Lemon Perfect founder and CEO Yanni Hufnagel didn’t know it yet, but his hydrating lemon water brand was about to go viral in 2020, all thanks to an unexpected appearance of the Dragon Fruit Mango bottle in the door of Beyoncé Knowles-Carter’s limo.
“She had posted a photo with it in her limo, and all of a sudden my phone blew up,” Hufnagel said. “We came to learn that she was an authentic fan of the brand. A year later, one of our investors was in her house and saw her stash in the fridge and helped us build the bridge with her. It is beyond my wildest dreams to have someone of her influence being a fan of the brand.”
The company announced Thursday that Knowles-Carter is a backer in its $31 million Series A alongside Beechwood Capital, Goat Rodeo Capital, Melitas Ventures, NNS Capital and Trousdale Ventures.
“I don’t typically enjoy drinks without added sugar, but Lemon Perfect is delicious,” said Knowles-Carter in a statement. “It was an easy decision to invest in something that not only tastes great and is healthy, but also, and most importantly, allows choosing a healthier lifestyle to be affordable and accessible to everyone.”
Hufnagel started the Atlanta-based company in 2017 after a career as a college basketball coach for University of Nevada, Reno. After an unexpected encounter with a store owner who dreamed of being a coach, the store owner ended up sending Hufnagel a draft of a book he was writing about the Keto diet, which included recipes for lemon water.
After seeing his basketball players drinking Bai in the locker room, it got Hufnagel thinking about taking lemon water and giving it the same foundation as Bai and to go after the multibillion-dollar enhanced water category that he thought was ripe for disruption. This market is expected to grow nearly 9% annually over the next five years.
Today, Lemon Perfect is in direct competition with drinks like Bai, Vitamin Water and Hint. It comes in flavors, including Beyoncé’s favorite Dragon Fruit Mango, Just Lemon, Blueberry Acai and Peach Raspberry. The drinks have five calories, contain potassium and vitamin C, but zero sugar and no artificial flavors or sweeteners.
“Nothing with our flavor and health profile is on the market today,” Hufnagel added. “And, our price point is at where a consumer anywhere and anytime can become a customer. It is very rare that you can have a total addressable market like we do.”
The Series A announced today is a combination of a $16.5 million initial round and a $14 million extension, Hufnagel said. The new investment gives Lemon Perfect total funding to date of $42.2 million and a total valuation to over $100 million.
The company previously raised funding two years ago, but the driver for this new financing was simple: growth. Hufnagel wants to scale the brand to more than 40,000 points of distribution by the end of 2022, which will require a substantial field sales team. Currently it is sitting at 25,000 points of distribution, including its website, Amazon and retailers across the country like Publix, Fred Meyer and Mariano’s. Lemon Perfect is also poised to launch in Costco in the summer.
In 2021, Lemon Perfect quadrupled its revenue to $21 million, and Hufnagel estimates the company will do $60 million in retail sales in 2022, up from $25 million last year. He also expects to more than double the business in terms of revenue this year. Along with that growth has come a boost in headcount, which stands at 70, up from 38 employees a year ago.
“Beverage is an expensive game, and access to capital is the only way to drive a fast-scaling brand forward,” Hufnagel said. “We want to be a disruptive player in a large category and want to put fuel on the fire. We felt like we were able to drive great execution, but still have room to grow and want to build a big margin story for tomorrow.”
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