Taking a DTC brand to IRL stores with Gabi Lewis from Magic Spoon

Taking a DTC brand to IRL stores with Gabi Lewis from Magic Spoon

Welcome Gabi Lewis (00:00:00)

  • Becca welcomes Gabi Lewis, the co-founder and CEO of Magic Spoon, to the podcast.
  • They discuss the relevance of breakfast to the podcast and Gabi's company.
  • Gabi shares a fun fact about bananas ripening quickly.

Magic Spoon TLDR (00:01:45)

  • Magic Spoon reimagines nostalgic breakfast cereals with more protein, less sugar, and fewer carbs.
  • The company launched in 2019 as a direct-to-consumer brand and expanded into retail stores about a year and a half ago.
  • Retail sales now account for about half of Magic Spoon's business.
  • Gabi studied philosophy and economics in college and initially intended to pursue a career in philosophy.
  • Her parents insisted she also study economics to ensure she could get a "real job."
  • After a brief stint at Bridgewater, Gabi co-founded her first startup, EXO Protein.

Innovating in the food industry (00:03:38)

  • Gabi Lewis, the founder of EXO and Magic Spoon, shares her entrepreneurial journey and the ideas behind her companies.
  • EXO aimed to introduce insect protein to Americans through cricket protein bars, inspired by its sustainability and nutritional value. However, it faced challenges in consumer acceptance and supply chain development.
  • Magic Spoon capitalized on the opportunity to reinvent cereal for modern consumers, offering low-sugar, high-protein options that cater to changing dietary preferences.
  • Both EXO and Magic Spoon utilized the direct-to-consumer business model to connect directly with customers and build a loyal following.
  • Magic Spoon's initial success in DTC allowed them to focus on that channel longer than anticipated, differentiating their approach through influencer investors and diverse acquisition channels.
  • After several years of DTC success, Magic Spoon entered retail to address challenges in the DTC landscape, starting with Target and expanding to major retailers like Walmart, Kroger, Safeway, Albertsons, and Costco.
  • The company's retail presence has grown rapidly, with approximately 12,000 stores nationwide, and now accounts for a significant portion of its overall business.
  • Preparing for retail involved adapting to different supply chain and inventory management processes compared to DTC.

Managing DTC and IRL retail (00:11:40)

  • Magic Spoon, a DTC cereal brand known for its healthy, low-sugar, low-carb, high-protein cereal, is expanding into brick-and-mortar retail stores.
  • Despite skepticism from investors due to the declining cereal market, Magic Spoon has attracted over $100 million in funding from various investors, including VCs, private equity firms, celebrities, and health and wellness influencers, due to its strong business fundamentals and product innovation.
  • The company's founders believed that consumers still craved cereal but wanted a healthier alternative, leading them to create a protein-based cereal with no grains and no added sugar.
  • Magic Spoon's branding strategy draws inspiration from classic cereal brands, creating a nostalgic feel and standing out from other healthy cereals with grown-up and psychedelic versions of cereal characters, bright colors, and playful designs.
  • The company aims to challenge the false choice between boring healthy cereals and fun but sugary options, offering products that are both enjoyable and nutritious.

Acquisitions and competition (00:24:00)

  • Magic Spoon has been able to grow quickly by focusing on the cereal category.
  • There are some adjacent categories that make sense for Magic Spoon to extend into, such as protein bars and Rice Krispy treats.
  • Magic Spoon recently launched protein bars that combine the fun and texture of a Rice Krispy treat with the nutrition of a protein bar.
  • The protein bar aisle is very different from the cereal aisle, with more innovation and competition.
  • Magic Spoon's protein bars have been well-received by consumers.
  • Other big cereal companies have launched similar products to Magic Spoon, which is a compliment to Magic Spoon's success.
  • Magic Spoon ships to the UK, where the big cereal brands are similar to those in the US but with some key differences.
  • Magic Spoon's retail velocity was strong, which prompted other big cereal companies to launch similar products.
  • Magic Spoon's protein bars have been well-received by consumers.

Entrepreneurship, product development, and leadership evolution (00:28:15)

  • Gabi Lewis, co-founder of Magic Spoon, highlights the importance of leveraging endorsers and influencers for marketing, a strategy they successfully employed with both EXO and Magic Spoon.
  • Magic Spoon focused on creating a product that people genuinely wanted, addressing a clear gap in the market for low-sugar, high-protein cereal.
  • Product-market fit is crucial, and Magic Spoon's success highlights the significance of identifying a genuine demand for a product rather than attempting to force an idea through sheer determination.
  • Gabi Lewis has learned to delegate and empower her team, recognizing that micromanaging every aspect of the business is counterproductive and that trusting experts in their respective fields leads to better outcomes.
  • Lewis and her co-founder have clear leadership responsibilities, with Lewis managing sales, marketing, and fundraising, while her co-founder handles product, operations, and legal matters.
  • Magic Spoon plans to reintroduce the cocoa peanut butter flavor in the future, along with new treat flavors, generating excitement among fans.

Outro with Becca and Dom (00:35:32)

  • Magic Spoon, a DTC cereal brand founded by Gabi Lewis, recently expanded into retail stores and has found success due to nostalgia, convenience, and the pandemic-driven shift towards online shopping.
  • The company's health-conscious positioning resonates with consumers seeking healthier food options, and its success demonstrates that people are more willing to try healthier alternatives if they taste good.
  • Magic Spoon found product-market fit by disrupting the existing cereal market rather than creating a new one, and its founder could consider creating a high-protein cricket cereal to capitalize on the trend of healthier alternatives.

Overwhelmed by Endless Content?