Cereal sales have surged in recent months as people are seeking comfort food during quarantine (pho and Siracha are my comfort go-tos haha).
One company that has benefitted from the increased demand is Magic Spoon, a direct-to-consumer (DTC) startup that offers a keto-based cereal that is high in protein and low in carbs.
The cereal company has a very active Instagram (~200k followers) and is recognizable for its colorful branding.
We spoke with Magic Spoon’s co-founder Gabi Lewis to find out more about the cereal boom and the company’s plans to ride the wave.
What has Magic Spoon seen since the start of the pandemic?
We can confirm sales have massively accelerated in recent months.
We are seeing the trend of people looking for food that offers comfort and nostalgia. Cereal is in that category, but many of the options out there aren’t very healthy.
Magic Spoon is able to spark joy, capture some of that nostalgia while providing health benefits.
How big is the cereal market opportunity?
When we started, big food manufacturers told us that cereal was a bad idea. It’s a declining market and the retail aisles are controlled by huge brands, making it hard to get shelf space.
We knew we were going to go direct-to-consumer (DTC) online, so were less worried about it. Further, we saw there was a clear opportunity to speak to customers in a new way.
Internally, we peg the US cereal market at $11B and the global market at $35-40B. The Magic Spoon opportunity is larger, though, as we also see ourselves as a potential substitute for protein bars and shakes.
What have been effective channels to boost sales during this period?
Like most DTC companies, Facebook and Instagram are our biggest channels. However, we’ve been doing a lot of influencer campaigns and it’s actually quite comparable in share to our bigger channels.
Since our product is marketed with health benefits, it’s very important to have word-of-mouth. It’s better if customers see someone they trust talking about the product and not just us.
We don’t just work with any influencer, though. Whether it’s via Youtube, Instagram or podcasts, we find partners (or they find us) that love the product.
What’s a notable example of an influencer that came to you?
Well, this wasn’t a direct inbound but Questlove put up a social post talking about how much he loved our product.
We didn’t realize that it happened until our phones started blowing up with texts. Ultimately, we connected with Questlove and he’s now an investor in the company.
What brands or companies have inspired Magic Spoon’s marketing?
If you look at old school cereal, the marketing is very effective. It’s colorful, they have cartoons and the brands are fun.
Of course, underneath the branding is often junk food. (Editor’s note: think Captain Crunch, Cinnamon Toast Crunch).
Taking inspiration from those old school cereals, we wanted to make Magic Spoon fun and accessible, but much healthier.
What are some criticisms of Magic Spoon and how do you address them?
There are two:
- “The product is pricier than other cereals”
While this is true, it’s just the reality of selling a healthier product. As an example: of course cold-pressed juice is more expensive than processed juice.
We’ll never be able to get to the same scale as junk food cereal manufacturers, which use commoditized inputs like high fructose corn syrup.
Having said that, we are really focussed on reducing costs and, if compared to other health foods (e.g., RX Bar), we’re cheaper.
- “We don’t taste exactly like other cereals”
It probably won’t ever be possible for us to taste 100% like junk food cereal. We won’t have as much sugar etc. But, we think we are 90% of the way there, which is good enough for most people who care about health.
For us, it’s a trade off between price, taste and nutrition. Junk cereal sacrifices nutrition. Healthy cereal sacrifices taste. Magic Spoon gives the best of both worlds.
Do you have a request for a startup?
I’m from Scotland and cider is big there. I would love for someone to make a cider brand in the US. I’ve seen a few attempts at it, but no one has nailed it.
I think cider could take a meaningful chunk of the beer market. It’s healthier than beer and is gluten free.
Alcohol is a hard category, though, so I’m definitely going to stick to cereal in the meantime.
UPDATE: No word yet on whether a pho-flavored cereal is in the works.