It's official: Hostess Brands goes bust

The second rescue since 2004 will be tough to pull off.

By Jonathan Berr Jan 11, 2012 10:52AM

Hostess Brands, the maker of Twinkies, Ho-Hos and Ding Dongs, filed for bankruptcy protection for the second time since 2004 in the face of mounting debt, skyrocketing prices for ingredients and the adoption of more healthful lifestyles.

The company, which has about $860 million in debt, sought protection from creditors after failing to reach an agreement with workers on pensions and benefits, according to Reuters. The company has arranged for $75 million in debtor-in-possession (DIP) financing from a group of its existing first-lien lenders, led by Silver Point Capital.  

According to a press release, Hostess will continue operating its bakeries, outlet stores and distribution centers and doesn't anticipate any disruptions to product manufacturing during the bankruptcy.

"Hostess has some of our industry's most powerful and resilient brands," said president and chief executive officer Brian Driscoll. "With generations of loyal consumers, numerous iconic products and a talented and experienced work force, Hostess Brands has tremendous inherent strengths to build upon."


The Teamsters Union released a statement saying the union "remains committed to working with all stakeholders during the bankruptcy to find a mutually agreeable solution, if possible."  It represents more than 7,500 of the company’s nationwide fleet of delivery drivers and merchandisers

Hostess wasn't able to change with the times.   A Wall Street Journal story recently noted that its whole-grain bread, Nature's Pride,  " hasn't sold well compared with some rivals amid a small presence on shelves," citing Mitchell Pinheiro, a Janney Montgomery Scott analyst.  A Hostess spokesman, Lance Ignon, counters that sales for the 52-week period ended December 15, 2011 were up 12.3% to $100 million. Nature's Pride was the 5th largest product introduction in the grocery industry in 2010, according to IRI, he said.


Its other products are being hurt by the growing awareness of the obesity epidemic sweeping the country, especially among children. That trend is particularly evident with respect to Hostess' signature product, Twinkies.

Twinkie inventor James Dewar swore by the cream-filled cake he invented in 1930 and ate at least two packets of them a week before he died in 1985 at age 88.  

 

"Some people say Twinkies are the quintessential junk food, but I believe in the things," the Los Angeles Times quoted him as saying. These days, many consumers don't share Dewar's heartfelt dedication to what were once dubbed "the cream puff of the proletariat."

 

Twinkies have an "F" grade from the nutrition website Calorie Count because they pack 150 calories. That means that the snacks have evolved from a daily treat in kids' lunches to an occasional food. Little wonder that Twinkie sales are flat.



-- Jonathan Berr is resisting the urge to buy a Twinkie.
*Updates with statement from Teamster's and additional information about Nature's Pride.

168Comments
Jan 11, 2012 1:42PM
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Twinkies have existed since 1930 but childhood obesity didn't become a problem until recent years.  The problem isn't Twinkies, the problem is people who won't use moderation and don't teach their children to.
Jan 11, 2012 12:49PM
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I still say the REAL reason for childhood obesity is NOT sweets but lack of exercise.  My children ate Twinkies,  Ho-Ho's and Ding Dong's and they are all still slender.  My oldest  is in his 50's and still eats them.  However,  he does not have time to sit in front of the tv or computer.  He's too busy working and walking his dogs and helping clean the house and he loves to cook.

 

Get our children off of the cell phone and computer and send them outside to walk and ride their bikes, etc. 

 

worth a try. 

Jan 11, 2012 2:27PM
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Twinkies aren't making kids fat, it's the lifestyle of sitting & playing on computers, video game boxes etc. At one time burning off a pack of twinkies was nothing, as kids did active things...ball playing, jump rope etc tc
Jan 11, 2012 11:46AM
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So sad how people are always ready to blame the working man who is out there trying to work hard and feed his family!! No one seems to mention that the union route drivers voted yes for a pay cut for themselves! I would like to see the big shots in the company make the same cocessions to help the bottom line...the heart and soul of this company is the men and women who work long ,odd hours with No overtime and a base pay of $179 a week!! My husband and his co-workers are not the villians in this..if this company fails they will be the ones who suffer, not the non-union big shots who will no doubt walk away with a very comfortable severance package and move on to missmanage another company into the ground!!!
Jan 11, 2012 11:48AM
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I don't care what anyone says, their cupcakes, chocolate and especially the orange ones are awesome!   Better than any bakery cupcakes I've had that can cost $3 apiece and more!.  Moderation is the key as other posters said.  And... get up and at least take a decent walk every day if you're not "well" enough to exercise strenuously.  No excuse for plain laziness.
Jan 11, 2012 1:54PM
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The original idea of the union wasn't a bad one and I'm sure Union Member 50 that you're a good person.

My problem is now some lazy people get in the union and can't be removed from their job for a qualified, hard working employee.

I have been in the union also and like I said, I understand why unions were formed to start with:

to protect workers form unfair labor practices, unsafe working conditions (Nicholas), to ensure fair pay for work performed, to settle labor disagreements and lots of other issues.

With that being said, alot of today's Americans have a sense of self-entitlement, what's-in-it for me mentality and there's no loyalty between employer and employee anymore.

