Is America ready for a Mexican Twinkie? Bankrupt Hostess 'to sell beloved snack to cake company south of the border'
- Hostess is closing its 33 plants, laying off its 18,500 workers and putting its snack brands up for sale
- Thousands of company workers went on strike last week after rejecting a contract offer that cut wages and benefits
- Fans of firm's products queue for last serving of Twinkies, Ding Dongs etc.
A Mexican company may come to the rescue of Twinkies-loving Americans across the country as it looks to acquire the bankrupt Hostess Brands to keep its lip-smacking-sweet confections on store shelves for years to come.
Mexican company Grupo Bimbo is reportedly eyeing Hostess Brands, the company that makes Twinkies, Ding Dongs and Ho Ho's, after Hostess announced last week that it would shutter and liquidate its 33 bakeries.
News of Hostess Brands' liquidation struck fear in the hearts of Twinkies loyalists across the country, who scrambled to snatch up the sticky-sweet treats from stores and online for fear of never tasting them again.
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Within hours of Friday's announcement that Hostess was going out of business, there was a rush on buying their products
Was it all in vain? On Friday Michelle Craft bought $100 worth of Hostess treats in Denver, but now it looks like the company might not go out of business afterall
As a result, the all-American Twinkies brand is now becoming more attractive to potential buyers. Food producers ConAgra and Flowers Food. the American company behind Nature Valley granola, have considered purchasing the company.
But Mexico's Grupo Bimbo, the world's largest bread baking firm, may have the upper hand.
Bimbo owns parts of Sarah Lee, Entenmann's and Thomas English Muffins. The company had previously made an offer of $580 million a few years ago, according to Forbes. Hostess is now estimated to be worth only $135 million.
Part of the reason for Hostess's bankruptcy is high sugar prices tied to U.S. trade tariffs -- which wouldn't be an issue in Mexico, where Bimbo can take advantage of lower-priced sugar.
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The family that owns and operates Grupo Bimbo is reportedly worth $4 billion.
As the future Twinkies hangs in the balance, a war of words has broken out between the unions and the snacks maker over who is to blame for them going out of business.
The Bakery, Confectionary, Tobacco Workers and Grain Millers International Union claims that the company would have gone out of business years ago if it hadn't been for the efforts of their employees.
Seeing the funny side: But Curtis Smout was taking precautions against the snacks' disappearance
Meanwhile, Hostess CEO Rayburn has publicly stated without doubt that the closure of the bakery giant on Nov. 16 was due to failed negotiations with the unions and they will be at fault if the Twinkies brand disappears for good.
Issuing a statement clarifying their position, BCTGM International President Frank Hurt said, '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.'
'Hostess failed because its six management teams over the last eight years were unable to make it a profitable, successful business enterprise.'
Hurt explains in his statement that a prior bankruptcy plan submitted by Hostess earlier this year was unreasonable and would have done little to reduce debt, but provided Hostess executives ample compensation.
A representative for the union speaking to Businessinsider.com said that, 'Hostess is a corrupt company and is attempting to shut their plant down because we are not willing to conform and take slave wages. We won't do that.'
'They're a big business who's mismanaged the company and made all of us suffer.'
Multi-generational: Heather Griffiths and her mother Dori team up to buy the Hostess treats they need
'We've been in situations like this, where Wall Street, big business investors will attempt to chop up wages and have workers work for little or nothing, where they're unable to support their families.
'When they have to take action to close the plant, that happens. We have families that cannot work for these types of wages and have little to no healthcare.'
In response to the decision to close Hostess at the cost of 18,500 jobs and the closure of 33 plants, Greg Rayburn laid the blame at the door of the unions.
'The leadership of that union made the decision that they’re willing to sacrifice these jobs because they don’t really want to have these kinds of concessions from other companies,' said Rayburn.
While most of the firm's most iconic brands are likely to be snapped up by other manufacturers, Twinkie die-hards were taking no chances after the announcement.
The snacks were flying off shelves throughout the nation, and grocery store workers reported that they were fast running out of Twinkies and other Hostess brands.
'We may have a few things left, but pretty much we're out of our Hostess stuff,' a store manager in Chicago told Businessweek.
