'Twinkies is Dead. Long Live Twinkies!'

Published in CSP Daily News

Hostess pulls plug; as a shocked world mourns, remembers, suitors emerge

IRVING, Texas-- "Hostess Brands is Closed."

That's the word on the snack cake and bread maker's old website, www.hostessbrands.com, accompanied by the press release that explains why: "We are sorry to announce that Hostess Brands Inc. has been forced by a bakers union strike to shut down all operations and sell all company assets. For more information, go to hostessbrands.info. Thank you for all of your loyalty and support over the years."

(See Related Content below for previous CSP Daily News coverage of the Hostess shutdown.)

The new website also offers a letter to employees from CEO Gregory F. Rayburn, which said, "I have very disappointing news. Hostess Brands must immediately begin to wind down all operations. ... All Hostess Brands employees will eventually lose their jobs--some sooner than others. " ( Click here to read the full letter.)

A letter to customers from executive vice president and chief marketing officer Rich Seban said, "[The strike] affected our ability to continue to make products and service our customers' needs and pushed Hostess Brands into a wind down scenario. ... We deeply regret taking this action. But we simply cannot continue to operate without the ability to produce or deliver our products." ( Click here to read the full letter and FAQ.)

And a letter to suppliers from senior vice president of purchasing Rob Kissick said, "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." ( Click here to read the full letter and FAQ.)

The Bakery, Confectionery, Tobacco Workers & Grain Millers International Union (BCTGM) issued a statement in response to the shutdown: "While Hostess management wants to blame our members for the demise of the company, the truth is that had it not been for the valiant efforts of our members over the last eight years, including accepting significant wage and benefit concessions after the first bankruptcy, this company would have gone out of business long ago." ( Click here to read the full statement and fact sheet.)

The snack giant endured $52 million in workers' comp claims in 2011, according to its bankruptcy filing this January. Hostess's 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012, said a Wall Street Journal report.

Union work rules usually required cake and bread products to be delivered to a single retail location using two separate trucks, the report said. Drivers were not allowed to load their own vehicles, and the workers who loaded bread weren't allowed to load cake. On most delivery routes, another employee moved products from back rooms to shelves.

This year, management negotiated concessions from some of the unions, including the Teamsters, but the bakers rejected a last and best offer in September. Then the courts gave Hostess unilateral authority to modify collective-bargaining contracts, prompting the strike. So now it will liquidate, instead of attempting to emerge from Chapter 11 intact. the report said.

Thus ends the saga of the venerable Twinkie snack cake that has been enshrined in popular culture in films such as Die Hard ( click here), Ghostbusters ( click here) and Zombieland (watch embedded clip or click here).

Or does it?

Although obituaries and tributes sprung up overnight on the web ( click here for one quite moving example), and Twinkies began disappearing from store shelves, most industry observers expect the brands to live on.

"Hostess Brands will sell its popular cake snack brands, including Twinkies, CupCakes, Ding Dongs, Ho Ho's, Sno Balls, Donettes, Drake's cakes and Dolly Madison. Bread brands to be sold include Wonder, Nature's Pride, Merita, Home Pride, Butternut and Millbrook, among others," Hostess told customers in the letter. "We expect there will be great interest in our brands."

Mexico City-based Grupo Bimbo ("BEEM-bo") may be interested in acquiring some or all of Hostess' bread and snack cake brands, according to a Forbes report. Bimbo already owns the Wonder bread brand in Mexico, as well as its own Bimbo-branded bread in Mexico and the United States. It also owns U.S. brands such as Entenmann's pastries; Brownberry, Holsum, Rainbo and Earth Grains breads; Thomas' English muffins; and bagels and Boboli pizza crusts. Last year, last year, Bimbo bought the U.S. bakery business of Sara Lee Co. for $709 million.

Other names mentioned in the press include Flower Foods, which makes Mrs. Freshley's and Tastykake snack cakes and Sunbeam and Bunny breads, and McKee Foods, which makes Little Debbie snack cakes. Some reports speculated that a private-equity or turnaround firm would acquire the brands.

Meanwhile, officials at Tulsa, Okla.-based QuikTrip said they were prepared well in advance for Hostess' decision to liquidate the company. The retailer told KJRH-TV that it is one of Hostess' largest customers in the Tulsa area. In addition to the Twinkies, its other snack cakes and Wonder Bread, it also used Hostess buns for its roller-grill items.

QuikTrip spokesperson Mike Thornbrugh told the news outlet that "customers shouldn't worry. We made both short-term and long-term provisions in case this day ever came, and unfortunately it did."

Some QuikTrip stores reported that they sold out of some Hostess products on Friday. Thornbrugh said, however, that the stores should still get some new shipments.