Anyway, the joke about the little, yellow, cream-filled Twinkies cakes that Baby Boomers and Gen Xers routinely had packed in their lunchboxes originated because they have an unusually lengthy shelf life (30+ days). The reason: the cakes don't contain any dairy products at all, and also have various preservatives. Of course, its fiction (see HERE) that Twinkies don't spoil or last for 30+ YEARS, but it brings me to the topic du jour: earlier this week, news surfaced that an ongoing strike could force Hostess Brands, Inc. to liquidate itself in bankruptcy. There were reports that 24 of 33 Hostess plants had workers on strike.
This wasn't Hostess' first trip to the bankruptcy courts.
Hostess filed for bankruptcy reorganization in January 2012 (it's second time since 2004 after being spun off as an independent company), but Hostess Brands' (formerly Interstate Bakeries Corp.) CEO Greg Rayburn warned earlier this week "We simply do not have the financial resources to survive an ongoing national strike." He added that the company would go into liquidation unless striking bakers didn't return to work by 4 p.m. Thursday, November 15, 2012. Bakers were striking in protest to a new contract that was imposed by the bankruptcy court. They didn't return to work, and he kept his word by filing for bankruptcy via liquidating the company's assets. Now, they’re all out of jobs.
Hostess was a company with a long history in the U.S. Much of the 82-year old company’s growth was via mergers and acquisitions. However, The New York Times dealbook blog (see http://nyti.ms/T2LLVG for that posting) reported that the new private equity owners loaded the company with a boatload of debt, making it difficult to invest in new equipment or sustain an ongoing labor dispute. Earlier this year, Hostess had more than $860 million of debt. However, sales of its iconic brands may help repay some of Hostess' creditors.
What's behind the bankruptcy and liquidation of Hostess Brands, Inc.? Fortune summed it up this way (see http://bit.ly/UMlB9r):
"In truth there are no black hats or white knights in this tale. It's about shades of gray, where obstinacy, miscalculation, and lousy luck connived to create corporate catastrophe. Almost none of the parties involved would speak on the record. Still, it's clear from court documents and background interviews with a range of sources that practically nobody involved can shoot straight: The Teamsters remain stuck in a time warp, unwilling to sufficiently adapt in a competitive marketplace. The PE firm failed to turn Hostess around after taking it over. The hedgies can't see beyond their internal rates of return. Et cetera, et cetera, et cetera.
The critical issue in the bankruptcy is legacy pensions. Hostess has roughly $2 billion in unfunded pension liabilities to its various unions' workers — the Teamsters but also the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (which has largely chosen not to contest what Hostess wants to do — that is, to get out of much of that obligation)."
A Portfolio of Iconic and Valuable Brands
Beyond artificial cakes, the Hostess was also a major commercial bakery ... among it's best-known bread is Wonder Bread, an iconic white bread that many kids had their PB&J sandwiches made from back on the days before child nutrition was seen as important (and kids could still bring things made with peanut butter to school). The company also sells other bread-products including Nature's Pride and Home Pride whole wheat breads, hamburger and hotdog buns, etc.
Hostess evolved over the years through a number of mergers and acquisitions. For example, back in the 1960s and 1970s, the company, then known Interstate Bakeries, bought more than a dozen regional bakeries that were located across the country. A couple of decades later, it paid $330 million for the Continental Baking Company, and in the process, picked up a portfolio of brands including Wonder and Hostess.
 |
| Twinkie the Kid |
That remains to be seen, but I think it's pretty likely.
Hostess' Brands Are Likely to Be Sold
In a liquidation, the assets for the company are sold to buyers (perhaps in pieces) to repay the company's creditors, some of which consists of unfunded pension liabilities.
If I had to name some potential buyers, I'd say one potential buyer for at least some of the company’s (bread) assets could potentially be Mexico's Grupo Bimbo. Bimbo already licenses the sale of Wonder bread in Mexico. But the company has also acquired many American baked goods brands over the years, including Arnold breads, Entenmann's pastries, Thomas' English muffins and bagels, Stroehmann's/Oroweat, and Boboli pizza crusts.
On the cake side of the business, The New York Times deal blog (see http://nyti.ms/ZOtX61) reported "Flowers Foods, a baking goods company based in Thomasville, GA, has struck 18 deals since 1999. Last year, it bought Tasty Baking, the maker of Philadelphia's beloved Tastykakes, after the company nearly collapsed."
