April 20, 2015

The resurrection of the Twinkie.

"It was the risk. This was a rare circumstance in history when you see a company go completely off the shelves and have no employees, have empty factories and no working capital. We saw the opposite – this was an opportunity to take a great brand and for the first time be able to reinvent it."
The magic bullet turned out to be chemistry. Metropoulos spent millions on R&D, working with food lab Corbion to tweak the formula of starches, oils and gums in Twinkies, finally arriving at an acidity level that would prevent staleness and discoloration. The singular goal: Make the Twinkie warehouse-friendly. And while none of this will make Alice Waters’ heart flutter, the team succeeded in making the indestructible snack even more so – [its] shelf life was more than doubled, to 65 days. Hostess switched to a warehouse system. Delivery costs dropped to 16% from 36% of revenue, and Hostess’ retail reach expanded greatly. “We now ship to all Wal-Marts, dollar stores, 100,000 convenience stores, plus vending machines and food services,” says Jhawar. “There is no reason why Hostess can’t be sold in any place that sells candy bars.”

29 comments:

Achilles said...

This is wrong. He didn't have any help from the government. He is obviously not showing enough concern for the needs of the people of the US. He needs to get right with the right people or he will not be successful. There is no way he can do something like that on his own.

Nonapod said...

Twinkies are the archetypical example of what I call food-amnesia - I always forget why I dislike them and find myself compelled to eat one once every 7 to 10 years or so in order to remember why I don't eat them.

lemondog said...

Better living through chemistry...ho ho(s)

retch

traditionalguy said...

Little Debbies taste better. And she is a sweet straight girl and she has the It Factor.

Charlie Currie said...

I always preferred, and still do, Hostess Chocolate Cupcakes...

Ann Althouse said...
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CWJ said...

Nonopod,

I agree, but for different reasons. A lot of childhood treats have been reformulated. Plus our tastes and tastebuds are not the same as when we were children. You can't go home again. I think it best to leave our memories intact.

Deirdre Mundy said...

Tasty-cake went downhill when they went national, but the Butterscotch Krimpets were our favorite 'special treat' when my mom packed lunch for long road trips. (Along with Homemade hoagies. YUM!)

Stanley Smith said...

Moon Pies. The best worst snack ever.

Seeing Red said...

I loved their Chocolate donuts. Then they changed the formula. It's like the 3 Musketeer bar, yuck!!!

Gahrie said...

Lemon Zingers for the win

Hammond X. Gritzkofe said...

I'm not a nutritionist or food chemist, so I'm just asking. A 65 day shelf life?

Packed in nitrogen filled bubble and irradiated?

Ingredients so stable they are digestible by neither common airborne organisms nor fauna of human gut?

Brando said...

I'm surprised Twinkie hasn't experimented more with alternate fillings the way Oreo has been doing recently (after nearly a century of not changing the cookie, except to Double the Stuf). Imagine chocolate filling, cookies n' creme filling, pumpkin spice filling!

hawkeyedjb said...

"shelf life was more than doubled, to 65 days..."

Hah! They are missing at least one zero. I've eaten Twinkies with expiration dates in a different century. Not bad, not bad at all.

lgv said...

It was such a no-brainer investment. You get a brand and you get to start over without any legacy costs. Pick and choose what assets to acquire. Simply price it at expected cash flow multiple. There were no other bidders, so they got it at a great multiple. Without the baggage, they were able to automate as much of the process as possible.

This is exactly what should have done with GM. People erroneously thought that without a bailout, GM would no longer exist. But, that's not how it works. There is some value there. As it turns out, there really was a new GM and an old GM. The problem was it wasn't a market based conversion, it was a government subsidized political rebirth.

CStanley said...

I was a ring ding and snowball girl until we moved down south and those brands were unavailable. Never liked Little Debbie's stuff much although the Nutty Bars were pretty good. Southern desserts and snacks are always incredibly sweet.

Ummm? said...
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Roger Sweeny said...

