In 2012, Hostess filed for bankruptcy. At that time, the company announced that it would no longer manufacture Twinkies or many of the brand’s other goodies. This caused an uproar, and the little spongy cakes started flying off the shelves. Hostess has since completed major rebranding and is finally making a comeback.
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Situation: Hostess Gets New Management
A few months after Hostess filed for bankruptcy, Metropoulos & Co. and Apollo Global Management acquired most Hostess assets for $410 million. Then they relaunched production of Twinkies, Sno Balls, Ding Dongs, and other Hostess goodies.
In 2013 Hostess brands underwent extensive downsizing to get back to profitable margins. The company went from 11 factories down to four and cut employees from 19,000 to only 1,800. The company also made a move to outsource distribution completely.
Under new management, Hostess turned to Bernstein-Rein, an advertising company, to come up with a marketing campaign to reintroduce Hostess products to the market. The agency came up with “The Sweetest Comeback in the History of Ever” campaign. The new management could have gone in so many different directions. Instead of launching new products, however, the company decided to rebrand by saying, “We’re back!”
Approach: Hostess Targets the Bread Industry
Hostess achieved success with “The Sweetest Comeback in the History of Ever” campaign, and the company simultaneously streamlined its production and eliminated the burden of pension costs and union contracts. Instead of resting on that success, however, Hostess made the choice to shift gears and target the bread industry as well. The company set the goal of bringing back Wonder Bread and Nature’s Pride, with sandwich bread, hot dog buns, and hamburger buns.
Flowers Foods was the first major bidder to acquire bread assets from Hostess brands. The bakery firm bought Wonder Bread, Nature’s Pride, Home Pride, Merita, and Butternut bread brands for $360 million. These assets included 20 bakeries and 38 depots.
Hostess and its partners still need to complete extensive work in order to make the brand’s bread products profitable once again. but the brand saw success with Twinkies and plans to do the same with Wonder Bread. To do so, Flowers Foods must position Wonder Bread and other products as the healthy and affordable option for consumers. The company will most likely target kids and people who enjoyed Wonder Bread as kids, since a similar method worked for Twinkies.
Impact and Advantage
Hostess brands have undergone significant transformation since filing for bankruptcy in 2012, including new management, downsizing, and rebranding. As a result, consumers fondly remember these products from their childhoods and want to enjoy them again. If Flowers Foods follows the lead of Metropoulos & Co. and Apollo Global Management, Wonder Bread may be able to make a comeback similar to the one that Twinkies achieved.
This narrative reveals how going back to the fundamental basics of a successful business, with streamlined production, optimized labor and labor contracts, and efficient distribution, can turn things around even after a bankruptcy filing. Consumers should be able to enjoy Twinkies, Ding Dongs, and now Wonder Bread for years to come.
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