Hostess Brand Returning With More Cost Cuts

The bankrupt assets of the former Hostess brand company that produced Twinkies and other snacks will be returning to business after Apollo Global Management LLC and Metropoulis & Co. purchased the company assets for a purchase price of $410 million dollars. But, the new company plans to continue the cost cutting moves of the previous company. The old company even had employees of the company even make store deliveries using their own automobiles, eliminating the need for many company owned trucks. Now, the new company plans to eliminate union workers, and hire a cheaper work crew with lower wages to further the company cost cuts to make the new company profitable.

Apollo Management LLC is a specialized company that buys out distressed businesses, often through stock purchases. It has corporate offices worldwide and has invested over $16 billion in buyouts or financial aid to shore up distressed businesses.

It is not really known why exactly much of the assets of Hostess were really saved since some large retailers such as Safeway sell some snacks very similar to the Hostess brands, often made with better oils than Hostess. Hostess did have a lot of corporate equipment to puchase, and perhaps the sale price might have seemed right to the investors. But, with some other companies producing much the same style of products, often with better quality ingredients, and paying better better union wages to their workers, the revival of the Hostess snack brand isn’t really as big of news as it appears.

The old Hostess company failed to keep up with the times, offering snacks that fell out of favor with many consumers who became more health conscious. And the Wonder Bread brand failed to offer whole wheat or whole grain versions of their breads, also experiencing more consumer disfavor as other brands responded much more to evolving consumer demands.

Hostess snacks seemed like a part of many lunches at one time. But, gradually consumers just started to eat more healthy, and the brand just started to lose too many customers. What the new Hostess brand intends to do about all of this is a good question. But, without a good business plan to actually recapture some market strength, the new Hostess brand doesn’t seem much better off than the old brand was. Sometimes some business decisions just don’t seem to be clearly thought through.

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  • fustian24

    Because what the world really wants is a cheaper twinkie.

    When Hostess went out of business, I stopped at the local mini-mart to savor a few samples for the last time.

    And I was horrified. They were ghastly. No wonder I stopped eating that crap. Was it always that bad?

    I cannot even imagine the horror of a cheaper twinkie.

    • Yeah, last time I got a pack for old times sake was… pretty much the last time I’ll get a pack.

      And I used to love Little Debbie Zebra Cakes. Sadly, they’ve apparently gone to artificial zebra – they’re pretty crappy now also.

      (And don’t get me started on Girl Scout Cookies – they haven’t had real Girl Scouts in them for decades!)

  • Safeway offers a far superior version of products made to look like Hostess cupcakes and Twinkies, made from higher quality ingredients. The taste is excellent on them. And Safeway is a first rate business, using their well maintained fleet of trucks for fresh delivery to their stores using a union work crew who are well paid and qualify for health care benefits as well as a retirement plan.

    I don’t understand the new Hostess company. Safeway is doing most things that Hostess once did, only much better. Further, Safeway makes a profit off of selling a huge array of high quality private brand products. The new Hostess company starts business with all of the same problems of the old company; a declining market for their goods. A company not profitable enough to offer good wages or benefits to their workers, and likely using cheap ingredients such as cottonseed oil when Safeway uses better quality oils in their comparable products.

    The new Hostess seems to make even less sense than the old Hostess company. I don’t get it. I love reporting on business stories, but this Hostess story males no good business sense at all.