Starting on July 15, the new owners of the Hostess brand will put Twinkies and other snack cakes back on the shelves. According to the company, the snack cakes will all taste the same, but each box will have a tagline that states, “The sweetest comeback in the history of ever.”
Daren Metropoulos, principal of Metropoulos & Co., one of the partners in the acquisition said, “A lot of impostor products have come to the market while Hostess has been off the shelves.”
Hostess Brands, Inc. had been struggling for years. In 2012, the company filed for Chapter 11 bankruptcy reorganization. Employees blamed the company’s problems on mismanagement and failure to create brands that would keep up with changing tastes. On the other hand, the company said that higher pension plans and medical costs for their unionized workers were the reason, and their competitors did not have the same high costs.
The company hired restructuring expert Greg Rayburn as its CEO in an effort to work through its bankruptcy reorganization. However, he was not able to reach a contract agreement with the union. In November, he announced that Hostess would be liquidating and blamed striking workers for inhibiting the company’s normal production.
This announcement caused consumers to buy up the Hostess snack cakes leaving grocery store shelves empty within hours.
Approximately 15,000 unionized workers lost their jobs.
During liquidation, Hostess sold its brands off in pieces to various buyers. Flour Foods, which makes Tastykakes, bought its major bread brand, Wonder. Drake’s Cake was sold to McKee Foods, which makes Little Debbie snack cakes.
Twinkies and other Hostess cakes were the brands acquired by Metropoulos & Co. and Apollo Global Management, LLC.
Apollo Global Management is known for buying trouble brands and then selling them for profit. The company’s investments include food chains Carl’s Jr. and Hardee’s. Metropoulos & Co. is also known for buying troubled brands and then selling them for profit. The company revamped Chef Boyardee and Bumble Bee and then sold off the brands. Metropoulos also owns Pabst Brewing Co.
Hostess Brands, LLC’s operating structure was trimmed down significantly. The brand hired previous employees who were no longer unionized. The company will also stop delivering directly to stores and deliver to warehouses that supply retail stores instead. According to Rich Seban, president of Hostess, this will allow the brand to reach more stores including dollar stores and almost all convenience stores across the nation. Under its previous ownership, the brand was only able to reach one third of the nation’s 150,000 convenience stores.
The company also consolidated its production by reducing 11 bakery plants to four. Its headquarters was moved from Texas to Kansas City, Missouri. Seban said that the changes were made to improve the cakes and not to cut costs. The price for a box of 10 Twinkies will remain the same, at $3.99.
Although, there are some slight changes being made to the CupCakes. To give them a richer, darker appearance Hostess is now using dark cocoa instead of milk chocolate.
According to Seban, Hostess may be expanding its product lineup. Currently, Hostess cakes are known for their three basic textures: spongy, creamy filling, and thick icing. He said the company could introduce different textures and flavors. He also said the company could tap into the healthier side of the market with gluten-free, added fiber, low sugar, and low sodium.
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