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An Empire Made of Cereal š„£
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Finlay Williams
August 07, 2024
2 minute wacky businesses, you can tell your buddies about š§
Ever heard of Magic Spoon? It sounds like a new wizarding tool from Harry Potter, but itās not. Itās a cereal brand. Yep, a cereal brand that's stacking $25 million annually. Magic Spoon is a "healthy" cereal. Imagine Froot Loops went on a juice cleanse and found its zen, and then created a cereal empire. Thatās Magic Spoon.
Taking a brick-and-mortar product to the DTC world š§
Founded in 2019 by Gabi Lewis and Greg Sewitz, Magic Spoon isn't just about cereals; it's about making healthy eating fun and nostalgic. They've struck a chord with health-conscious millennials with flavours based on childhood classics but packed with protein and free from junk.
While 99% of cereal companies stick to retail shelves, Magic Spoon embraced a direct-to-consumer (DTC) model. This approach not only cuts out the middleman but also allows them to gather invaluable customer data, driving continuous improvement and personalisation. Although they have now begun to expand into retail, but is it workingā¦
What are the nuggets? š
š Origin: Gabi and Greg werenāt newcomers to the startup scene. They previously founded Exo, a cricket protein bar company, which gave them the insights and grit needed to launch Magic Spoon. Their ability to identify market gaps and capitalise on health trends.
š Pivotal Moment: Like many startups, the pandemic was a turning point. While traditional cereal brands struggled with disrupted supply chains, Magic Spoonās DTC model boomed. Their agile logistics and strong online presence allowed them to meet soaring demand, proving the resilience and scalability of their model.
š½ Awesome Marketing Play: Magic Spoon had a collaboration with Spotify to create custom playlists for each cereal flavour, it was a strategic move to deepen brand engagement.
š Funding: Magic Spoon has raised a crazy $124M. To me this is a possible sign of worry, their revenue in 2023 is estimated to be around $25M, even if their profit margins are healthy, investorās returns are a long way down the road. Theyāve also got some note-worthy investors like Snoop Dogg and Kevin Durant on board, maybe they know something we canāt seeā¦
š Their Move into Retail: A major distribution deal with Target has taken Magic Spoon from online success to a household name. Reports show that this move may not have been a major success, with pictures of large amounts of stock in the clearance bin. Feedback suggests that Magic Spoonās price point isnāt competitive with other brands on the shelf. Given their history of growth through direct response channels, Itās understandable that theyāre only just running into this problem now.
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