Indeed, American Public Media's Marketplace interviewed a bankruptcy attorney familiar with liquidations and they felt certain that some of the various brands belonging to Hostess would stick around, albeit under different ownership, and could potentially be quite valuable for reasons beyond the shelf space they currently command at supermarkets today. You may listen to that story below, or by visiting http://bit.ly/UM03iG:
Possible Loss of American Pop Culture Icons
"The Twinkie was a popular cult icon, a reference point that was mentioned by Homer Simpson and even spawned Twinkie cookbooks," said Nancy Down, head librarian at the Browne Popular Culture Library at Bowling Green State University in Ohio. "It's pure nostalgia and it reminds us of a happy childhood. And even though I don't think I'd eat one today, it has that sweetness and shape, that perfect sort of handheld thing, that made it such a comfort food for so many people."
As a point of reference, Twinkies also had a lengthy list of TV and movie credits. For example, Archie Bunker always had one in his lunch on the sitcom "All in the Family", and the yellow cakes were also featured in the animated series "Family Guy" and "The Simpsons." There are probably many others I can’t think of now. The point is, this is something of a loss for American pop culture, even if it is pure junk food.
Looming Shortages of Twinkie Inventory?
Time business has a story with a headline "Time to Start Stockpiling Twinkies? Hostess in Limbo as Workers Strike" about the pending liquidation of Hostess Brands, Inc. which can be viewed at http://ti.me/ZRe9P2. The article cites a Wall Street Journal article from earlier in the week (see http://on.wsj.com/PWDdCi for access to the article with a WSJ user name and password) about what the strike might mean for the company's storied brands.
In the interim, there are now stories of impending Twinkie shortages across the country, with people hoarding boxes the ubiquitous junk food. By Friday evening, there were already more than 24,000 people who had signed an online petition calling for the White House to "nationalize the Twinkie industry." That seems very unlikely since there's no shortage of commercial bakeries still in operation, but there are likely to be one or more buyers for the company's iconic brands. My hope is that whoever buys the product has the good sense to try and make them healthier, which was a main issue the iconic products dealt with in recent years (For more background, definitely read Steve Ettlinger's book "Twinkie Deconstructed" which investigates, in order, every ingredient on the box of Twinkies as we knew them). Regardless, for those mourning the loss, now might be time to resurrect a recipe for Twinkies that first emerged back in the seventies (they're loaded with hydrogenated fats, the kind cardiologists say are even worse than saturated fats), but for those individuals who cannot survive without their Twinkies, let me offer something something from an earlier time: baking at home.
Gloria Pitzer, a St. Clair, Michigan (originally) housewife who gained worldwide fame for her role as "The Recipe Detective" was discovered by the masses back in the 1970's thanks to an appearance on "The Phil Donahue Show", and she gave a recipe for what she called "Hopeless Twinkles" away on the show. She recommended baking them in an oblong plan designed for baked potatoes, but I never found such a thing. Perhaps now, with the advent of the internet (see http://amzn.to/WgnhsW), those aren't as hard to find as they once were. I should note that while her recipe may taste pretty darn close to the original, it really isn't a whole lot healthier than the original if you examine the ingredients. But, I'll share that recipe with everyone below just in case you're worried about shortages in your local supermarket or 7-11 stores:
by Gloria Pitzer
Makes 24
Filling:
1/2 cup butter or margarine
1/2 cup shortening
1 cup granulated sugar
3/4 cup evaporated milk
1 tablespoon vanilla
Cake:
3 large eggs
1 1/2 teaspoons vanilla
1 cup whole milk
1/2 cup butter
1 1/2 cups sugar
1 teaspoon salt
3 1/2 teaspoons baking powder
2 cups all-purpose flour
To make filling: Cream butter 5 minutes at medium speed. Add shortening a little at a time. Cream 3 to 4 minutes. Add sugar a little at a time. Mix milk and vanilla, and add to mixture, scraping bowl frequently. The longer you beat mixture, the better it becomes.
To make cake: Preheat oven to 350 degrees. Grease two 8-inch square cake pans or baking dishes or use a 13-inch by 9-inch by 2-inch pan. Beat eggs and vanilla together for 1 minute, then add other items one at a time, beating a minute after each addition. Pour into prepared pans.
Bake 30 to 35 minutes (40 to 45 minutes in oblong pan), or until toothpick inserted in center comes out clean. Cool cake in pan.
It's best to use cake when it is slightly frozen. About 30 minutes in the freezer works best.