Another reason delivery costs fell so much (and a major reason for the bankruptcy in the first place), from the bankruptcy filing:

the [Collective Bargaining Agreement]s contain a variety of different work rules that hamstring operations and make the CBAs uncompetitive as well as extremely difficult to administer. For example, the Debtors often provide both bread and cake products to an individual customer location. The existing work rules require that, on many routes, separate trucks must deliver the bread and cake products to that single customer location. The work rules also require that, in some bakeries and distribution centers, a separate individual must be used to load the trucks (the Debtors’ competitors have drivers who load their own trucks) and separate people must load either bread or cake onto a truck. Finally, work rules require that, in some instances even when a route representative is already visiting a customer location, that representative may not move product within that location; rather, a separate employee must visit the customer location to move product from the back room to the shelf. Often, this so-called “pull-up” employee cannot move both bread and cake and, thus, two “pull-up” employees must make this same trip. This multiplies the number of individuals necessary to deliver product to customers and doubles the costs associated with trucks and fuel. Finally, the work rules prevent the Debtors from implementing alternative distribution systems into new, currently unserved markets.

Surprise! Now they are selling in former "unserved markets."

Ummm? said...

Saving GM was only about saving the UAW.

Hostess was taken down by their union truck driver's union, forced to have two trucks deliver to each store, "cakes" and "bread" required separate trucks each with a different union affiliation driver.
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lgv said...
This is exactly what should have done with GM. People erroneously thought that without a bailout, GM would no longer exist. But, that's not how it works. There is some value there. As it turns out, there really was a new GM and an old GM. The problem was it wasn't a market based conversion, it was a government subsidized political rebirth.

BobJustBob said...

Tastycakes....they're back to being good again Deirdre. Moon Pies are good but I know them as Scooter Pies. And Drakes Devil Dogs.

CStanley said...

Blech, Devil Dogs! We always asked for Ring Dings and half the time Mom brought home those dry Devil Dogs instead....I think it was because she preferred them!

Edmund said...

They have made other changes to Hostess products. First, the Twinkies and Cupcakes appear to be smaller. Second, they repackaged the pies into boxes (and they seem smaller).

Here in Texas, they still haven't reclaimed their shelf space in many convenience stores. They got squeezed out by Tastycake (not very good, IMHO) and by expanding the Bimbo products. (Bimbo is the major snack brand in Mexico. Some of their products are really good - their shortbread cookies and the cinnamon cookies are excellent.)

Anonymous said...

You will be more alert if you stop eating sugar. There is a withdrawal period but you should invest the time to try it. Quitting sugar changed my life. We did it in my house for my wife's health but the first positive change we noticed was in mine. I am not going back. There are enough no-sugar sweet things to satisfy my now-shrunken sweet tooth and I love feeling better.

bwebster said...

God bless free enterprise. No, really. It's not like I'm a big fan of Twinkees, or any Hostess treat, but they saw an opportunity, spent the time and money to make it work, and are apparently succeeding at it. If people don't like the newly formulated snacks, they won't buy them -- and, as noted, they have alternatives. That's how a free market works.

gadfly said...

High delivery costs at Hostess were largely caused by the union contract held by the Teamsters.

According to the WSJ:

Union-imposed work rules stopped drivers from helping to load their trucks. A separate worker, arriving at the store in a separate vehicle, had to be employed to shift goods from a storage area to a retailer's shelf. Wonder Bread and Twinkies couldn't ride on the same truck.

No chemical magic was required to lower delivery costs - all that was needed was the prestidigitation performed by the Bakers Union when they refused to ratify the bankruptcy agreement. The Teamster contract then vanished along with Hostess.

John Lynch said...

They went bankrupt and got out of their pension obligations.

"But the liquidation had washed away everything. Yes, the company was gone, but so were the pension costs, the union contracts and the debt. It also unbundled the brands, allowing investors to carve out the best businesses. “
We didn’t have to take on the factories or the routes,” says Metropoulos. “We didn’t have to take all the historic al drags on the company.”

Kzookitty said...

So, three girls peddling their sweetstuff: Hostess, Little Debbie, Bimbo. Wonder which Lazlo prefers?

Didn't Mel Gibson get in a bunch of trouble for calling some female cop "tastycakes"?

kzookitty

Zeb Quinn said...

They went bankrupt and got out of their pension obligations

No, that's not what happened. The trustee liquidated their assets so as to pay as much of the debt as possible, and debt would include the pension obligations. Products names, goodwill, and recipes have value, and were among the assets sold. Looked at that way, this was to the benefit of the pension obligations.

mikee said...

"The business soon grew stale."

Writers and their word games!