And a spokesman for grocery chain Supervalu warned, 'We will only have the products while supplies last.'
Customers flocked to the Wonder Hostess Bakery Coutlet in Indianapolis to get their hands on the fast-vanishing treats.
Demand: there were long lines outside the Hostess store in Denver when the company announced its demise on Friday
Shortage: Hostress Brands quickly sold out after news spread that the company was going out of business
Charles Selke showed journalists his plastic bag stuffed with snacks, including Zingers dessert cakes.
'How do these just disappear from your life?', he asked. 'That's just not right, man. I'm loyal. I love these things, and I'm diabetic.'
For others, the rush to snap up Hostess foodstuffs was motivated by historic considerations, as in the case of Samantha Caldwell, from Chicago.
In New York City, many grocery stores had run out of Twinkies by mid-afternoon, with only Hostess' less popular products left over.
The shortage led to the snacks selling for wildly inflated prices on eBay and other online marketplaces.
One opportunistic seller managed to offload a box of 10 Twinkies - which would normally cost no more than $5 - for $60.
It is unclear how long the sweet treats will stay fresh - while it is widely rumoured that Twinkies remain edible for decades, it is unclear to what extent that is true.
Leftovers: The most popular snacks such as Twinkies were completely sold out in some Manhattan stores
Gaps: New York City bodegas were fast running out of Hostess products such as Wonder Bread
'I don't think it's a stretch to say there's a lot of sadness today,' Hostess spokesman Tom Becker said, adding: '18,500 people had jobs yesterday and knew they weren't going to have jobs anymore when they woke up today.'
The 82-year-old company, based in Irving, Texas, said a nationwide worker strike crippled its ability to make and deliver products, which include Ding Dongs, Ho Ho’s, Dolly Madison and Drake's cakes.
'There's no way to soften the fact that this will hurt every Hostess Brands employee,' the company's chief executive, Gregory Rayburn, said in a letter to employees.
'All Hostess Brands employees will eventually lose their jobs - some sooner than others.'
Shut: A sign taped onto the door of Hostess plant is seen in St. Louis as the company goes out of business
Farewell: The maker of Twinkies and CupCakes is going out of business and laying off thousands of workers
Hostess had warned its workers that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn't return to normal levels by Thursday evening.
It went ahead and filed the motion on Friday, but said deliveries will continue and Hostess Brands retail stores will stay open for several days to sell already-baked products.
Yet the eventual closure will shutter 33 bakeries, 565 distribution centers, 570 bakery outlet stores and approximately 5,500 delivery routes, the Chicago Sun-Times reported, leaving thousands out of work.
VIDEO: The loss of an iconic treat, and thousands of jobs:
Out of work: Lee Byers mans the picket line outside the closed Wonder Bread bakery in Lenexa, Kansas
On strike: Striking worker and Chief Steward Kravis Pfeiffer from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, representing Hostess workers in Peoria, Illinois
Angry employees: Workers gather to strike outside the Hostess bakery in Memphis earlier this week
'It’s a very sad day because there's lots of history there,' Donald Woods, president of the Local 1 union that represents 500 workers at Hostess plants in Schiller Park, Hodgkins and Peoria, Illinois told the Sun-Times.
'We have members who've had 40 years there. ... Their dream was working there and retire there.'
Valorie Smith, who has worked at the Hostess packing plant in Schiller Park for 27 years, stood outside her workplace on Friday with a group of fellow employees waiting to hear the news.
Smith, 50, said the 10- to 12-hour shifts were tough. 'I gave it my all here,' she lamented to the Sun-Times. 'It’s hard on your body. It breaks you down.'
The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.
Fighting back: Union members with Bakery, Confectionery, Tobacco Workers and Grain Millers International picket across the street from the Hostess owned Dolly Madison bakery in Emporia, Kansas on Wednesday
Waiting game: Picketers play cards outside of the Hostess plant in St. Louis on Friday
Outrage: Diana McKinley, a 33-year employee of Hostess, pickets on Thursday in Sacramento, California
Twenty four hours to save Twinkies: Producer Hostess Brands and unions have agreed to mediation talks
‘Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands,’ Rayburn said.
'We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.'
But union members said the company only has itself to blame.
Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer in September that cut wages and benefits.
