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Thursday, Mar 28, 2024

Tangy Startup

Sherman Oaks startup Lemonette is carving out a niche as the country’s first line of exclusively lemon-based cooking sauces. Since reaching brick-and-mortar stores as a one-woman operation in 2015, Lemonette has doubled its sales each year and is projected to cross the threshold into profitability in the next year or two. “Usually startups crash and burn in three years. We’ve overcome that hurdle. We’re in our fifth year, free and clear,” said founder Tenny Avanesian of Encino. Currently, Lemonette sauces are sold at more than 150 stores in California and Arizona, including Gelson’s Markets, Jensen’s Foods, Jimbo’s, Bristol Farms, Erewhon, Mother’s and AJ’s Fine Foods. On the Amazon.com Inc. website, bottles retail for $6.99. Mediterranean appeal The brand strives to be a clean and healthy alternative for popular dressings and marinades made with fat-heavy cream or allergenic vinegar as primary ingredients. “It has all the ‘no’s’ you can think of: no GMOs, no gluten, no vinegar, no sugar, no canola oil, no soy, no dairy, no MSG, no artificial colors or preservatives,” Avanesian said. “What’s left? All the good stuff.” Lemonette’s flavors — Italian herb, Mediterranean herb, zesty cumin and its flagship lemon garlic — are tart and may sit a bit off-center on the traditional American palate, but that’s by design. The company’s concept and core products can be traced to Avanesian’s Armenian roots. “(Lemon) is a primary ingredient in all of the sauces or condiments used to accompany (Armenian) dishes,” she said. “We wanted to bring into the market a line of flavors that are familiar to what we grew up on.” She noted the San Fernando Valley’s large Mediterranean population and said she hopes to make these flavors more readily available to people with that background. “This is a highly competitive marketplace,” said Michel Algazi, founder of food consultancy Food Centricity in Valley Village. “The challenge with sauces and dressings in general is product velocity. Saying it’s a marinade or a cooking sauce in addition to a dressing tends to improve its chances of turning (profits) more quickly because people can find more opportunities to use it.” Algazi said it isn’t uncommon for small, self-funded or family-owned food companies to take four or five years to achieve profitability, and that if Avanesian can prove velocity — or how fast her products sell — equal to or faster than the industry average, Lemonette will soon be well-positioned to expand into regions beyond Southern California. Startup challenges Though Lemonette hit the market in 2015, the company has existed on paper since 2011, when Avanesian first secured a trademark for the name. The next few years were spent on research and preparation. “I read books, I attended seminars, I walked the floor of numerous trade shows, I talked to people in the industry for a few years,” she said. “It was really all self-taught.” Because she was raising three young children, the company was slow to progress at first. She recalled losing a relationship with an East Coast food consultant who thought “he wasn’t going to live to see (her) product in bottles and on grocery shelves.” But that didn’t stop her. For the first two years, Avanesian ran Lemonette on her own as a grassroots operation. She secured her first 35 store placements by cold calling and walking into grocery stores and offering free products so they could test Lemonette’s ability to sell. Retailers called back for more inventory. But the real turning point came in 2017 at San Francisco’s Fancy Food Show. Avanesian spent thousands of her own dollars printing trade show signs, making promotional hats and shirts, designing her booth display and paying for registration. The investment paid off — she secured relationships with three distributors and one retailer in Arizona that she still works with today. “Exhibiting at Fancy Food legitimized us as a company and put our brand on the map,” she said. Investor connection Avanesian has since hired up to 10 employees, opened a second office in West Hollywood and partnered with a manufacturing center in Anaheim. And in January, she landed her first and only investor. Hollywood producer Jehan Agrama came across Lemonette while eating office lunches with her father. She noticed him drowning his salads in Lemonette’s lemon garlic dressing; as an immigrant of Egyptian heritage, the strong flavors were reminiscent of home and provided an authentic dining experience other brands couldn’t achieve. He suggested that they invest so he could get free product for personal use. They met with Avanesian in December and expressed interest in buying a stake of the company. “With our knack for sales and building things, it was a good match. She was looking for a partner, somebody to bounce ideas off, somebody who would work with her,” Agrama said. “We worked well together.” Agrama now serves as Lemonette’s chief executive and co-owner. Her father still pays for bottles of dressing at the grocery store. Agrama said she enjoys the challenge of growing a startup and is happy to see business ramping up. “There are markers of success. We’re in Gelson’s — they’ll usually dump you in six months if your product is not producing. We’re closing (deals with) new stores. We’re getting reorders in stores. We’re generating a lot of Amazon sales,” Agrama said. Scaling up Avanesian remembered when she had to make sure there were enough customers that the dressings wouldn’t expire on the shelf. Today, Lemonette has the opposite problem. “We need to make sure we schedule production runs fast enough that we’re able to fill them. Purchase orders are coming in more frequently and in more directions than in the past,” she said. According to Algazi, the consultant, there is still major growth opportunity for Lemonette in the Southern California grocery market, which he called the best in the nation and possibly the world due to the high density of population and retail stores. “There’s probably now an opportunity for her to present to Albertsons Cos., Safeway and Kroger Co., which owns the Ralphs banner,” Algazi said. “She could have another 300 to 500 stores in Southern California, and that would be a great thing to do because at that point her cash flow would allow her to start expanding into other regions.” Agrama said she admires Avanesian’s commitment to organic growth. “We’re not looking for venture capital or to sell to the highest bidder. It’s a brand of passion for her and for me,” she said.

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