How to grow a $510M brand in three years like Magic Spoon

In a mere three years, Magic Spoon has shaken up the cereal category and wracked up a valuation of almost $510M. Want to know how they did it? Read on 👇

#1 CULTURE

In a world of uncertainty, people crave the certainty of the past. In fact, the ‘Journal of Consumer Research’ discovered that people were willing to pay more for products that remind them of the past.

Ref #1: It’s been shown that people are willing to pay more for products that remind them of the past.

Magic Spoon masterfully taps into this, from its packaging to its flavour profile, reminding us all of a childhood eating cereal and watching Saturday morning cartoons.

#2 AUDIENCE

Like many startups, Magic Spoon’s media budgets will have forced them to focus on niche over mass media. Despite this, the brand’s appeal has always been broad. They appeal to the many millions of Americans who miss a childhood filled with Saturday morning cartoons & cereal.  The brand entices them back into the category with a healthier alternative, one they can fall in love with once again.

Ref #2: The US cereal market is valued at a whopping $13.1BN and is set to grow over the coming years.

Don’t believe me? Well, look at their approach to influencers. They don’t just focus on ‘vegan’ or ‘wellness’ influencers, they operate in various niches from finance to gaming. 

Ref #3: Magic Spoon moves beyond the ‘wellness’ niche and reaches a broader audience, by working with a wider variety of creators from finance to gaming.

#3 PACKAGING

The cereal category is fairly predictable when it comes to packaging. Either you are a kids brand with a mascot (eg Cap'n Crunch, Trix the Rabbit). Or you're a healthy cereal brand that uses a generic colour palette of greens and browns.

Ref #4: The majority of cereal packaging is designed for kids (see above) or defaults to the dull tons of greens & browns, for vegans.

Magic Spoon cleverly cuts through this, with incredibly distinctive packaging. Their vibrant colours are unique, stand out and remind us of our childhood. 

Ref #5: Magic spoon cuts through the category with more distinctive and nostalgic packaging.

#4 INFLUENCER EQUITY

Pretty much every DTC brand uses influencers to stand out. Magic Spoon, however, leverages influence in a very clever way. They treat influencers as equity partners, rather than media partners. In one of their earliest seed rounds, they invited many prominent wellness influencers to take a stake in the business.

Ref #6: Magic spoon has worked with creators throughout its journey, in unique ways, to help accelerate growth.

Beyond this, they also work with a broader range of TikTok influencers and invite them into an affiliate program. A program that gives them a kickback every time the creator achieves a new sale. This ‘play to pay’ method encourages influencers to continually push the product because the more they promote, the more profit they make. 

#5 DISTRIBUTION

Perhaps the brand's biggest perceived weakness is distribution, as it only sells directly via its website. However, I think that in the short term, this is a smart strategy for them. Why? Firstly, it enables the brand to wrack up some big numbers and prove large demand for their product. This will be valuable when negotiating with big retailers (who as we know, love to slash a brand’s margins).  Second, it’s lower risk in the short term as they won’t be forced to spend a fortune on big in-store placements to stand out or invest in big TV campaigns many retailers demand.

I really hope you enjoyed this case study. If you did I would love it if you share this post on Linkedin or recommend the newsletter to just one person. It helps us grow this community.

Finally, please excuse any typ0s…i’m proudly dyslexic.

Many thanks,
Will Poskett
Co-Founder | Strategy Partner
Defiant