Enhanced water maker Lemon Perfect announced today it has closed a $31 million Series A funding round backed by several investment firms and pop star and entrepreneur Beyoncé Knowles-Carter.
The new financing brings the Atlanta, Ga.-based company’s total financing to over $42.2 million and arrives as the brand prepares to expand its footprint to over 40,000 doors nationwide this year, including upcoming expansions into Costco, CVS, Walmart and Target stores.
Speaking with BevNET, Lemon Perfect founder and CEO Yanni Hufnagel said with the new financing the cold-pressed beverage maker now has over 200 entities on its cap table. The round featured existing investors like Beechwood Capital, Goat Rodeo Capital and Melitas Ventures, as well as firms such as NNS Capital and Trousdale Ventures.
The big name for consumers, however, is undoubtedly the involvement of Beyoncé. According to Hufnagel, Knowles-Carter joined the round towards the end of closing after an existing investor and friend of the “Single Ladies” singer saw her drinking the brand while visiting her home and encouraged her to get involved with the ongoing fundraise.
“It was honestly authentic brand love that connected us,” he said.
However, unlike many celebrity brand investments, there won’t be too many Instagram posts or TV spots featuring Beyoncé holding up a bottle for the camera. Hufnagel anticipates that her involvement will help associate her name with Lemon Perfect in press coverage, and he wouldn’t rule out potential marketing campaigns involving the star in the future, but he said the deal is “less about Beyoncé on Madison Avenue” and more about tapping into her professional network and entrepreneurial experience to grow the company. He noted that Knowles-Carter’s team did a full analysis of the business prior to investing and that she personally is looking at the deal from the lens of a business partner, not as an influencer.
“Through Beyoncé and our investor network as a whole, we know that we have access to just about anyone,” he said. “How we leverage that influence remains to be seen as we scale the brand, but what this really does for us is it adds a new layer of credibility to the brand on a consumer level, on a customer level, on a distributor level. You know, it’s really significant in that there are meaningful legs that Lemon Perfect is standing on now.”
That new credibility comes as the brand makes a broader push to expand in the convenience, club, drug and mass channels and intends to grow its marketing team to begin raising brand awareness.
Founded in 2017, Lemon Perfect is currently available nationwide in retailers like Publix, Kroger, Whole Foods, Mariano’s, Ralph’s and Fred Meijer, among others. To date, Hufnagel said the company has been focused on its sales operation, prioritizing retail programming and field execution rather than advertising.
Currently leading sales for the company is Jim Brennan, a former EVP of national retail sales for The Coca-Cola Company, who joined Lemon Perfect as a board member and advisor last year and agreed to serve as interim Chief Customer Officer until the company can hire a full-time sales lead in the back half of 2022, Hufnagel said. Brennan works “side by side” with SVP of field sales and distribution Brian Arkus, who came to the company from Celsius last year.
Hufnagel credited the sales-forward strategy with rapidly growing Lemon Perfect’s business in the natural and conventional grocery channels and said the company is on track to surpass $60 million in revenue this year. But now, the new funding will in part support expanding the brand’s marketing team and launching consumer-facing campaigns.
“We just think that the harmony between retail sales and field sales is how you create magic in beverage,” he said. “But having said that, we’ll start to invest in our brand and content story. You know, it’s hard to put those dollars to work until you have the distribution, we’re now getting distribution to a point where we feel like we can start to put some real marketing dollars behind the business.”
Lemon Perfect produces a 7-SKU line of 12 oz. organic, zero sugar cold-pressed lemon waters available in Just Lemon, Dragon Fruit Mango, Blueberry Acai, Peach Raspberry, Kiwi Star Fruit, Pineapple Coconut and Strawberry Passion Fruit flavors. Hufnagel said the company currently has three additional flavors that are “ready to go” and will launch strategically in the near future, and is also exploring packaging innovation opportunities including new pack sizes and, potentially, aluminum bottles.
As well, Hufnagel said the brand intends to focus simply on its core line with no plans to explore additional line extensions such as functional or sparkling products, despite the base drink’s versatility for innovation.
“We are going to disrupt enhanced water,” he said. “We know that we have to go after Vitaminwater and Bai and Hint and we’re very focused on just winning in that category with the product that we have today.”