom remains linked to the broader success of kava. Kava bar operators see kratom as another functional plant-based ingredient that can replace alcohol, while some drink makers see synergy in the two ingredients’ target consumers.
Meanwhile, Leilo’s Broady remains confident that kava’s future as a go-to relaxation beverage and non-alc alternative lies in patience.
“I liken it to catching a wave,” he said. “We can see the wave coming and, at a certain point, you have to sit on your surfboard and wait to catch it. You can’t paddle forward, you can’t paddle toward it. It makes no difference. We’re allowing the market to dictate our growth, and that’s been a much more sustainable and healthy strategy.”