Nothing beats a classic PB&J though.
Aw (pea)nuts!
SOURCES
https://patch.com/ohio/cleveland/remembering-anthony-bourdain-cleveland
https://www.entrepreneur.com/business-news/smuckers-ceo-said-buying-twinkies-tastes-like-growth-three-years-later-it-tastes-like-a-5-billion-mistake
https://www.inc.com/minda-zetlin/after-98-years-twinkies-maker-hostess-just-made-a-bittersweet-announcement-about-its-future.html
Twinkies: History, Flavors & Facts
Smucker Paid $5 Billion for Twinkies. It Has Already Written Off Nearly $3 Billion
https://www.fastcompany.com/90915714/a-decade-after-its-brief-disappearance-the-twinkie-brand-is-thriving
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TRANSCRIPT:
So, I dunno, maybe it’s years of consuming media where I’ve been told over and over that Twinkies are pretty much the indestructible food that will sustain us in the event of a nuclear apocalypse, but I’ve always assumed that Hostess’s golden sponge cream-filled snack cakes can survive pretty much anything.
The Simpsons has joked about it. Family Guy has joked about it. Anthony Bourdain once went out with the legendary comic book writer Harvey Pekar and tasted decades-old Twinkie filling trapped in the pipes of an old factory in Cleveland that’s now the world’s largest bookstore, and he said it tasted exactly like what’s inside the snack itself.
Because it’s all made of chemicals, you know! The bookstore owner even said on the show that the mice and rats wouldn’t eat it when the pipes ruptured in places and started leaking.
So Twinkies have always seemed to me like the food of the future, mainly because they’ll be around long after any of us.
And the J.M. Smucker Company bet on them too by buying up the Hostess brand for $5 billion in 2023. In fact, when the CEO Mark Smucker announced the move, he went on onstage and ate a Twinkie and said to everyone, “Tastes like growth.”
But three years later, we’ve watching Hostess bring Smucker’s down, not up. The snack division has endured six straight quarters of declines and Smucker’s is losing billions.
So, what happened? As it turns out, the shelf life of a box of Twinkies is just 65 days, whereas most Smucker’s products can sit on the shelves for at least a year.
It turns out we’ve had the apocalypse diet all wrong, and Smucker’s is learning one of the toughest lessons a business can ever learn:
When you take two things that seem like they ought to go together and combine them, sometimes you get something really unappealing as a result.
And for Smucker’s, this is more of a marketing problem than anything else. So let’s dive into what’s happening, and what they can do about it!
I’m Sean in St. Louis, and this is the Marketing Gateway.
Hostess, the company that makes Twinkies, Ding Dongs, Ho-Hos and other treats, has been around for quite a long time. They started out in 1849 in New York City as Ward Baking Company, but in 1925, now under the name of Continental Baking Company, their first big acquisition was Taggart Bakeries, who made Wonder Bread. This made Continental the largest commercial bakery in the United States.
Continental also had a snack food division eventually called Hostess and it was through them that James Alexander Dewar created the Twinkie in 1930. The whole idea of the sponge cake dessert was based on being able to make something like Strawberry Shortcake when strawberries were out of season. Twinkies were originally filled with banana cream instead.
And, fun St. Louis connection here, Jimmy Dewar apparently got the idea for the name Twinkie when he was in St. Louis and saw a billboard for “Twinkle Toe Shoes.”
During World War II, bananas were harder to get, and thus the cream was switched to the vanilla flavor more familiar to us today.
Twinkies have been ubiquitous snack foods for decades, but they also disappeared off the shelves for a few months back in 2012 when Hostess abruptly went out of business and ceased production of them and all its other snack foods. Two private investment companies brought Hostess – and Twinkies! – back to life, but during that time, nobody was able to develop a good substitute. The brand proved in that moment it had a unique place in the junk food pantheon.
And for that matter, Twinkies have always been the very definition of junk food. They have almost no nutritional value, they’re too light to be filling and too sweet to be anything but a dessert, and they also, as it turns out, don’t go well with jam. It’s been tried – Hostess has tried to make a fruit-jam like filling and people really didn’t go for it. Banana Twinkies, chocolate Twinkies and even my all-time favorite, the chocolate-dipped Twinkies known as Chocodiles, are still a thing. But berry flavors have never really worked.
And that brings us to the Smucker’s dilemma.
So J.M. Smucker has been around since 1897, and it’s surprisingly not owned by a conglomerate, but still stands on its own as a publicly traded company specializing in a variety of canned and preserved products ranging from coffee to jams to pastries to pet foods. In addition to their own Smucker’s brand, they own brands like Folgers, Jif, Uncrustables, Meow Mix and Milk Bone. They even acquired the Knott’s Berry Farm grocery brand from the California theme park, though they discontinued that product line in 2024.
When Smucker’s announced they were buying Hostess brands, it seemed like a good idea. Both companies have been around for a long time, have strong distribution and retail presence, know how to manage CPG brands and serve similar consumer markets. Smucker’s also cited research at the time that the average consumer ate 2 snacks a day,
The bidding for Hostess was also competitive, with General Mills being one of the notable companies also trying to snag the snack brand.
