Hostess

[rowyn]

I need to say one thing at the start, because the silliest rumor on Twitter is "There will be no more Twinkies!" Which is ridiculous: whether Hostess liquidates or not, there will be more Twinkies. Hostess has a number of problems, none of which are "people don't eat Twinkies any more". If Hostess goes into liquidation bankruptcy, then some other bakery will buy the Twinkie brand name and recipe and start making Twinkies. Very likely, some one will buy the Hostess brandname itself and produce Hostess cupcakes and many if not all of their most popular snack cakes. They may not be quite the same, and there may be a delay in production, but they'll go on.

That aside, the Wall Street Journal had an interesting opinion piece by Holman Jenkins on the problems at Hostess, suggesting that the core problem is union vs union. It appears Hostess's distribution costs are excessively high for their product: Jenkins argues this is due to the costs of Teamsters contracts and union rules. The bakers' union, therefore, is betting that their members will be better off under whatever entity buys Hostess out of liquidation -- which won't have the unusually high distribution costs and therefore will be able to pay the bakers a market wage instead of the below-market ones that are all Hostess can afford.

I have not done any research into the situation on my own, but this struck me as pretty interesting and the most rational explanation I'd heard for what's going on, so I figured I'd share.

Comments

[the-vulture.livejournal.com]

Let's not forget, you can always go north of the border for 'em. :P

[rowyn]

Hee! I did not know that Twinkies were already licensed to a different company in Canada

[the-vulture.livejournal.com]

Yep! 'Course, it looks like Saputo wants to push Vachon goodies to you folk, instead of the Hostess brands. Frankly, while there's no replacement for a Twinkie, the Vachon brand has much tastier offerings than the rest of the Hostess lineup. Jos Louis over a Ding Dong any day!

[duane-kc.livejournal.com]

I find it interesting that this is all being laid at the feet of the bakers union, when Hostess management voted themselves anywhere up to 300% (yes, three *hundred* percent) pay increases prior to attempting to force the union to accept a contract which would have resulted in a 30% pay cut over the next five years. Further, I wonder at the motive for attributing part of the blame to the Teamsters now, who had *already agreed* to a pay cut in negotiations earlier this year.

[the-vulture.livejournal.com]

Well, that's all part of the union busting rhetoric, innit. Thankfully, the other side of the story seems to be coming out, too.

[rowyn]

I am sure that the whole picture is pretty complicated, and probably not actually observable by anyone, including the unions and the management.

[shaterri.livejournal.com]

While that's largely true, the compensation boosts to executives before the bankruptcy are a matter of public record, and even received some unfavorable commentary from creditors: http://www.snopes.com/politics/business/hostess.asp has the basics of that particular situation.

[tuftears.livejournal.com]

Good lord. :O

I wonder if the unions could afford to buy out Hostess if it's going to be liquidated for pennies on the dollar...

[rowyn]

Worker-owned companies are fine. Union-owned company is kind of a disaster, as shown by United Airlines. D:

[tuftears.livejournal.com]

At least they can blame themselves for it!

[rowyn]

... that's less clarifing than I thought it was going to be, given the 'these executives had pay raises approved but then four of them renounced ther salaries and some others left and we don't have a timeline for this'. :/

[minor-architect.livejournal.com]

Hostess has a number of problems, none of which are "people don't eat Twinkies any more".

Indeed! Thank you for providing my Laugh of the Day. :D

[rowyn]

Although why people eat Twinkies is quite beyond me. I always found them pretty nasty. n.n

[minor-architect.livejournal.com]

You could bake your own! There are lots of recipes out there to make a similar product. (Or I could just grab a Tastykake, if I want my fill of food preservatives for the week. I always preferred Butterscotch Krimpets, anyways. ;)

[haikujaguar.livejournal.com]

minor_architect! I hardly see you anymore. You are missed! :)

[rowyn]

I do bake my own goodies from time to time, but nothing like a twinkie is sufficiently appealing to be worth the work. ::9

[the-vulture.livejournal.com]

Interestingly, Saputo, the company that owns the rights to Hostess products north of the border, is thinking of pushing its own line of stuff to the US because Canadian sales have dropped along with interest in sugary desserts.

[octantis.livejournal.com]

Dr. Egon Spengler: I'm worried, Ray. It's getting crowded in there and all my data points to something big on the horizon.
Winston Zeddemore: What do you mean, big?
Dr. Egon Spengler: Well, let's say this Twinkie represents the normal amount of psychokinetic energy in the New York area. Based on this morning's sample, it would be a Twinkie... thirty-five feet long, weighing approximately six hundred pounds.
Winston Zeddemore: That's a big Twinkie.

[terrycloth.livejournal.com]

There's always the danger that someone will buy the name but not the recipe and replace twinkies with a cheap knock-off under the twinkie name.

[rowyn]

There's that, though it seems unlikely -- I bet the recipe is cheap compared to the name, and paying $10 million for the name and not $1 million for the recipe (or whatever) would be peculiarly short-sighted. Though I could see someone trying the 'New Coke' route on Twinkies, thinking they could make a more popular version.

[terrycloth.livejournal.com]

I just remember it happening to Otter Pops. The new otter pops were awful.

Then again, it happened to Vernors and to Sobe's Red Tea (before it was cancelleed for good) without it having to change companies.

[tuftears.livejournal.com]

... wouldn't it be more logical to worry about an expensive, over-healthy product? >_>

[terrycloth.livejournal.com]

Whole Wheat Twinkies with Organic Yogurt filling?

[tuftears.livejournal.com]

Part of their attempt to market Twinkies to a market demanding health-conscious food that fits into a green worldview, yet is inexpensive!