Growing up, Hostess was EVERYWHERE – Twinkies, Ho-Hos, Sno-Balls, Suzy-Qs, Fruit Pies and so on. Not to mention Wonder Bread, the enriched white bread that got good mileage out of touting nutrients added to notoriously deficient product. I even remember the advertisements in comics featuring Batman and the Archie gang.
But then people realized that regardless of enrichment white bread was deficient, and moved more to whole grains. Also, the infamous ‘infinite shelf life’ tests for Twinkies didn’t help the company, and as more and more low-price competitors such as Little Debbie found favor in traditionally strong Hostess (and Drakes, another brand I grew up with), Hostess hit Chapter 11 back in 2004 but emerged in 2009 a much stronger company … or so it seemed.
But today the Wall Street Journal is reporting that once again Hostess has filed for Chapter 11 bankruptcy protection, with more than $900 million of debt:
Hostess owes more than $50 million to vendors, which have been demanding payments on shortened time frames because of Hostess’s financial condition, one of the people said. Most of those goods and services were provided to Hostess within the past three weeks or so.
Sales of Hostess’s signature Twinkies have recently declined a bit while the overall bakery snacks category has been about flat. Nearly 36 million packages of Twinkies were sold in the year ended Dec. 25, down almost 2% from a year earlier, according to data from SymphonyIRI Group, a Chicago-based market-research firm. The data captures sales from supermarkets, drugstores, mass-market retailers and convenience stores, but exclude sales from Wal-Mart Stores Inc. and club stores.
Interestingly, even the featured spot as Woody Harrelson’s ‘quest’ in Zombieland didn’t give the Twinkie brand much of a boost.
According to this report the union pension is Hostess’ biggest problem:
Hostess lists the Bakery and Confectionary Union Pension fund as its largest creditor, with a debt of $994 million
Given that the company has been here before but is still saddled with the same fundamental issues as before, and that the continued weak economy and dim view of their core unhealthy product lines, it is hard to imagine this going well for Hostess. Which would be sad for a set of brands that most over 30 strongly identify with as key memories from their childhood.
But I worry more about the 19,000 people still employeed by the company and their families, as well as the underfunded pensions they and former employees depend on for retirement.