In recent years, consumer preferences have undergone a notable shift towards alternative beverages that offer calming effects without the downsides associated with alcohol consumption.
This trend presents a lucrative opportunity for investors looking to tap into the expanding market of non-alcoholic, herbal, and adaptogenic products.
Two ASX-listed companies are leading the charge in this space: The Calmer Co (CCO) and Bioxyne (BXN).
These companies are using herbal medicines, such as kava root and CBD (hemp), as well as supplements including ginger, curcumin, magnesium, and more, otherwise known as adaptogens.
According to Vintage Market Research, the global alternative supplement market is anticipated to grow from US$1.56 billion (A$2.44 billion) in 2022 to US$2.45 billion by 2030, boosting at a CAGR of 5.1 per cent.
Technological advancements play a significant role in driving this growth, as they enable the extraction of raw materials and facilitate the dissemination of research and information aimed at promoting a healthier lifestyle.
Not only that, the long-term isolation caused by COVID-19 lockdowns, school closures, and social distancing has increased the prevalence of anxiety disorders by 25.6 per cent worldwide, making such supplements more popular than ever.
Functional beverage market and trends for 2023
More than 30 per cent of Australians are now choosing non-alcoholic options, and the trend is widespread across global fronts, giving rise to a market for non-alcoholic beer, cider, wines, and spirits.
The non-alcoholic market increased by 60 per cent in 2022 alone, setting the stage for the resurfacing of adaptogens with the same calming effects as alcohol, yet without the unhealthy hangover the next day.
What makes adaptogens even more appealing is their ability to bypass the lengthy regulatory approvals required for prescription drugs, thanks to minimal side effects.
With the red tape removed, companies are fast-tracking these age-old alternatives into commercialisation, with their primary requirement being that they be assembled using good manufacturing practices.
Dr Jacqueline Michael is passionate about healthy longevity and has expertise in obesity and chronic disease reversal. She is a Fellow of the Australasian Society of Lifestyle Medicine and provides health and nutrition coaching through HEAL Solutions.
She spoke to The Market Herald and offered her take on the growing use of alternative supplements to soothe the body.
“The last decade saw the greatest growth of integration of previously alternative healing into the mainstream…herbal medicine simply by having the tag ‘herbal’ endears it to one section of society who have come to believe that herbal is natural and hence superior to synthetic and lab-developed medicines,” she said.
“So the actual trend is people seeking natural and herbal stuff, but they are seeking it in a highly commercialised form.”
Despite the positives of commercialisation and new technological advancements, Dr Jacqueline Michael said she remained sceptical about trying to replicate age-old traditions.
She highlighted that blindly jumping on “the bandwagon” had its own pitfalls, with many of the side effects and mechanisms of action of alternative medicine not thoroughly documented, like pharmaceuticals.
“What centuries ago folks would gather from the wild or their own gardens and prepare according to their climate and constitution, we have now bottled and tried to replicate the same effects, which in my opinion will not bring the desired results,” she said.
“Herbal medicines do not intrinsically have such a robust system of documentation of side effects….this is not to say that herbal medicines are ineffective, they definitely have their uses where they have been studied appropriately using scientific rigour.”
Adaptogenic market and ASX-listed companies leading the way
The Calmer Co
To be considered an adaptogen, substances must be non-toxic at normal doses, support the entire body’s ability to cope with stress and help return the body to a stable state.
The Calmer Co uses its natural kava root to create its FijiKava and Taki Mai products, and it also markets a third brand called Danodan, which provides patented organic full spectrum CBD, rich water-soluble organic hemp flower infusions and functional formulas.
The company employs the latest technology to extract the purest form of kava from Fiji to promote sleep, and relaxation, and to reduce anxiety.
Kava is part of the pepper plant family and contains the psychoactive ingredient kavalactones, which act as a central nervous system depressant used widely in the Pacific and South Sea Island communities.
The company has penetrated global markets with functional ready-to-drink beverages, which include dietary shots, tinctures, teas, and powdered drinks.
These products have been made accessible to the Chinese, USA, New Zealand, and Fiji markets via its Amazon e-commerce profile.
In August, CCO also entered into a partnership agreement with Naturally Elevated, to market its products to more than 14,000 customers via its telepath portal to 2000 pharmacies and 5000 niche retailers.
Moreover, in February of this year, Kava sales made a legal comeback to Coles Group (COL) shelves after a 15-year absence in the Australian market. Since then, the company has observed a significant surge in demand for its 50-gram kava pouches across more than 700 stores.
Bioxyne (BXN)
Bioxyne, through its wholly-owned subsidiary, Breath Life Sciences (BLS), has been sitting at the forefront of this emerging market, with its utilisation of CBD, novel food supplements, and mushroom extracts which offer a calming alternative to man-made substances.
BLS supplies raw materials to the European, Japanese, and UK markets, and is the supplier to more than 600 business clients through its BLS clinic, which houses 60 authorised prescribers of alternative medicines.
One of the company’s direct-to-consumer brands, Dr Watson, is internationally trademarked as one of the only approved CBD products on Amazon. BLS also houses its mushroom and skincare brands on the Amazon platform.
In July, Bioxyne reported a 400 per cent increase in quarterly revenue for Breath Life Sciences compared to 2022, indicating the growing demand for its products.
Investor takeaways
The evidence of an increasing consumer attitude toward alternative medical beverages to alcohol can be referenced from market forecasts plastered across numerous research and analytical websites.
Allied Market Research anticipates the global adaptogens market size is set to grow from $10.3 billion in 2021 to $20.3 billion by 2031 at a CAGR of 7.3 per cent.
Dr Jacqueline Michael, while still sceptical of their true effect, believes the market is well-equipped to grow exponentially at great benefit to the consumer if monitored correctly.
“Kombucha is kind of like a fermented tea and is gaining popularity on supermarket shelves…In my view, the sale of Kava-based beverages and Kombucha and kefir will increase as long as it is responsibly marketed and organically sourced,” she said.
“Different cultures have their own favourite varieties – for example, the Europeans have Sauerkraut, the Koreans have kimchi, and the Japanese have Miso – all these are traditionally prepared from ingredients locally sourced and available.
In the pursuit of healthier lifestyles, the market for calming alternatives to alcohol is thriving, and investors have a unique opportunity to be a part of this exciting journey through companies such as The Calmer Co and Bioxyne.
As more consumers seek natural and herbal solutions in a highly commercialised form, investors will hold all the cards to play a pivotal role in shaping the future of this market.