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Posted by on Nov 16, 2012 in Business, Economy, Featured | 25 comments

Good Bye (For Now) Twinkies: Hostess Is Going Out of Business

Good bye (for now) Twinkies, that delicious and tempting, nearly addictive packaged cream-filled cake snack of generations that makes you say “good bye” to your diet as you eat one after another. Its parent company Hostess is going out of business. And if Twinkies are sweet, the debate over why the party’s over for Hostess is bitter, indeed:

Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn’t return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers’ pensions last year.

NBC’s Savannah Guthrie read a statement on “Today” from the bakers’ union that said: “Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and the union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.”

By most accounts, some other company could well buy the rights to make Twinkies. The Washington Post’s Alexandra Petri pleads for them to live on as long in the marketplace as they can on a shelf:

Twinkies were supposed to outlast us.

Worlds and civilizations and all the greatest works of mankind would pass away, and all that remained of this planet would be a lonely cockroach, chewing meditatively on a Twinkie.

The Twinkie was supposed to outlast the cockroach, too.

So now that Hostess, in the face of strikes, has announced that it is liquidating and will start selling its assets, including its inimitable Twinkie, I have to reevaluate all my fundamental assumptions about life. If Twinkie can fall like this, to strikes, then is it truly possible to create a work that will stand the test of time? Maybe I should chuck it all and go live on a sailboat.

I feel, surveying the wreck of Twinkies, the way Ozymandias would probably feel gazing on the vast and level sands stretching far away. So much for human effort. So much for humanity’s one lasting monument! You might smash the David with a giant sledgehammer. You could paint over the Mona Lisa. But I defy you to do anything to a Twinkie that will get rid of it. No, the only way to get rid of a Twinkie was to eat it. And consequently the Twinkie was guaranteed to linger.

I thought it would be nutrition standards that did the Twinkie in. I thought it would be — sheer carelessness on the part of the human race, ending ourselves by accident by hitting the wrong button. I thought we’d be hit by an asteroid. I never thought the Twinkie would be the first to go. No parent should have to bury its Twinkie.

In general, I defy you to rid yourself of a Twinkie. They linger like meddlesome, high corn-starch ghosts. They outlive parrots. And parrots outlive everyone. I had a Twinkie sit ominously on the edge of my desk croaking “Nevermore” all through college. I nuked a fridge containing Twinkies and Indiana Jones, and only the Twinkies survived. My point is, these things are indestructible.

Meanwhile, there is speculation (or hope?) that the Mexican bakery “Bimbo” — which believe it or not is not named after any candidate who ran for office in the last U.S. election — will keep the treat alive. Forbes:

Hostess sweet treats have tempted the sugar-starved among us for more than eight decades. Now, the company, pumped full of debt by private equity buyouts, is going out of business. That moves the focus on Hostess’ brands—Twinkies, Devil Dogs, Wonder Bread, Ho Ho’s, to name a few—from the store shelf to the auction block.

It seems quite plausible that the next Twinkie maker could be a Mexican company run by a billionaire family.

Meet Daniel Servitje Montull. He and his family are worth more than $4 billion by our tally. Servitje runs Grupo Bimbo, a publicly traded bakery concern that ranks as the world’s largest bread maker. (Seated close to Servitje is his uncle, Don Roberto, and his father, Lorenzo. Papa Servitje founded Bimbo with three others in 1954.) Daniel Servitje assumed control of Bimbo in 1997, setting the company on a course of rapid growth. This included a battle with Mexico‘s tortilla don; positioning white bread in Latin American markets; and careful management of Bimbo’s fleet of white delivery vans.

A period of substantial expansion—profits doubled and revenue more than tripled—that also included several flirtations with buying Hostess

Acquisitions are at the very center of Bimbo. Indeed, Bimbo has gobbled up companies, and this was initially confined to South America, and Servitje, a thin man with deeply set eyes, worked to extend Bimbo’s reach from Mexico to the tip of South America, in Patagonia. Thereafter, his attention turned north. He bought Fort, Worth-based Mrs. Baird’s Bakeries of Fort Worth, Texas for $200 million shortly before 2000, then Heiner’s and Earth Grains. And just last year, Bimbo bought the U.S. bakery business of the Sara Lee Co. for $709 million, as well as the Spanish and Portugal portions in a separate transaction.
Today, Bimbo is a $10 billion sales business with $200 million in cash on its balance sheet. (By contrast, Bimbo posted $3 billion in sales a decade ago; annual profits have more than doubled to roughly $400 million.) It competes with U.S. companies like Kellogg, Hershey and General Mills, and with privately held operations such as McKee Foods, the maker of Little Debbie’s snacks. Supermarkets stock Bimbo staples like Entenmann’s and Thomas’ English muffins. And, significantly, the Sara Lee acquisition suggests that Bimbo’s appetite for U.S. bakeries is hardly satiated.

So, perhaps Twinkies will take their place in Bimbo’s white vans.

Hostess cupcakes may vanish. Hostess Devil Dogs may be put to sleep forever.

But Twinkies — like the package you might not know you have had in the bottom of a box in your attic for 20 years – could still live on.

MUST READ: A collection of the funniest eulogies to Twinkies.

And here’s how to make Twinkies at home..

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