Wondering About the End of an Era...or a New Frontier

A little background on the Culinary Industrial Complex:

A study by Paul Johnson and Paul Kenny at the Scripps Research Institute (2008) suggested that junk food consumption alters brain activity in a manner similar to addictive drugs like cocaine or heroin.[6] After many weeks with unlimited access to junk food, the pleasure centers of rat brains became desensitized, requiring more food for pleasure. After the junk food was taken away and replaced with a healthy diet, the rats starved for two weeks instead of eating nutritious fare.[7] 

• The Demise Of The Twinkie: Hostess To Liquidate

 November 16, 2012

 from the Corporate Intelligence Blog/Wall Street Journal

 by Tom Gara

And that’s that: Hostess Brands, maker of Twinkies, Wonder Bread and more, announced this morning it has filed a motion with bankruptcy court to start liquidating the company immediately. A huge number of jobs are soon to be lost.

“Hostess Brands will move promptly to lay off most of its 18,500-member workforce,” said CEO Gregory F. Rayburn in the statement, “and focus on selling its assets to the highest bidders.”

In a letter posted on a new site set up to communicate with employees and suppliers through the liquidation process, Mr. Rayburn pinned the blame on its striking union:

Despite everyone’s considerable efforts to move Hostess out of its restructuring, when we began implementing the Company’s last, best and final offer, the Bakers Union chose to stage a crippling strike. This affected Hostess’ ability to continue to make products and service its customers’ needs and pushed Hostess into a Wind Down scenario. As a result, we are forced to proceed with an orderly wind down and sale of our operations and assets. We deeply regret taking this action. But we simply cannot continue to operate without the ability to produce or deliver our products.

There’s no way to soften the fact that this will hurt every Hostess Brands employee. All Hostess Brands employees will eventually lose their jobs – some sooner than others. Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the Company can offer you at this time.

And for suppliers, the situation is also dire, wrote Rob Kissick, the company’s senior vice president for purchasing:

Any orders in process are cancelled immediately. Any product in transit will be or has been returned to the shipper. We have retained a Wind Down Team that will continue on to assure that the business shuts down in an orderly fashion. It is unknown at this time what will happen to unpaid vendor invoices or whether sufficient funds will be ultimately made available for payment.

There has been no word yet from the Bakery, Confectionery, Tobacco Workers & Grain Millers (BCTGM) union that was leading the strike — we’ll update when there is. Also one to watch is the response from the Teamsters Union, whose members earlier voted to accept the new labor deal offered by the company and have not been participating in the strike. Yesterday, the Teamsters said current strike put it in a “horrible position,” where members were being asked to “support a strike that will put them out of a job.”

So does this mean the Twinkie is gone for good? Not necessarily, the WSJ’s Rachel Feintzeig reports:

Adam Hanft, a branding strategist behind Hanft Projects, sees the potential for new life in the death of a decades-old company. A fresh owner of the intellectual property, which includes everything from names to recipes to graphics, could revitalize the Hostess brands, which Mr. Hanft sees as weakened but not lacking potential. He raised the prospect of new flavors, limited-edition Twinkies, products co-branded with independent music groups and the potential for an international reach.

“Its nutritional emptiness in the right hands could be its core strength,” he said, explaining that a buyer that embraces the brand’s “kitschy,” “deliciously retro” feel could be rewarded. He foresees a potentially diverse crowd of bidders for the property.

“It’s the kind of iconic brand that might attract people who might not otherwise be interested in owning a consumer good,” Mr. Hanft said.

Related: Rachel Feintzeig has more on Hostess’s closure on Markets Hub.