But the merger has been a disaster because it turns out that the two companies are different enough that they don’t go together at all.
As I mentioned before the jump, one big problem is shelf life. Snack foods are perishable and can only hang out on shelves for a couple of months before they’re stale and unappealing. Smucker’s is used to shipping product that will sell through long before it’s out of date. Perishable food brings problems like spoilage, returns and more frequent delivery schedules.
And that points to a different problem: distribution. About 40% of Hostess products are sold through convenience stores, compared to what’s basically a rounding error for Smucker’s distribution of its own products. Hostess has also long had a very formidable distribution system that allowed them to control retail distribution so tightly they could divert delivers intended for warehouses to head out to retail stores instead.
Smucker’s, by contrast, is used to a more traditional distribution system, and it folded Hostess into those systems and started trying to consolidate the convenience and grocery businesses. These sales channels aren’t at all alike, and it led Hostess to having stockouts that other brands like McKee Foods’s Little Debbie, Flowers Foods’s Tastytake and Bimbo Bakeries USA have been able to capitalize on, earning them more shelf space and Hostess less.
And there’s another problem, too. People are snacking less and trying to stay away from ultra-processed foods loaded with sugar, and the rising cost of food has also made indulgences a harder sell in a constrained market. All of those competitors I just mentioned are struggling too, and whatever gains they make from snatching market share from Hostess doesn’t change the fact that their market is shrinking.
So, Smucker’s has finally admitted that yes, there is a problem and they’ve focused on providing value-focused products like $1 packs of donettes and smaller versions of their cupcakes so they can sell the idea of small sweet indulgences. This may help them stabilize the brand, and Smucker’s does have some experience in breakfast products like Donettes thanks to its own Uncrustables line, which has been steadily growing.
But let’s think about this like marketers for a moment. Donuts are a sliver of the snack food market and they’re an increasingly competitive space as those other snack food brands try to get in on it.
Little Debbie, for example, has been ramping up sales of full-sized packaged donuts, and many convenience stores and grocery stores also offer fresh-baked varieties.
This is not a snack subcategory like Twinkies where there’s nothing else quite like it; this is a category where low-price strategies and heavy competition are a race to the bottom.
Even slight price increases will change consumer behavior, and store brands for major C-store operators like 7-Eleven and Circle K may cut into the value market further.
And then there’s the problem that food costs are projected to further grow just as Americans are getting super-interested in GLP-1 weight loss drugs. That’s not a favorable market for the Hostess brand, and Smucker’s has never really had to endure a time where its products were facing a decline due to strong market forces.
Smucker’s certainly has seen its coffee sales fluctuate as instant coffees like Folgers have given way to people grinding their own beans and brewing fresh coffee at home, but Smucker’s has brands that compete in that newer space and they’ve been able to stave off a lot of the effects of those changes. This is normal for maturing brands as they hit their long, slow decline, and Smucker’s has weathered that storm just fine.
With Hostess, they may find that there is no path to continued profitability and they’ll have a few choices. The first is to cut back and focus on the profitable products and shelve the rest. That’s probably where Smucker’s will head for the short term. I wouldn’t be surprised to see a lot of the Hostess products that aren’t big sellers starting to disappear.
The next would be to refocus the business, perhaps onto breakfast foods and pastries, with Twinkies and CupCakes being the outliers used to keep a hold on the snack market. Again, this seems inevitable to me, especially since breakfast foods are not as impacted as snack foods in current dietary trends.
But then the question is, “do we get out of this business or find a new pathway to grow it?” And that’s where things get expensive. They’ll almost certainly lose money if they sell – maybe getting a $2-3 billion instead of the $5 billion they paid – but that may be the smarter path since the Hostess division is clearly not compatible with the Smucker’s company in its current form.
Another option is to spin Hostess off as a subsidiary and rebuild what it had before the acquisition. That may require significant investment and be too large of a gamble.
And a final option is to find a new pathway to success with innovative marketing strategies that rethink the whole portfolio. Maybe licensing the brands to other snack food companies or doing brand collaborations might renew interest.
Maybe remarketing these products in other parts of the world or in other sizes and form factors might establish a new love for old American brands. It’s happened before – did you know Spam is considered a luxury item in South Korea, KFC’s biggest market is Asia and Pabst Blue Ribbon beer is huge in China?
Or maybe finding a way to reinvent these brands for Generation Z so that they’re fun again would spur some interest.
Before you say it can’t be done – remember that Hostess was down and out seemingly for good in 2012 and it was because of its new owners believing in its core values and bringing many of its products and brands back from the dead that the newly-formed Hostess Brands was able to regain its footing and be healthy enough to attract that purchase from J. M. Smucker.
So the question isn’t whether or not Hostess can hang in there. It’s whether or not those managing the company can set it and its iconic brands like Twinkies, Suzy Q’s, Ding Dongs, HoHos and Hostess CupCakes up for yet another turnaround.
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