KANSAS CITY, Mo. -- Behind the return of the familiar, cream-filled Hostess Twinkie snack cake on July 15 is a leaner operation, free of the union labor and the $1.3 billion in debt that saddled the brand's previous owners, said a report by The Wall Street Journal. With that clean slate, the new owner and CEO, C. Dean Metropoulos, plans to launch into an ambitious growth plan and avoid the problems that led to two Chapter 11 bankruptcies, the last of which ended in liquidation.
In his first interview about the company's strategy, Metropoulos told the newspaper that the new Hostess Brands LLC, based in Kansas City, Mo., will be focused on innovation, efficiency and getting more Twinkies in more places.
"Wherever you find a Snickers bar or M&Ms, you should be able to find a Twinkie," he said.
The previous distribution system involved approximately 6,000 drivers--all with union wages and pension benefits--delivering products to stores and placing them on shelves. The old Hostess distribution was governed by complicated work rules that required drivers to deliver bread and cakes on separate trucks, adding costs. Those delivery routes also reached only 50,000 of the country's 150,000 convenience stores, and left some parts of the country entirely without Twinkies.
Now Metropoulos is using third-party drivers to deliver products to retailers' warehouses, which he said will enable big expansion. He expects to reach a total of about 110,000 c-stores by year-end and to start reaching dollar stores, club stores, drug stores and vending machines, where its products previously were absent.
Metropoulos isn't allowing a unionized workforce and is moving to automate and improve the capacity of the plants, while eliminating products that sold poorly or were only sold regionally, such as Strawberry CupCakes.
The old Hostess had approximately 19,000 employees, many of whom worked on brands such as Wonder Bread that Metropoulos's group didn't buy. The new Hostess is planning to have about 1,800 workers when it is fully staffed. Some workers who are returning to the company are being paid significantly less than they were before the bankruptcy.
Metropoulos also nixed approximately 600 outlet stores that Hostess used to operate, selling soon-to-be-stale products at a discount. He said those competed with nearby c-stores.
Also, Hostess will also start developing healthier products, Metropoulos said. They could include whole grains, lower-calorie snack packs, be gluten-free or contain stevia, a natural sugar substitute.
The new Hostess also plans a multimillion-dollar marketing campaign. "The Sweetest Comeback in the History of Ever" will tout the Twinkie's return via outdoor banner ads, a Hostess food-truck tour and social media. Metropoulos said he and his sons, Daren, 30, and Evan, 32, who will be involved in promoting the brands, will likely use guerrilla marketing techniques, celebrities and sports figures.
Click here to read the full Wall Street Journal report.
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