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By Paul Losch

About this blog: I was a "corporate brat" growing up and lived in different parts of the country, ending in Houston, Texas for high school. After attending college at UC Davis, and getting an MBA at Harvard, I embarked on a marketing career, mai...  (More)

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Let Us Praise Hostess Twinkies and Wonder Bread

Uploaded: Nov 16, 2012
The company making these and other products, such as Ho-Ho's and its version of a Cupcake, were part of my growing up.

"Wonder Bread: you wonder if its bread!" It was a major factor in a Jif or Skippy peanut butter (smooth not chunky) and jelly sandwich, along with some Welch's grape jam. And the Wonderbread wrapper was great—it looked like balloons!

What a lucky lunch pail I carried to school in those days. Along with a little box of SunMaid raisins. I bought a carton of milk at school.

I did enjoy the occasional Twinkie, an ersatz sponge bread filled with a faux cream. We had enough real cupcakes baked in my household that the Hostess variety was in a category of its own. I did like Ho-Ho's, a variation on the theme of Twinkies' and Cupcakes.

My business experience suggests that the Hostess company needed to shut down. The key product offerings were obsolete, there did not appear to be a culture that could adapt and develop products that kept up with the times. The key Hostess products lost their allure a long time ago, for parents, kids, and the competition.

I find it regrettable that the company has 18,000 employees who will have to move on from working at a company where they may have limited transferrable skills. Worked on the Ho-Ho line? Not sure what that means when seeking employment in another mass produced bakery organization.

My food shopping practices in recent times have been such that I have not even seen Twinkies or Ho-Ho's on the shelf, let alone purchased them. I think I am a microcosm of many, who once consumed these products, but moved on, and did not pass them along to the next generation.
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Posted by RIP, a resident of ,
on Nov 16, 2012 at 9:07 am

RIP Mayor Moscone, assassinated by a psycho who claimed to be high on Twinkies.

Posted by deep fried Twinkies, a resident of ,
on Nov 16, 2012 at 10:33 am

wither the South?

No more deep fried Twinkies.

Perhaps an end to today's headline? Diabetes Rates, Links to Obesity, Skyrocket in South

Probably not. But they want to secede anyway....

Posted by deep fried Twinkies, a resident of ,
on Nov 16, 2012 at 10:34 am

Seriously though, someone will buy those still popular brands. They will live on, infamously.

Posted by deep fried Twinkies, a resident of ,
on Nov 16, 2012 at 10:42 am

Some detail: a private equity (think Bain-style vulture capitalism)company bought Hostess. They previously instituted major wage and benefit cuts, while the executives took huge pay packages.

"Unfortunately however, for the past eight years management of the company has been in the hands of Wall Street investors, "restructuring experts", third-tier managers from other non-baking food companies and currently a "liquidation specialist". Six CEO?s in eight years, none of whom with any bread and cake baking industry experience, was the prescription for failure."


Posted by Sally, a resident of ,
on Nov 16, 2012 at 11:01 am

[Post removed by Palo Alto Online staff.]

Posted by deep fried Twinkies, a resident of ,
on Nov 16, 2012 at 11:25 am

Hostess was a viable, solid company with national and regionally recognized brands -- locally, they own Colombo Breads, top notch sourdough.

Sourdough.... yum!

Enter the private equity barons, who make their money breaking things up, and they decided early on to drive Hostess into liquidation, using tax loopholes to make it even more profitable for them, but not for working families.

here's Dvid Stockman, the Reagan guy, on this style of vulture capitalism: Web Link

Well, we still have Krispy Kreme. And the top tier management at Hostess, the liquidators, will do great through all this.

That's what counts, right?

Posted by Anon., a resident of ,
on Nov 16, 2012 at 12:04 pm

Junk food, the factory farm, the chemical industry and then the "health" care profits made when sick people finally fail in some way is the core of the American system now ... it is institutionally TOO BIG TO FAIL. All driven by the petrochemical industry, that funnels money to the same people who prevent any change or even competition and then get so much money they can expand and take over everything else in the economy and promote what are basically fascist ideals, certainly nothing recognizable as American from a generation or two back.

Kids born these days do not even have much contact with anyone who can tell them different, and the media assures them they can safely and righteous ignore their parents and elders anyway!

How does this change? I have no idea, I just try not to put any money into this system that I can possible avoid, hoping that others will join me and see the light.

Posted by Ducatigirl, a resident of ,
on Nov 16, 2012 at 12:21 pm

As for me, I never touch the stuff, though i suspect that all the preservatives may be preserving the people who eat them.

