Image Commercially Licensed From: Unsplash

Entrepreneur Yanni Hufnagel experienced some difficult times as he began building Lemon Perfect, a fruit-enhanced flavored water brand, in 2017. He experienced a range of emotions, from joy to despair. The initial steps were painful as he strived to find a beverage formulator, finalize a bottle design, and obtain funding. He received multiple slaps of reality on the journey. 

“There are probably not many things more challenging than building a beverage business,” said Hufnagel. “You’ve got long odds.” 

Hufnagel set a high bar. He sought to build a billion-dollar business that could change the way America drinks water. Made with squeezed organic lemons and plant-based sweeteners, Lemon Perfect is formulated to deliver healthfulness in a delicious and refreshing beverage.

“I want Lemon Perfect to impact the health of the American consumer,” Hufnagel says. “The beverage ecosystem is dominated by high-calorie and high-sugar options.”

Yanni Hufnagel Views the Enhanced Water Industry as a “Street Fight”

Enhanced water beverages typically deliver functional ingredients, like electrolytes, vitamins, and minerals. Vitaminwater birthed the enhanced water industry in the 2000s. Its popularity sparked others to build brands in what is now a multibillion-dollar industry. 

Despite his lofty goal of seeing Lemon Perfect become the number one brand in the enhanced water category by dollar share, Yanni Hufnagel understands the long odds. 

“The enhanced water category is a street fight,” Hufnagel says. “Our category includes Vitaminwater, Bai, Propel, and Hint. Vitaminwater, Bai, and Propel are distributed by big soda.”

In 2007, The Coca-Cola Company bought Glacéau, the maker of Vitaminwater, for $4.2 billion. In 2016, Dr. Pepper Snapple Group, Inc. purchased Bai Brands for $1.7 billion. Dr Pepper, Snapple Group, and Keurig Green Mountain combined during a 2018 megamerger to create Keurig Dr Pepper (KDP), a conglomerate with $11 billion in revenue (Bai and coconut water maker Vita Coco came with the deal).

A Beverage Producer Handed Yanni Hufnagel a Sip of Reality

After Yanni Hufnagel conceived the idea of Lemon Perfect in 2017, he spent months studying the beverage market. He jumped in by seeking a beverage formulator that could perfectly execute his idea to marry organic lemons with organic zero-calorie sweeteners. 

Hufnagel’s first meeting with a potential beverage formulator did not go as planned. 

“I walked in dressed in a suit and tie and had been really secretive about the idea. Then I shared it with them. They said, ‘Sorry, but we don’t do anything made from real fruit.’ That meeting lasted 15 minutes.” 

He remembers calling his mom after leaving the meeting. He told her, “I don’t know if I can do this.” 

Hufnagel considered reversing the course. 

“I was blind,” he says. “I had no idea what I was doing.” 

But Hufnagel was resilient. He persisted, making many phone calls until he founded Ocean Blue Innovation, which took Hufnagel’s formulation project on.

“I sampled the first iteration of Lemon Perfect on Aug. 28, 2017,” he says. “When I tasted it for the first time, I knew we had something.”

Yanni Hufnagel’s First Investor Meeting Went Badly, but He Recovered

Despite never having raised capital for a business before, Yanni Hufnagel says, “I put one foot in front of the other; things started happening. Once I was in, there was no turning back.”Being at the helm of a new brand in an industry with long odds of success, Hufnagel knew that raising money would be a challenge, especially before having amassed any sales data. He championed Lemon Perfect’s attributes—organic ingredients, the health benefits of lemons, delicious flavor, and zero sugar.

“There was never a product created in the same realm as Lemon Perfect,” Hufnagel says. “No one ever said, Can we take something made from real fruit and give it the flavor profile that America craves and do it with no sugar? I was lucky that we could always tell a great story.”

Hufnagel’s enthusiasm was met with a dose of reality when he had his first investor meeting. 

“It was so bad,” he says. “I got back in the car, put my head on the dashboard, and started crying,” he said.

The disastrous meeting occurred on a Monday morning. Then Hufnagel’s luck turned. On Friday, he met with a second investor, who said, “I don’t know anything about beverages, but I’m going to take a shot here and bet on you. I just need to check with my wife. Can you get me some more samples?”

The next day, the investor committed $50,000—Lemon Perfect’s first check. Over the next four months—bridging late 2017 and early 2018—Hufnagel raised over $1 million, and, in the more-than-five-years since, Lemon Perfect has raised over $60 million dollars and sold almost 50 million bottles. 

One thing is clear: Lemon Perfect has found product-market fit in a hyper-competitive category and appears well-positioned to achieve Hufnagel’s dream of building a billion-dollar business.