MRK106 S22 Final Assessment - Case Magic Spoon Cereal Cereal sales have surged in recent months as people continue to seek comfort food a trend started during the Covid-19 pandemic. There is a growing number of professional, financially stable, college educated, Gen X and Millennial consumers looking for food that offers comfort and nostalgia. Cereal is in that category, but many of the options out there aren't very healthy making them unattractive to these health-conscious, active groups. One company that has benefitted from the increased demand is Magic Spoon, a direct-to-consumer [DTC) startup that offers cereal that specializes in "high-protein, non-GMO, gluten-free, grain-free, soy- free, wheat-free, nothing artificial, childlike cereal for grown-ups". MAGIC 129 39 MAGIC 129 39 SPOON MAGIC 129 39 SPOON MAGIC 129 39 SPOON SPOON Frosted Fruity Cinnamon Cocoa Launched in early 2019 by Gabi Lewis and Greg Sewitz, Magic Spoon was inspired by the flavors and nostalgia of Saturday-morning-cartoon cereal but upgraded for a 21st-century consumer. "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" says Lewis. In the first three years since it launched, Magic Spoon has built a strong brand with an engaged and loyal consumer base, reported to have reached one million customers. The average American eats 100 bowls of cereal a year, and kids are one of the largest consumers. The global cereal market is valued between $358-$408 and in the United States, 2021 revenue in the Breakfast Cereals segment totaled US$19.768. The market is expected to grow annually with a compound annual growth rate (CAGR) of 2.33%%. The market is currently dominated by General Mills (Cheerios), Kellogg (Frosted Flakes) and Post (Honey Bunches of Oats). In addition to the cereal market, Magic Spoon has additional growth opportunity as it is also a potential substitute for protein bars and supplements. The protein bar market is projected to reach USD $7.03 billion by 2027 with a CAGR of 5.6% whereas the Protein supplement market is expected to reach USD $26.05 billion by 2028 with a CAGR of 8.4%. Available via the Magic Spoon Web site, the cereal is available in a 4-box pack or 6-box pack and retails at just under $10 USD a box and have a 4-box minimum order for $39.00 USD (4 x 7 oz boxes, $1.03/oz, direct). While this is pricier than their competitors, the company offers an innovative subscription service that features a discount, free shipping and 100% risk-free guarantee Competitors include the Forager Project who offer a 4-pack of their "Sweetly nostalgic, organic, gluten-free" cereal in for $29 (4 x MRK106 522 Final Assessment Case Brief Page 1 of 37.5 oz boxes, $0.98/oz, Amazon) and Cascadian Food with their Fruitful O's Cereal which sells in a 10.2 oz box ($0.41/oz, Walmart, Amazon). Magic Spoon comes in eight flavors with their four most popular FROSTED FRUITY flavours being: Fruity, Cocoa, Peanut Butter and Frosted. All of Nutrition Facts Nutrition Facts them are made with a protein blend (milk protein isolate and 7 servings par conte Serving slam 1 Cup Pill arving she . Cup 1209 whey protein isolate), coconut oil, tapioca flour, chicory root Calories 110 calories 110 fiber, and a unique sweetener blend of monk fruit, Stevia, and Total Fat of Allulose. According to Magic Spoon, "Allulose is a 'rare' sugar Thang Fat On Trans Fail found in things like figs and maple syrup. It tastes just like Cholesterol 10mg Cholesterol 1047 "regular' sugar, but has zero glycemic impact and almost zero Bedium Burg Total Carbohydrate By 1% Tobill Carbohydrate By calories (less than 0.4 cal/g)." Then, depending on the flavor, Dietary Fiber Big Dietary Fiber g THE there are other additions, like cocoa powder or vegetable juice. Inches D. Added Sugar ON Protein Ty Pratain 12g All varieties contain 12 grams of protein, and only three grams Vitamin D Omgj Vitamin D Omon of net carbs. Potassium Ong Since their launch, Magic Spoon has been featured in many media publications including CNN, Hypebae, Delish and Ingredients Probein Blond Milk Business Insider, to name a few. Jessica DeFino from Business Protein Inolate, Whey Protein boketel, Protein Isolate, Whey Protein Iscute Insider wrote the following headline for her article review of the Blend Ninioers, Monk Fruit Extract Blond QAutos, Monk Fruit Extract, Thevia Eddrach, Chicory Phool PON. product, "Magic Spoon is cereal for adults that's high in protein Natural Floors, Suit, Vegetable Juice. Courtaim: Milk, Coconut Contains Milk, Coomout and low in sugar - I'm impressed with how delicious it is." Mary backand in A Facility Which Processes Whent, Other Tee Mika And Fearto Like most Direct to Consumer