Jan 11, 2012 11:31AM
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BRING BACK THE TWINKIE!!! Any foodstuff in MODERATION isnt a bad thing.
Jan 11, 2012 1:50PM
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I worked for Hostess Cake for ten years.At one time the employees believed in the quality of the product.Im not sure if they do now.I feel the company is and was mismanaged.It was a hostile work environment where employee moral was down and I believe that is what hurt the company.When employees want to show up for work and are proud of what they are doing it makes a huge difference.


Jan 11, 2012 11:19AM
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Thank you Union Labor for forcing them into a retirement plan they could never afford.  Sounds like the US Post Office doesn't it?
Jan 11, 2012 11:22AM
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No more TWINKIES ? It's the end of the world as we know it!
Jan 11, 2012 11:36AM
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The same people that gripe about the Twinkie and its calories, are the same people who eat at McDonalds and Burger King every day. Fat is fat!!!!!!!!!!!!
Jan 11, 2012 3:05PM
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Legalize pot, and they won't be able to keep up with production!
Jan 11, 2012 12:28PM
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Hostess products, especially the beloved twinkie,used to sell very well because they were very cheap,it has nothing to do with people trying to be healthier there are more fat people now than there were in the 1970's. thanks to procssed foods and microwaves, The real issue is the price is too high for the hostess products, snacks that used to be about a quarter each in the 1980's and even into the early 1990's are now over a buck each and boxes are usually about 3 to 5 bucks each,store brands are always cheaper.When you over charge for a product that has little value, and the product is easily reproduced by someone else cheaper,eventually your company will fail.

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I worked for Hostess Cake here in Seattle for over 30 years before I retired. I know what goes in them and the only thing that is bad for you is the shortining. If you bought a package of cake mix off the store today you would hae the same end results.. What put this company under is the way managment requires the paper work to be shown. Waste is a big factor here. The cost of sugar and flower has gone sky high. Rent and property taxes, labor cost and insurance, and the prices of the product just cant keep up with overhead. The union has done a great job keeping these employees working but ther comes a time when they have to say to the employees.. "This has to be" and that hurts a lot of lives who depend on that job to survive. My heart goes out to those who will most likely loose their jobs if any of the plants close down. We lost Wonder bread here. and hundread's were sent out to the open to find work who did not make the retirement requirements
Jan 11, 2012 12:23PM
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Overall, I don't believe unions are the cause of THIS particular problem.  With the downturn in the economy there comes cutbacks.  I'm sure that for many, myself included, one of the first cutbacks was unnecessary junk.  Food included.  However your view on unions, there was a time when they served a purpose for the good of all workers.  Now, they just seem to serve the purpose of lining the pockets of their leaders.  Unions too need to change with the times, or, like the twinkie, may just disappear.
Jan 11, 2012 1:26PM
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I don't see how the Obama presidency has anything to do with this. Hostess (IBC) filed for Bankruptcy back in 2004, so apparently the company couldn't survive the Bush presidency either. It has nothing to do with politics, and everything to do with how a company is run from the inside. I used to work for IBC, and back in 2009 when Silver Point Capital gave IBC the investment capital it needed to emerge from bankruptcy, the first thing IBC's executives did was lease brand new Lexus vehicles for themselves, instead of putting the money towards the company first. That's most likely a good reason why I was injured by faulty equipment and am now fully disabled on my right side, and will lose the use of my right arm fully when the nerve dies in the next few years. Just keep your far right wing, tea party, small minded views to yourself.
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Self restraint and responsibility are the key to any health issue, even obesity. If Twinkies, Ho-Ho's, Suzie Q's, Ding-Dongs, Donettes, and all the other goodies go bye bye can Wal-Mart be far behind? Wal-Mart's customers clog up the snak food aisle with their fat asses and Rascal carts.
Jan 11, 2012 1:02PM
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What's worse than being pro-union or liberal is being a boot-licker for the corporate interests which are destroying American jobs and sending them overseas.  Jason, you said "the owners are the one's risking their money."  What owners?  CEOs of corporations are NOT owners.  They are employees of the Corporation, and they are risking NOTHING!  There is a big difference between a businessperson who risks his/her capital to build an enterprise and a CEO who contracted with a corporation for a mighty paycheck and bonuses for doing bugger-all.  The self-made man/woman is an American hero.  The incompetent CEO is a overpaid jackass who destroys his company and then asks the American taxpayer for a bailout.
Jan 11, 2012 1:05PM
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Moderation in everything is key.  I grew up on Junk, but got alot of exercise. Now I eat better and yes, Hostess and Little Debbie are still in our house! Farmers eat big breakfasts of pancakes, bacon syrup etc.. but they work it off.  If you aren't going to be active, cut the junk..simple as that.
Jan 11, 2012 1:05PM
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I just looked at the salaries of the CEOs of Hostess and each CEO gets 1.5 mil plus 44 millions in compensations. You know how many Twinkies you have to sale just to pay the salary of one CEO and they have at least 5 of them that earn this amount. Blaming the Unions is ridiculous.
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