I’ve a tender spot for sugar cereals.
Having grown up within the 80s consuming large bins of Captain Crunch, Fortunate Charms, and Life (my mates known as me Mikey!), I nonetheless salivate after I see large, colourful bins with leprechauns and monsters within the grocery retailer cereal aisle.
So when keto-friendly, processed sugar-free sugar cereal substitutes began showing in 2018 and 2019, I used to be excited. Like several self-respecting grownup, I’d moved on to extra accountable breakfast choices, however noticed these new keto-free cereals as a guilt-free time journey machine again to the land of the magically scrumptious.
I wasn’t the one one. The product’s early success accelerated throughout the pandemic, a time when folks have been bored at house and ordering a lot of meals by way of supply. This led to a powerful collection B in 2022, the place the corporate scooped up $85 million. That funding fueled the corporate’s growth into retail, and now you will discover Magic Spoon in locations like Costco, Goal, and Walmart.
With widespread availability, the corporate ought to now be beating the old-school, better-for-you cereals like Grape Nuts and granola, proper?
Perhaps not. In line with a tweet by Andrea Hernández of Snaxshot, Magic Spoon cereal has hit the clearance bin at Sprouts, a sequence specializing in premium manufacturers. The pic, which Andrea additionally posted on Linkedin, led to a lot dialogue about whether or not the better-for-you keto cereal pattern is over.
OMG 😂🤝
Magic Spoon in low cost bin for $1.99
that is what VC backed progress will result in—rattling so folks don’t even need it at a $7 low cost
that’s wild lolllllll
but additionally thank your native VC 🤝
making BFY accessible to lots pic.twitter.com/5sSuzAqBYf— Andrea (@iiiitsandrea) March 28, 2024
Whereas it will not be over, you must surprise concerning the long-term prospects of Magic Spoon and rivals like Schoolyard Snacks (previously Cereal College). The primary downside is they’re simply very costly. Sadly for these manufacturers, breakfast cereal is a commodified merchandise, one thing most conventional adults aren’t prepared to pay a 3x premium for.
The opposite downside is addressable market dimension. I like Magic Spoon (or precise sugar cereal) as a once-in-a-while nostalgic escape, however realistically, I’m not going to make it part of my on a regular basis routine (and, as I mentioned, I actually like sugar cereal). I think about that is fairly typical of their addressable goal market.
Lastly, there’s the query of style. I’m high quality with it, as are many others, however some suppose the sugar-free style is a poor artificial illustration of the actual factor. In a manner, this criticism echoes a few of those that have heard about Unattainable and different plant-based meats (although I might argue each the acquisition motivation and rationale for plant-based meat are a lot stronger, and the addressable market a lot larger).
So is the keto, better-for-you sugar cereal pattern over? Most likely not but, however I’ve to surprise if the VCs who wrote giant checks for fund firms making tiny bins of cereal for adults had rigorously labored via all their assumptions about how large these markets can be.
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