CEO and founder of Lemon Perfect Yanni Hufnagel - who has just teamed up with New York-based beverage and snack distributor Big Geyser - believes the company's cold pressed lemon water, which contains five calories and 0g of sugar per bottle, can be a mainstream beverage as it expands beyond its initial market of Southern California.
The impetus for Lemon Perfect was essentially Hufnagel wanting to make his morning routine of squeezing half of an organic lemon into water more convenient.
"It really became a non-negotiable part of my routine, but it quickly became very burdensome," Hufnagel told FoodNavigator-USA.
Hufnagel, who was an assistant basketball coach at the University of Nevada at the time, remembers independently googling beverage formulations when he couldn't find a comparable product to lemon water on the market.
In late September 2018, Lemon Perfect launched with a cold chain bottled product and secured distribution with 22 natural, independent retailers in Southern California.
"The idea was, let’s go a mile deep and an inch wide and really build the brand in a controlled environment and try to prove product market fit early on," said Hufnagel.
Lemon Perfect recently debuted its shelf-stable beverages in bottles and sparkling water in cans. Flavors include: Just Lemon, Blueberry Açaí, Dragon Fruit Mango and Peach Raspberry (for bottled products). Flavors of the sparkling cans include: Coconut Lime, Just Lemon, Strawberry Kiwi, and Watermelon Cherry
When exhibiting at the Natural Products Expo West show last year, Lemon Perfect attracted the attention of the buyer for the Northeast Whole Foods territory.
"That was one of our first moments to scale the brand beyond Southern California," he said.
Building a business that could scale
After building a strong consumer following in New York, Hufnagel knew that to become a truly disruptive beverage brand -- and profitable one -- he would need to rethink the company's supply chain and logistics strategy.
"We were upside down in a cold chain ecosystem from a unit economics perspective, and we had to find a way out... [I thought] there’s not enough margin here for us, there’s not a route to market for us that makes sense in a cold chain ecosystem and I set out to deliver the same nutrition integrity, if not more flavor, in a shelf-stable form," Hufnagel said.
"I had to go into a cave and not come out until we had a business that could scale."
Implementing aseptic filling to produce Lemon Perfect's bottled products allowed Hufnagel to emerge from the metaphorical cave.
"It’s propelled us to a point where we believe we have a chance to become the next big disruptive beverage brand," he said.
Each bottle of Lemon Perfect contains filtered water, half of a squeezed organic lemon, organic erythritol, organic flavors, vitamin C (ascorbic acid), and organic stevia leaf extract, according to the company.
"That’s how we most closely preserve the nutritional deck for our organic lemons," he said.
Robust distribution targets
By the end of April 2020, Lemon Perfect will have switched its distribution from Rainforest Distribution to New York-based Big Geyser, which distributes a number of large beverage brands as well many emerging ones.
"Nearly every great beverage brand that’s scaled to an exit has gone through their system and we certainly hope we’re the next one," said Hufnagel.
Lemon Perfect is currently sold in three Whole Foods regions and is pursuing global distribution with the leading natural retailer, and will launch a future partnership with Target. Products are currently sold for a SRP of $1.99.
"What’s our next big moment? It’s winning this summer in Big Geyser, and we’re going to put the resources behind it," said Hufnagel.
'We have to build a brand and a category at the same time'
When asked where within the beverage category Lemon Perfect will fit, given the growing number of functional and sparkling waters, Hufnagel said: "We have functional elements. We have hydrating electrolytes, we have essential antioxidants, and 10mg of citrus bioflavonoids. We tried to build something that checks almost every box. This a drink for refreshment. The key difference for us though is, we are not an essence, we are not an extract, we are a cold-pressed lemon water."
Hufnagel added that Lemon Perfect has already proven its ability to cross retail channels and consumer markets.
"It doesn’t matter if you live in Venice, California, or Milwaukee, Wisconsin, the product is resonating," he said. "You have to be able to win in multiple verticals to build a massive brand. And that’s ultimately what we’re going to position ourselves to go to do."
What is the next breakout beverage category? How are consumers defining a functional beverage? Find out during FoodNavigator-USA's FREE-TO-ATTEND LIVE Beverage Trends webinar next week.