Consumer demand for functional beverages, namely functional waters, is at an all-time high. The CPG industry has heeded this call recently, as numerous flavored water brands that boast myriad health benefits—namely from antioxidants and vitamins—have sprouted increasingly frequently. This space is where Yanni Hufnagel, founder and CEO of Lemon Perfect, found his niche with the refreshing and hydrating flavored lemon water brand that is now the fastest-growing brand in the enhanced water category.

I had the pleasure of speaking with Yanni to discuss his decision to leave basketball coaching to launch Lemon Perfect more than five years ago. We spoke about the brand’s meteoric rise, its recent $31M Series A funding round with an investment from global superstar Beyoncé Knowles-Carter, and the exciting future of Lemon Perfect.

Gary Drenik: You coached NCAA basketball for 10 years. Can you walk me through what led to your decision to leave coaching to start Lemon Perfect?

Yanni Hufnagel: I felt like it was an idea that had incredible upside, and the skill set I developed coaching college basketball translated to entrepreneurship well—so I went for it and started building the business and growing this team. I’m still coaching a team today. It's a bigger team—we currently have more than 70 employees at the company—than the basketball teams I coached (about 13 scholarship players on a team). Similarly, to a basketball team, we too are building this business against a scoreboard. Beverage is a scoreboard business, and there’s one winner that walks off the floor. The first thing you see when you walk into the Lemon Perfect headquarters is the scoreboard: gross revenue—the one number on which we bonus our entire organization. We are not shy about making sure our whole team knows where we are versus the top-line revenue plan for the year.

In sum, this felt like a big opportunity that I had to chase. From the moment when I jumped up and said, “I’m going for it,” through all the tough challenges so far, we’ve persevered—and today I’m feeling as good about the business as I ever have.

Drenik: How did coaching college basketball set the stage for you to build a fast-growing beverage company? In what ways does coaching basketball translate to building a $100M water brand?

Hufnagel: It all comes down to mindset. At Lemon Perfect, we are team first and scoreboard focused—and that’s coaching, irrespective of the sport. To win in basketball, you must have an incredibly connected team, both on and off the floor, and you must prioritize constant communication and elite energy—and that’s something that we talk about all the time at Lemon Perfect. In college basketball—with recruiting—you’re telling a story, you’re selling an opportunity, you’re selling the school, you’re selling the coaching staff. At Lemon Perfect, we sell hard and tell the story of a unique product with great flavor that’s also good for you.

Drenik: What white space did you see in the market that inspired you to create Lemon Perfect?

Hufnagel: I’ll admit I didn’t understand just how big the white space was until after we launched. I didn’t know that the enhanced water set was so desperately in need of disruption and innovation. I didn’t know there wasn’t a water with juice squeezed from real fruit or that we were paving a new path for enhanced water with delicious and refreshing flavor without the sugar. Even our commitment to sustainability (we’re certified plastic neutral) was relatively new in the category. So in some ways it was blind luck that we found and filled that white space. But as we look back now, we recognize that big white space, and we’re going after it at full force.

We’re also seeing a rising interest in flavored waters from the younger generations—Gen-Z and Millennials. Younger generations tend to show more interest in flavored water options than older generations do. According to a recent Prosper Insights & Analytics survey, 67% of Gen-Z and 68% of Millennials drink flavored water at least occasionally.

That same survey also shows 38% of respondents in those demographics never reach for energy drinks—indicating they’re primed for enhanced waters instead. While our marketing efforts to date have largely been geared toward health-conscious young adults, we think Lemon Perfect is a beverage for anyone, anytime, anywhere.

Drenik: Lemon Perfect is quickly gaining category share as the fastest-growing enhanced water brand. What point(s) of differentiation versus your competitor set is/are driving that traction?

Hufnagel: Delicious and refreshing flavor; zero sugar; and the fact that we check almost every other box that is prioritized by today’s consumer—organic, non-GMO, gluten-free, vegan, and sustainable packaging. At the end of the day, flavor wins, and we are delivering that mouthwatering and refreshing flavor profile without the junk. To this end, we have an opportunity to change the way people drink water, regardless of where they live, where they shop, and how much money they make. We say all the time that flavor knows no boundaries.

Drenik: How have you seen the brand grow since its 2017 launch?

Hufnagel: In 2018, we did just over $20,000 in retail sales. In 2023, we plan to achieve 3,000 times that. That’s very exciting growth over a five-year period. The brand is truly on fire.

Drenik: What’s on the horizon for Lemon Perfect this year and beyond?

Hufnagel: We plan to continue prioritizing growth with our retail partners by setting an industry-leading bar on retail programming and retail execution. We’re innovating across the board, from the size of our bottles to flavor to the brand behind the bottle.

Drenik: Thank you, Yanni, for sharing your story on how you left a 10-year career in coaching to follow another passion of yours, which led to creating one of the fastest-growing brands in the enhanced water category. We look forward to seeing what’s in store for the brand in 2023.