News Column

Hostess Hoarders; Twinkies Flying Off Store Shelves, onto eBay

Nov. 17, 2012

Lisa Brown

hostess, chapter 7, product runs

Hostess Brands' abrupt decision to cease operations Friday came as a shock to many, prompting customers to stock up on Twinkies and other snack cakes that they've loved since childhood.

Budding entrepreneurs turned to eBay to auction boxes of the baked goods online. Ten-count boxes of Twinkies were priced in the hundreds and even thousands of dollars on the online site as news of Hostess' demise spread.

"I can't imagine Twinkies gone forever," said Daniel Fusco of St. Louis. Fusco picked up a box of Hostess Zingers snack cakes for himself at a Schnucks grocery store in Richmond Heights, Mo., and a box of Hostess Cupcakes for a friend. All Twinkies had sold out earlier in the day, a store employee told the Post-Dispatch.

"My friend in New York sent me a text to buy some (Hostess products) because the stores he went to were sold out," Fusco said.

But don't despair - because the disappearance may not last forever. Hostess Brands says it will seek to sell its popular brands, including Wonder bread, Yodels and Ding Dongs. The 82-year-old company has about 30 brands, which could be sold through a bankruptcy court auction.

On Friday, struggling Hostess Brands asked a bankruptcy court to approve the Irving, Texas-based company's request to permanently close the business and sell all its assets, with plans to wind down operations within a year. A hearing on its request is set for Monday.

The move to liquidate, which means laying off more than 18,000 employees nationwide, follows a bakers' union strike that began last week.

Hostess said a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents more than 5,000 of its employees, crippled its ability to produce and deliver products.

Some grocery stores already saw a shortage of some Hostess products this week during the labor turmoil. By Friday afternoon, many Hostess shelves showed dwindling supplies.

"After the final deliveries of Hostess breads and cakes are made today, there will be no more Hostess brand products available," Lori Willis, spokeswoman for Schnuck Markets Inc., wrote in an email. Schnuck Markets operates 100 grocery stores in several states under the names Schnucks, Logli and Hilander.

She said the grocer is working to increase the availability of similar products, including private brands, to meet demand.

Hostess issued an ultimatum to bakers' union members by mid-week, saying the company would shut down if more employees didn't report to work Thursday.

By Thursday night, not enough workers had returned to work to restore normal operations, the company said Friday.

Hostess reiterated that the company lacked the financial resources to weather the national strikes, and that selling its assets made the most sense.

The International Brotherhood of Teamsters, which represents 6,700 Hostess employees, said it would continue to make deliveries of available inventory in the next few days. Teamsters union employees approved their contract with Hostess in September, but will now soon find themselves out of work.

Analysts expect buyers to emerge to purchase the Hostess brands, which have loyal customers stretching back decades.

In court filings Friday, Hostess said that no single buyer emerged in recent months to buy the entire company, but "a number of potentially-viable proposals to purchase limited pools of the debtors' assets," came forward.

"The desired outcome of the wind down is the sale of groups of assets that can be operated on a going concern basis," Hostess said in a court filing.

No companies were identified, but analysts said potential bidders for some brands include Mexican-based Grupo Bimbo, the world's largest bread maker, and Flowers Foods, based in Thomasville, Ga., which owns the Sunbeam and Bunny brands.

Bloomberg News reported late Friday that C. Dean Metropoulos & Co., the owner of Pabst Brewing Co., is considering a bid for the brands.

"We believe there may be some specific Hostess assets that Flowers could buy to both expand its geographic reach and fill in its existing territory," SunTrust Robinson Humphrey analyst William Chappell Jr. wrote in a note to investors.

Jon Falk, executive vice president of branding agency Falk Harrison, was among the Hostess fans who hit stores Friday to load up on Twinkies and other snack cakes for his firm's employees. He found only two packages of Twinkies for sale at the Walgreens in Olivette, Mo., on Friday morning.

"It's really sad to think about these iconic brands being not accessible to people," Falk said.

Still, he's convinced Hostess will ultimately be able to sell the brands. "The brands are where the real value is."


Source: (c)2012 St. Louis Post-Dispatch Distributed by Mclatchy-Tribune News Service.

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