The co-founders of Exo, the cricket-protein bar company, have launched Magic Spoon to revamp the cereal segment with nostalgic branding and a better-for-you nutritional profile, NOSH reported. Gabi Lewis and Greg Sewitz sold Exo in early 2018 to Aspire Food Group and wanted to create something new to enter the "stale yet massive category."
While cereal sales have declined, they will still reach $1.1 billion this year, NOSH said, citing data from Mintel. Even though General Mills, Kellogg and Post dominate the segment, the Magic Spoon co-founders think they have the advantage of understanding consumer preferences even if they have far less funding than the CPG giants.
"A lot of people see this massive market dominated by these three huge incumbents," Lewis told NOSH. "[But] when you look at the products that they are all putting out, pretty much everything in that cereal aisle today is high sugar, high carbs and full of junk, which is counter to every consumer trend we’re seeing."
Magic Spoon is trying to bring back consumers who have turned away from conventional cereals for healthier options. Lewis and Sewitz told NOSH their intended audience is similar to the one they appealed to with Exo, but now they won't have the challenge of trying to talk them into consuming crickets.
The duo hopes to lure cereal buyers with colorful packaging, a higher protein level, fewer carbohydrates, no artificial ingredients and a sweetener blend containing monk fruit, stevia and allulose. These factors check a number of boxes for today's consumers who prefer less sugar and more filling cereal products. They're also looking for convenience and snacking options, areas where cereal can shine.
However, Magic Spoon's new cereal products aren't cheap, nor are they available in grocery stores. One case, which includes four 7-ounce boxes, is $39.99 plus shipping through online ordering only. Subscribers can get a 10% discount and free shipping by signing up to get four boxes of the product delivered each month. The company has four flavors — Fruity, Cinnamon, Cocoa and Frosted.
It's possible Magic Spoon may be able to shift to retail sales and more aggressive marketing since they've been able to attract some new funding. For now, Magic Spoon appears to only be in boxes, but it may need to branch out to portable bars or cereal bowls to meet changing consumption habits and grab a bigger share of consumers who eat cereal away from home.
Magic Spoon isn't the only cereal brand appealing to consumers with more protein and lower carbs. Kellogg debuted a new cereal in 2018 called HI! Happy Inside featuring prebiotics, probiotics and fiber. However, all three U.S. cereal giants also have introduced indulgent cereal brands during the past year. The companies said they plan to continue innovating to keep up with consumer demand and fulfill the public's taste for products that emphasize flavor. Post, for example, has cereals with or inspired by Chips Ahoy!, Nutter Butter, Oreo cookies, Sour Patch Kids and Honey Maid graham crackers.
It remains to be seen whether Lewis and Sewitz will succeed with their new cereal brand. They're going back to colorful packaging and games on cereal boxes, offering on-trend higher protein levels and advertising that each serving contains 12 grams of protein and 3 grams of net carbs.
What's likely to matter most, however, is how the Magic Spoon cereal tastes. A recent survey from Shopkick found consumers still prefer sweet varieties, and about half of shoppers decide which cereal to buy based on flavor more than nutritional value.
Milk and cereal was once the go-to breakfast option for many Americans. Today's consumers are looking for more convenience and nutritional benefits, leading cereal sales to fall. Although cereal manufacturers have remained optimistic, sales decreased 17% from 2009 to 2016. There are signs that the decline is leveling off, but it remains an uphill climb to restore growth. If Magic Spoon has the answer, you can bet cereal companies will quickly take notice.