Cut cake into 1 1/2-inch by 3 1/2-inch bars. Put bottom side of each bar on wax paper, spread half of the bars with filling and top with unfrosted bar, sandwich style. Refrigerate up to 2 weeks; freeze up to 1 year.
Before you set up shop as a Twinkie baker, as I already noted, in all likelihood, most the Hostess' brands, are likely to return under new ownership before very long.
Author P.S., November 20, 2012: There is news that the bankruptcy judge Robert Drain who is overseeing the Hostess case asked both the company and the unions to join him for a mediation session to try and broker a new contract. Both sides have agreed to go into mediation to try to avoid the company being shut down with some 18,000 workers losing their jobs, so there's a possibility Hostess may survive as a company. APM's Marketplace covered that news below, or you may visit their website directly at http://bit.ly/QWcxTE:
However, as of the evening of Nov. 20, 2012, Bloomberg News is reporting (see http://bloom.bg/SaOXRB) that Hostess failed to reach a deal with union representatives during a mediation session. In essence, a last-ditch mediation session with its bakers' union over a new contract imposed in bankruptcy court failed, bringing the company closer to liquidation. If the company goes into liquidation, its brands and recipes will be sold off to raise funds to pay creditors.
Author P.S., January 5, 2013: As of January 5, 2013, The Wall Street Journal is reporting (see http://on.wsj.com/SbK0dD, note WSJ subscription may be required for access) that Flowers Foods Inc. and Grupo Bimbo SAB are in discussions to acquire pieces of Hostess Brands Inc.'s bread business according to people familiar with the talks. Readers may recall that I cited BOTH companies when I wrote about the liquidation. Incidentally, on November 30, 2012, WNYC's radio program "Last Chance Foods" covered Twinkies and spoke with Steve Ettlinger, author of "Twinkie, Deconstructed". It's worth checking out at http://wny.cc/RtsQYr.
Author P.S., January 11, 2013: The Wall Street Journal and other news media reports that Flowers Foods, Inc., which I named above as a potential acquirer for at least some of Hostess' brands will buy the bread brands from Hostess for $390 million (see http://on.wsj.com/10nmiyO for details). The bid is subject to court approval since it involves a bankruptcy liquidation. The news applies to the bread brands (Wonder, Home Pride, etc.) only, but the press is also reporting that Hostess is expected to announce buyers for its famed dessert cakes (Twinkies, etc.) over the next several weeks.
Author P.S., March 12, 2013: Hostess is gone, but Twinkies are back. Marketplace reports that Twinkies are comin' back. (see http://bit.ly/YaUM15) Two private equity firms confirmed they're the winning bidders in the Hostess bankruptcy auction. They reportedly paid $410 million for the brand. Twinkies will be back on the shelves by summer. Though, if you had any left from when Hostess went broke in November, they're totally still good, too.
Author P.S., July 9, 2013: Marketplace reports that (listen or read the news at http://bit.ly/12WNQKu), Twinkies (as well as Ding Dongs and Ho Hos) will be returning to store shelves. Officially, the reported date they will return to stores will be on July 15, 2013 -- less than a year after the old Hostess declared bankruptcy. The new owners, specifically C. Dean Metropoulos and Apollo Global Management, thanks to the company's bankruptcy, have been able to slash costs because the people who were hired back are now non-unionized (that may not be good news for the employees, but its great for the owners), because the new owners don't have to fund big union pensions that dogged the old company. Although an old Indianapolis Hostess plant on Shadeland Avenue is expected to be fired up again, as is another in Columbus, Georgia, while yet another plant in Columbus may be used as a distribution center, most of the other bakery locations around the country are now closed - permanently. Slashing distribution costs, much associated with rigid union contracts, has been a big part of the resurrected company's business strategy. Some of that could impact the product itself. For example, they will now ship to warehouses rather than to individual stores, enabled by freezing Twinkies so they can be shipped further and can be stored longer (45 days vs. 25 for the old way) which is a big deal in terms of supply-chain management. The new owners say they plan to expand the Hostess brand by offering healthier products and new varieties, such as gluten-free varieties (if ever there was a "trendy" food, that's it, because the incidence of people with diagnosed rather than perceived gluten allergies or autoimmune Celiac disease is estimated to be 0.55%, or one in every 200 people). There have been no announced plans (I am aware of) on a variety without carbohydrates or the über-unhealthy hydrogenated fats used in the "creamy" filling, which would definitely be "healthier", but only time will tell, I guess.
No comments:
Post a Comment