Fiji Kava Limited (ASX:FIJ) has signed a three-year distribution agreement with leading Australian supplier Pathway International to provide high-quality Noble kava extract.
As its first major revenue-generating contract, Fiji Kava will supply premium Noble kava extract to Pathway International for distribution to its network across Australia and New Zealand, which will increase in years two and three.
Over the three-year period, this arrangement is expected to generate in excess of around US$2.5 million for the company.
The agreement underpins the company’s growth strategy to become a leading retailer of premium kava end products, providing a natural alternative to the large, global benzodiazepine market.
Growing demand for kava as a natural alternative
Fiji Kava chief executive officer Zane Yoshida said: “This is a major achievement for us and puts us in a great position to grow Fiji Kava into a strong and lucrative company, delivering on our core strategy.
“The large and increasing minimum order amounts under the agreement over the three-year term reflects the growing acceptance and demand for kava as a natural alternative to prescription medications in the treatment of anxiety and other disorders.”
Pathway International chief executive officer Wayne Coote said: “We have had strong indications of demand from many of our existing customers who are interested in this product and the benefits it can offer to a broad consumer base.”
The company has also secured kava supplies and expanded production to account for its distribution agreement as well as the expected increase in demand for its products in 2019.
The signing of the agreement demonstrates Fiji Kava’s ability to secure profitable agreements with leading companies in Australia while generating exposure within the market for its products.