companies, Facebook and Instagram are the biggest advertising channels. With 380,000+ NET CARBS NET CARBS followers on Instagram for example, Magic Spoon has a much BE CARBS & CARBS -2p FIBER - 2% FIBER larger social media following than traditional cereal brands - 3g ALLULOSE - 3% ALLULOSE Another advantage for Magic Spoon is the popularity of the - 3g NET CARBS - 3g NET CARBS Ketogenic diet which seems to be a common theme among the cereal's followers, that leave rave reviews on virtually every post. The company has begun to leverage influencer campaigns to great success. One influencer of note is Questlove (from hip-hop band The Roots, the in-house band for the Tonight Show with Jimmy Fallon) who put up a social post talking about how much he loved the product and is now an investor in the company. "Since the product is marketed with health benefits, it's very important to have word-of- mouth" says Lewis, "It's better if customers see someone they trust talking about the product and not just us." In the summer of 2022, Magic Spoon founders received $85 million in investment during their funding round which they have said will be used to accelerate their growth specifically focusing on growing the firm from solely selling DTC but to also supplying bricks-and-mortar retail. Recently, they have begun to sell Magic Spoons at Target stores in the United States. Recommended Viewing: . The following video is a compilation of Breakfast Cereal commercials from the 1970's era. These are some of the nostalgic flavours that Magic Spoon is trying to replicate. https://youtu.be/sjDmgOOb49w Magic Spoon Web Site: https://ca.magicspoon.com/ MRK106 522 Final Assessment Case Brief Page 2 of 3Sources: This brief was mashed-up from the following sources: Abdelrahman, Amina Lake. "I Tried the Healthy Cereal Brand That's All Over Instagram-and It's Even Better Than I Thought." Health. com, 22 July 2020, www.health. com/food/magic-spoon-cereal-review . Breakfast Cereals, Statista, accessed 3 Aug. 2002 www.statista.com/outlook/cmo/food/bread-cereal-products/breakfast cereals/united states Burrows, Dan. "America's Most Popular Breakfast Cereals (fund the Stocks Behind Them)." Kiplinger, Kiplinger, I1 Oct. 2018, www.kiplinger.com/slideshowinvesting/1052-001-americas-most popular-breakfast cereals-stocks/index. html Chin, Tyler. "High-Protein Cereal Might Be the Upgraded Quarantine Breakfast You're Looking For." Gear Patrol, Gear Patrol, 8 Feb. 2021, Coyne, Andy. "US cereal firm Magic Spoon targets retail after closing $85m funding round" JustFood, 14 Jun. 2022, www.just food.comews/us cereal firm-magic angels retailafter closing-85m-funding-round DeFino, Jessica. "Magic Spoon Is Cereal for Adults That's High in Protein and Low in Sugar ." Business Insider, Business Insider, 1 Mar. 2021, http:/www.businessinsider.com/magic-spoon-healthy-cereal-reviewwwhat-ingredients-are-in-magic-spoon Edwards, Tanya. "We Tried Keto-Friendly Cereal Magic Spoon, and Here's What We Think . CNN Underscored" CNN, Cable News Network, 12 May 2020, www.com.com/2020/05/12/cnn-underscored/magic-spoon-cereal-review/index.html . "High Protein, Low Carb, Healthy, Keto Cereal: Magic Spoon Cercal." High Protein, Low Carb, Healthy, Keto Cereal | Magic Spoon Cereal, Magic Spoon, http:/ca.magicspoon.com/ Pauly, Alexandra. "Meet Magic Spoon, the Breakfast Cereal With Over 10,000 5-Star Reviews." HYPERME, HYPEBAE, 21 Dec. 2020, http:/hypchae.com/2020 7/magic.spoon-cerca _flavors.ingredients.nutrition-protein-carb-sugar.information.label.reviews Phan, Trung T. "Magic Spoon's Gabi Lewis: 'People Are Looking for Food That Offers Comfort and Nostalgia." The Hustle, 18 Sept. 2020. http:/thehustle.co/gabi-lewis magic-spoon-the-hustle. "Protein Bar Market Size, Share, Trends: Global Industry Growth, 2027." Protein Bar Market Size, Share, Trends | Global Industry Growth, 2027, Fortune Business Insights, Aug. 2020, www.fortunebusiness sinsights.com/industry-reports protein-bar-market-100805 Protein Supplements Marker Worth $36.05 Billion By 2028, Grand View Research, Mar. 2021, www grandviewresearch.com press release/global-protein-sup lements market Watson, Elaine. "Magic Spoon Celebrates Its First Anniversary. "We've Exceeded Our Wildest Expectations'." Foodnavigator, William Reed Business Media Lid., 23 Apr. 2020, www.foodnavigator usa.com/Article/2020/104/71/Magic-Spoon-cckbribes-its first-anniversary We've exceeded our wildest expectations. Weinberg, Sarah. "Magic Spoon Just Debuted Two New Keto Cereals That Tasic Like Strawberries And Peaches." Delish, Delish, 12 Feb. 2021, www.delish.com/food-news517 6196:magic.spoon.keto:beachy-corcall. MRK106 522 Final Assessment Case Brief Page 3 of 3