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.