Posted by Paul Losch, a resident of ,
on Nov 16, 2012 at 1:34 pm

Paul Losch is a registered user.

My initial observaions were around the Hostess products, and their viability in this day and age.

I know nothing about recent ownership, but Hostess does fit the bill for a "turn around" situation. The sort of thing that private equity types with turn around teams pursue.

It's differentfriom what many VC's do in these parts, which is focused mainly on helping new ideas grow.

Failure rate very high in both sectors. The "home runs" make up for the things that strike out.

My MBA from a well known business school suggests to me that if it was a private equity firm that owned the business in the last few years, there was a group running the company that had a limited understanding of the marketplace in which Hostess participated, and had no motivation to keep the brands going.

Monetize as much as possible and bail out.

Posted by Wayne Martin, a resident of ,
on Nov 16, 2012 at 5:38 pm

Several of our large, institutional employers are probably going to disappear in the coming decade--

Sears Posts $500M loss:
Web Link

US Post Office Loses $15.9B:
Web Link

The Internet will probably be the agent of change that will usher some of the companies to the door, labor unions will be pall bearers in the industries where they have festered for decades. Automation may help a few of these companies survive--but the management of any "old industry" companies will need to take the bull by the horns as quickly as possible, automating what they can, and liquidating what they can't, if the unions refuse to play ball.

Posted by horselady, a resident of ,
on Nov 16, 2012 at 5:43 pm

We used to eat the cake out of the snowballs and make rubbery toys out of the marshmallow coating. My dad said that Wonder bread was just unsweetened pastry dough, and that it was called Wonder bread because everyone wondered what it really was. He used to put peanut butter and honey on it and call it dessert.

But seriously, I think the company that owned it most recently did not have a clue, as they seemed to do no marketing. They probably tirned the day-to-day business over to another compamy, as Paul says, and they had no clue, either. Just squeeze the money out and run.

The sad part is all those employees who have worked there since graduating high school--who will pay to re-train or re-educate them?

Posted by Paul Losch, a resident of ,
on Nov 16, 2012 at 6:48 pm

Paul Losch is a registered user.

To Wayne Martin:

Of course the internet is changing the face of retail, and I don't think the internet has killed the Twinkie.

Even in this rarefied part of the world, where high tech generates wealth, employment and other benefits, there remains a great deal of commerce that cannot go over a fiber optic line.

Distribution is a key to success for many businesses. It is a constant struggle for the company I have run. But there are products and companies that will require access to their customers via means other than the internet.

Posted by Sharon, a resident of ,
on Nov 16, 2012 at 7:08 pm

A petition at the White House is urging president Obama to ?nationalize the Twinkie industry?.
The iconic cake manufacturer declared bankruptcy after it failed to reach an agreement with the union. Politico reports that the AFL-CIO is blaming the company for refusing to operate at a loss.

?What?s happening with Hostess Brands is a microcosm of what?s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price,? AFL-CIO president Richard Trumka said in a Friday statement

The last time radicals defined the issue as a class war it did not work out so well

Some want to to try that strategy again-last time it ended in mass death and organized crime.

So it goes

How about crispy creams donuts?

Posted by Wayne Martin, a resident of ,
on Nov 16, 2012 at 8:13 pm

> But there are products and companies that will
> require access to their customers via means
> other than the internet.

We have yet to begin to think about how disruptive the Internet/Digital Technologies will be in the coming years. Let's take 3-D printing, for instance--

3-D Printing:
Web Link

3-D Printing Revolution (6 mins):
Web Link

3-D Metal Printing (5 mins):
Web Link

Although this technology has been around for over a decade, it is now moving into the consumer marketplace, as the first video above demonstrates. It's too early to begin to consider the bounds for 3-D printing, but it does offer some very interesting possibilities that allow people to connect via the Internet with web-sites offering products that can be "printed" at home, or at a local "3-D Print Shop". Delivery services can provide the last leg of "distribution", allowing everything but the actual parcel drop-off to be done over the Internet.

Higher speed data networks, coupled with large screen displays, and imaginative, animated, on-line sales points which might well have a complete profile of every customer could easily be envisioned which would allow people to virtually "try on" clothes, shoes, hats, etc. Again--no travel would be required in order to make the sale.

I suppose we will still have to move lumber, and gravel, to building sites with trucks--but who knows, maybe there will be some sort of organic synthesis available one of these days. Pour a little carbon and water in one end, and out comes 2x4s at the other.

Anything is possible. So, best not sell the Internet short, just yet, anyway.

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