Most of the company's employees had approved an eight per cent pay cut for the coming year, but the members of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union had voted against the cut and a change in the pension plan.
Iconic brand: A Hostess Twinkies sign is shown at the Utah Hostess plant in Ogden, Utah
Pulling out: A Hostess Wonder Bread truck is shown in front of the Utah Hostess plant in Ogden
'The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,' the union said in a statement.
'The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset – its workers.'
Hostess has said that production at about a dozen of its 33 plants has been seriously affected by the strike. Three plants were closed earlier this week.
The company, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are becoming more conscious about healthy eating.
A HISTORY OF TWINKIES: AMERICA'S FAVORITE SNACK FOOD & PUNCHLINE
The quintessential junk food treat - a cream-filled, 150-calorie sponge cake - has been called the "cream puff of the proletariat" and the "snack with a snack in the middle." It faces extinction now that its maker, Hostess Brands, announced plans to liquidate amid a dispute with striking bakers.
* James A. Dewar, a manager for the Continental Baking Co, came up with the idea in 1930 after seeing the machines that made shortcakes with strawberry filling sit idle at the bakery when strawberries were out of season. He injected the elongated sponge cake with banana filling - vanilla would be used later - and called it a Twinkie after seeing a billboard for the Twinkle Toe Shoe Company. Dewar, who died in 1985 at age 88, said he ate at least two packets of Twinkies a week.
* Twinkies were scorned by nutritionists as the archetypal unhealthy snack and became a comic's punch line, but somebody is eating them. Hostess was able to manufacture 1,000 a minute at its bakeries and in 2005 the Washington Post said Americans had bought $47 million worth of Twinkies in the previous year.
* Many jokes about Twinkies play off their longevity thanks to their ample chemical preservatives. There has been much speculation about how many decades a Twinkie can sit on a shelf before being eaten. For the sake of freshness, Theresa Cogswell of the Twinkies' parent company Hostess, has said that no more than 25 days was ideal but a Maine college professor gained notoriety by keeping one atop his blackboard for 30 years. He said it still looked good.
* In 2000 President Bill Clinton's White House Millennium Council put together a time capsule in order to give people in 2100 an idea of how we lived. Its contents included historic items such as a piece of the Berlin Wall, film of Neil Armstrong walking on the moon, a U.S. World War Two soldier's helmet, a photo of civil rights pioneer Rosa Parks and a Twinkie.
* The trial of San Francisco city supervisor Dan White, who fatally shot the mayor and another supervisor in 1978, gave rise to what came to be known as the "Twinkie defense." The defense said White was suffering mental problems, as evidenced by the way he had given up his healthy lifestyle and started eating junk food. The defense argued that this behavior was an indication of his instability. White ended up serving five years in prison for voluntary manslaughter.
* Twinkies' surge in popularity in the 1950s was partially attributed to its ads on "The Howdy Doody Show" directed at kids, who demanded the desserts in their lunch boxes.
* Hostess collected recipes from connoisseurs to publish the "The Twinkies Cookbook" in 2006. The 50 recipes included Twinkie-based burritos, lasagna, tiramisu, milkshakes and sushi (with dried fruit rather than fish). Deep-fried Twinkies have been a staple at U.S. state fairs.
* The Twinkie has a long list of television and movie credits. Archie Bunker always had one in his lunch on the sitcom "All in the Family" and they have been featured in the animated series "Family Guy" and "The Simpsons." A character in "The Deer Hunter" eats Twinkies dipped in mustard. In the wacky comedy "Ghostbusters" a scientist tracking demons calculates that the level of "psychokinetic energy" in New York City could normally be as big as a Twinkie but things had become so bad that that Twinkie would now be 35 feet long and weigh 600 pounds (about 270 kg).
* Twinkies are just part of the Hostess snack food family. Other well-known treats from the company include Ding Dongs, Ho Hos, Suzy Q's, Sno Balls, Zingers and Drake's cakes.
* Twitter and other social media were filled with laments about a Twinkie-less world on Friday. Entrepreneurs and speculators turned to eBay. A box of 10 Twinkies was being offered on the online auction site for a starting bid of $500. "What better way to say, 'I love you' than with the gift of an American icon that will be gone soon," the seller said.
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