Initial sales of low-carb cereal Magic Spoon have exceeded expectations, say founders
As a known-quantity with high household penetration, cereal was always going to be an easier sell than edible insects, concede Lewis and Sewitz, who sold their EXO cricket protein bar business last year and turned their attention to the cereal aisle.
But it’s also a declining center-store category dominated by CPG giants (Kellogg, General Mills, Post) that’s hemorrhaging shoppers, says Lewis, who is targeting consumers he claims grew up enjoying sugary cereals but have phased them out in favor of smoothies, Greek yogurt or protein bars amid concerns over nutrition.
Magic Spoon (strapline: ‘Childlike cereal for grownups’) offers these consumers a route back into the market with a grain-free option that tastes as good as Froot Loops, Frosted Flakes or Cocoa Puffs but has a fraction of the net carbs (3g vs 21g, 24g and 23g respectively) and 6-12 times the protein (12g vs 2g, 1g, and 1g respectively), he says.
Have your cake and eat it too?
But is excess sugar really the reason some shoppers are spurning cereals, given that many recent launches - from Pop-Tarts Cereal and Strawberry Rice Krispies to Cinnamon Toast Crunch Churros, Fruity Lucky Charms and Chocolate Toast Crunch – seem to be dialing up the sweetness?
Magic Spoon recognizes the indulgent trend, but is offering cereal fans a chance to have their cake and eat it too with a product that delivers a sweet taste, fun and whimsy (courtesy of designers at Brooklyn-based agency Gander) that shoppers are clearly looking for, without the carbs, and with a hefty serving of protein, says Lewis.
“Right now there are the bright colorful playful sugary fun cereals, and then there's the healthier more natural ones, although many are still high carb, but they're not as tasty and not as much fun. We're saying you don't have to make any sacrifices.
"But we're not limiting ourselves to any particular niche such as keto or gluten-free or low carb, Magic Spoon is just a healthy cereal that tastes amazing."
He adds: "We're also finding that parents are emailing us telling us that their kids love it, so at some point in the future if we decide that children are a more immediate target audience, we'll probably develop a brand that's more specifically targeted at children, and maybe even tweak the product to be more suited to children as well."
The formulation: Protein isolates, coconut oil, tapioca flour, chicory root fiber, allulose, monk fruit, stevia
Available in four flavors (Fruity, Cinnamon, Cocoa, and Frosted) Magic Spoon is a blend of milk and whey protein isolates, coconut oil, tapioca flour, and chicory root fiber, sweetened with allulose, stevia and monk fruit.
While this isn’t exactly consistent with consumer demand for less processed, more ‘natural’ foods delivering inherent nutrition, it delivers what many shoppers are looking for from a macronutrient perspective in a category that most consumers accept is by definition pretty ‘processed,’ argues Lewis.
“It's more processed than eggs, but most cereal is somewhat processed, and consumers understand that.”
While many consumers are not yet familiar with allulose (a rare sugar that’s found naturally in figs and raisins but is produced commercially via the enzymatic conversion of fructose from corn), perceptions are generally positive, given that it tastes great, but contains virtually no calories, and has no impact on blood sugar, claims Lewis.
Pricing and the go-to-market strategy
Available exclusively via the Magic Spoon website, the cereals retail at $10 a box, (with a four-box minimum order). Monthly subscribers receive a 10% discount and free shipping, says Lewis, who notes that cereals are better suited to an online subscription model than most foods, because they are shelf-stable, light to ship with a reasonably long (12-month) shelf life, and consumed habitually.
Magic Spoon, which has closed a seed round backed by Collaborative Fund, Wild Ventures, and the founders of Thrive Market, among others, has already attracted significant interest from bricks and mortar retailers, but has enough demand from online customers to keep it busy for the time being, he says.
"We’ve already been approached by a number of reputable retailers excited to bring something fresh to the cereal aisle, but we're struggling to keep up with demand right now. Plus selling online - at least to begin with - allows us to be pretty flexible, survey our customers, and gather feedback on flavors."
Asked whether price could hold the brand back, especially when it hits brick & mortar stores, he said: "$10 is more than you’d usually pay for a box of cereal, and we were nervous before the launch, but we’re seeing very little pushback on price.
“It looks like cereal but it’s not really cereal [no grains] and we’re using expensive ingredients such as protein isolates, natural sweeteners and coconut oil, rather than corn and wheat. It’s the kind of ingredients you get in protein bars and shakes, although obviously with scale prices could come down a bit in future."