Entrepreneur Yanni Hufnagel makes no bones about how big he hopes his zero-sugar hydrating flavored lemon water brand Lemon Perfect will become. He wants it to be huge—$1 billion huge.
“By 2030, we want to be a billion-dollar sales business,” he says. “We’re on our way.”
Hufnagel is the founder and CEO of Atlanta-based The Lemon Perfect Company. In 2017, he created Lemon Perfect, a 5-calorie, zero-sugar beverage, to disrupt a beverage ecosystem dominated by high-calorie, high-sugar options.
Plant-based sweeteners, including stevia, enhance Lemon Perfect, a line of USDA-certified organic beverages that competes in the enhanced water category. As sugar reduction has become a top priority among Americans, Lemon Perfect is the type of product consumers increasingly desire.
Lemon Perfect enjoyed early success. In April 2022, the company closed a $31 million Series A funding round that brought its total funding to $42.2 million and a valuation of over $100 million. Getting to a $1 billion valuation requires taking a bigger market share, and Hufnagel’s calculated steps are getting the brand closer to that goal.
“Nothing is more important than share,” said Hufnagel on BevNET’s Taste Radio podcast. “My heart wants this brand to be ubiquitous, whether you’re shopping at a Whole Foods in Beverly Hills [California] or a Dollar General in Baton Rouge [Louisiana]—and everywhere in between.”
Yanni Hufnagel Knows a Brand’s Aesthetic is Critical
Early on, Hufnagel leveled up Lemon Perfect’s branding, knowing it needed an edge to stand out in a competitive category. He wanted the bottle to embody the company’s mission, vision, and message. After all, before founding Lemon Perfect, Hufnagel worked as an assistant basketball coach for some brand-driven entities, including Harvard University and Vanderbilt University. After 10 years in this field, he understood well the power of storytelling and visuals.
But when the initial bottles rolled off the line, Hufnagel experienced a stop-the-presses moment. He says, “I looked at them in my hands and said, ‘My God! This looks like a medicine bottle!’ I knew right then that we would have to pivot.”
Yanni Hufnagel learned a powerful lesson by holding the physical bottle: a product can look fantastic on a computer screen or paper printout but not so hot as a finished good. Based on that bottle, Hufnagel had sold 40 investors on a pre-revenue seed round, and he had to inform them of the decision to rebuild the brand.
“It was painful,” he says, describing the 40 phone calls he made to investors to explain the decision to delay the product launch.
Hufnagel then worked with a graphic designer to create a brand identity and packaging system infused with optimism and energy that would stand out on supermarket shelves. The bottles’ bold colors and minimalist layout combine to position Lemon Perfect as a simple but powerful product. To spread sunshine the Lemon Perfect way, the brand’s aesthetic is that of a vibrant, cheerful rainbow of colors.
“You have to draw people in through the brand’s visual aesthetic,” Hufnagel says. “Now our bottles allow our consumers to be a walking billboard for the brand. We came out of it with a package that makes people feel good and look good. And it captivates the eye.”
Yanni Hufnagel Changes Formula to Maximize the Brand’s Visibility
A floor display is designed to attract customers’ attention. Its mere presence suggests the brand is of particular importance, and it flexes immense selling power when accompanied by targeted marketing materials. A floor display gets a product noticed in a crowded field like the enhanced water category, whose competitiveness Hufnagel has compared to “a street fight.” Lemon Perfect would have loved to use such a display at the outset, but it couldn’t get one.
Hufnagel’s company launched Lemon Perfect as a “keep refrigerated” beverage that fits into the cold distribution category. Whole Foods, the first nationwide retailer to pick it up, sold it with other cold-pressed, refrigerated drinks. Since Lemon Perfect lived in a refrigerator, there wasn’t an option to build displays on the floor to garner awareness.
Being refrigerated was a hindrance for a company that wanted to scale in a significant way—so Hufnagel decided to reformulate Lemon Perfect into a shelf-stable beverage.
“To win in beverage, you have got to be able to build the incremental display space on the floor, especially with how our bottles look,” he says. “We create a fashion show on the floors of retailers across America. But if you live in a refrigerator, you don’t get that. There’s no option to build that incrementally, to attack and get that display.”
Today, Lemon Perfect comes in seven shelf-stable flavors: Original Lemon, Dragon Fruit Mango, Peach Raspberry, Kiwi Star Fruit, Blueberry Açai, Strawberry Passion Fruit, and Pineapple Coconut. The brand’s bottle design includes visual elements of color and contrast that capture the eye.
Yanni Hufnagel Knows the Price Is Right
Hufnagel has yet to increase the price of Lemon Perfect from $1.99 a bottle. He believes compressing margins on the front end will build an excellent margin story later.
“I’m guided by the belief that I’m never going to put a wall up and make Lemon Perfect inaccessible,” he says. “We’re going to be accessible. We’re going to change the way that people drink water. And to do that, you’ve got to be able to play on price. Our barrier to trial is low.”
Lemon Perfect has discovered a competitive advantage through retail promotional strategies as an additional incentive for consumers to buy. One of the company’s best accounts in America is Publix, where Lemon Perfect runs six BOGO’s (Buy One, Get One) a calendar year, which trim the beverage’s price to $1 a bottle.
“The American consumer is still shopping price tags,” Hufnagel explains.
Yanni Hufnagel Admits His Business Is Challenging
“There are probably not many things more challenging than building a beverage business,” Hufnagel says. “You’ve got long odds. It’s just hard.”
At the beginning of the Lemon Perfect journey, Hufnagel made difficult decisions about packaging, beverage formula, and price. Ultimately, he achieved a delicious and refreshing flavored water, an eye-catching product design, and a sophisticated retail strategy, promotional strategy, and pricing architecture. It’s drawing customers in.
“It really has become a magic formula,” Hufnagel says.
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