R.I.P., Twinkies

[rico1]

Looks like there is enough blame to go around.

For anyone who remembers the days before schoolkids ate free-range chicken wraps and kale chips, reading the news Hostess Brands posted on its website Nov. 16 was like watching Howdy Doody get strangled: the 82-year-old company, which makes Wonder Bread, Twinkies, and other triumphs of American food engineering, would shut down immediately and ask a bankruptcy court to let it hold a fire sale on everything it owns.

Hostess CEO Rayburn blamed a labor dispute, but a failure to keep pace with artisanal times helped doom the celebrated snack cakes. (Jonathan Alpeyrie / Polaris)

The proximate cause? The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 5,000 Hostess Brands workers, wouldn’t sign off on the bankrupt company’s latest reorganization plan and had gone on strike Nov. 12. Claiming that the company lacked “the financial resources to weather an extended nationwide strike,” CEO Gregory F. Rayburn said in a statement that “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

At first blush, the brinksmanship over Twinkies—Twinksmanship?—was a case of junk bonds meeting junk food and producing a junky result. The parent company first went into Chapter 11 in 2004, where it stayed for more than four years before emerging under private-equity ownership. Rechristened Hostess Brands, it made a return trip to Chapter 11 in January 2012, laboring under a $700 million debt load.

The new owners—hedge funds that had purchased the company’s debt—brought in Rayburn, who sought to cut employees’ wages and reduce pension and 401(k) contributions. In exchange for concessions on work rules, benefits, and compensation, the unions were to receive a 25 percent stake in the company, board representation, and a $100 million IOU. Several unions, including the Teamsters, signed off. But the bakers held out.

Hostess Brands is a story of what happens when -businesses—be they large companies or small firms—focus too much on financial engineering to the detriment of innovation. Hostess, Dolly Madison, Ho Hos, Sno Balls, Twinkies, Wonder Bread—all have a Proustian effect on consumers of a certain age.

But the product line didn’t keep up with a change in the zeitgeist. “Now we are in midst of a food revolution focused on local, organic, artisanal, and -authentic—the very antithesis of Twinkies,” says Marion Nestle, a nutrition expert at New York University.

For many U.S. consumer brands, producing overseas, with local labor and for local tastes, has been a way to change their cost structure, to grow, and to cash in on the rapidly expanding consumer markets of China and India. Yet here again, Hostess was stuck with a 1950s worldview. Even though its products are loaded with preservatives, which means they can endure arduous travel to distant markets, Hostess does very little exporting.

<a name="body_text7" style="visibility:hidden">The unwillingness or inability to update its business strategy and products for a changing world was more damaging to Hostess than the brief strike this month. A white-bread manufacturer that focuses solely on the U.S. market in 2012 is a little like a white-bread GOP candidate who focuses only on white voters in 2012.

http://www.thedailyb...y-pleasure.html

Edited November 18, 2012 by rico1

[DoD]

Does this mean we want see "Look for the union lable" anymore on our Twinkies??? I guess the big union boss has plans for these 18.500 unemployed folks....

[RodandStaff]

Looks like a dual charge implosion for Hostess. On one column you have a company that isn't keeping up with the shift toward healthier eating. Sure there are millions still enjoying their guilty pleasure.... but many have been converted to a healthier lifestyle, thus dramatically shrinking their customer base. On the other column... you have a relentless union that doesn't think logically, doesn't crunch real life numbers... they only care about their own survival. So you have a large company that is doomed for a fatal collapse with no way to avoid it's own demise.

Will someone try to buy them out for pennies on the dollar? Who know's??? But if they do... they had better be very versatile and flexible for any future changes in the market of they will suffer the same fate imo. The markets change.... people's appetites change.. and you have to change with it or suffer the consequences!

Thanks for the post rico1!

[yota691]

Looks like a dual charge implosion for Hostess. On one column you have a company that isn't keeping up with the shift toward healthier eating. Sure there are millions still enjoying their guilty pleasure.... but many have been converted to a healthier lifestyle, thus dramatically shrinking their customer base. On the other column... you have a relentless union that doesn't think logically, doesn't crunch real life numbers... they only care about their own survival. So you have a large company that is doomed for a fatal collapse with no way to avoid it's own demise.

Will someone try to buy them out for pennies on the dollar? Who know's??? But if they do... they had better be very versatile and flexible for any future changes in the market of they will suffer the same fate imo. The markets change.... people's appetites change.. and you have to change with it or suffer the consequences!

Thanks for the post rico1!

From what I hear maybe a Obama Bailout on the way!! It fit right into the Unions!! Just saying..Oh and that on-line petition it supported by the O camp!! GM Rod and all of DV..

[RodandStaff]

Bail out or not... plenty of fodder for the comedians I'm sure!!!

Yup Yota... looks like it's gonna be "O" to save the day!!! Wonder how Michelle is gonna react to that???

[rico1]

Will someone try to buy them out for pennies on the dollar? Who know's??? But if they do... they had better be very versatile and flexible for any future changes in the market of they will suffer the same fate imo. The markets change.... people's appetites change.. and you have to change with it or suffer the consequences!

Thanks for the post rico1!

It is my understanding from the news that I have read their are two companies that are interested. One is PBR and the other is a Mexican company.

Bail out or not... plenty of fodder for the comedians I'm sure!!!

Yep, I can just hear it now.

What does the CEO and the Bakers union of Hostess Brands have in common?

THEIR BOTH DING DONGS

[RodandStaff]

What does the CEO and the Bakers union of Hostess Brands have in common?

THEIR BOTH DING DONGS

Sorry.... but my door bells broken!!!

[RodandStaff]

Well.. that went well!!!

[rico1]

Door bell is broken. And no one is home. :Dsrc="http://dinarvets.com/forums/public/style_emoticons/default/biggrin.gif">

[Shabibilicious]

SNOWBALLS?!!!!!!

GO RV, then BV

[RodandStaff]

Now what are they gonna eat in the Zombie Apocalypse???

[Peace]

So what I get from all this is to buy up a large amount of twinkies to sell later????????

Done!

[RodandStaff]

So what I get from all this is to buy up a large amount of twinkies to sell later????????

Done!

Might not be a bad investment!!! Just be sure and try not to eat too much of your profit!!!

[twinmom]

You know whats funny? One of my 8 yrs olds got to go along on his first hunting trip this fall and he hates twinkies but he asked me to pack him a big box of 'em in the bottom of his duffel bag for trading purposes. He said everyone wanted one and it worked perfectly! He's bummed no more Twinkies! I swear this kid could sell popcicles to Eskimo s!

[twinmom]

You know whats funny? One of my 8 yrs olds got to go along on his first hunting trip this fall and he hates twinkies but he asked me to pack him a big box of 'em in the bottom of his duffel bag for trading purposes. He said everyone wanted one and it worked perfectly! He's bummed no more Twinkies! I swear this kid could sell popcicles to Eskimos!