Hostess, RIP (part 2)

I’ve been wondering about the demise of Hostess, and yet I have been quite unsurprised in some ways.

Let’s start with this:  the strike and the labor dispute might indeed have been the death blow to the company (not to mention the alleged misconduct of senior management giving themselves getting 300% raises  as they were preparing for bankruptcy ).  But that’s like discussing the behavior of those on the sinking Titanic.  The question is what made the Titanic sink.

So in this case, what was Hostess’s iceberg?

Well, I don’t know.

And why would anyone ask me?  I know very little about economics (other than the words “supply and demand”, which I learned from Father Guido Sarducci ).

But I like the pies.

So I do have some anecdotal evidence that might suggest an answer.

First, lets go to the most obvious factor of all:  much of Hostess’s product line was based on products that might have been innovative in their day, but which later encountered an onslaught of local competition.  Take Wonder Bread:  that soft, moist, fluffy white bread that must have seemed something incredibly different and special when it was introduced later became just another—more expensive—brand on the shelf.  Regional and local brands eventually learned to serve up a nearly identical product.  If you want soft, moist, fluffy white bread, why pay more money to buy it from Hostess?  And although Hostess used regional and local bakeries to do the baking, I can imagine that in the last thirty or forty years Hostess was constantly fighting against the perception that the local bread came from the local bakery (the one wear someone’s cousin works), and that Wonder Bread comes from Chicago.

(To digress completely:  I’ve long wondered how Frito Lay manages to keep such a large product line on supermarket shelves.  In Pennsylvania, where I come from, I always bought local brands of chips—with the exception of Fritos, of course.  And I can’t hardly recall seeing Lays potato chips at any of my friends’ or relatives’ houses.  I myself had one of those gallon sized Charles Chips cans; though, to be honest, it didn’t always have Charles Chips in them.  I kind of liked variety back then.  But even Charles Chips had trouble competing.  Why is that?  I mean, a totally different product—like Fritos, or like Pringles—can compete.  But how can Lays compete with the local, riffled potato chip when Charles couldn’t even keep up?)

That leaves me to the second, rather obvious point:  if Wonder Bread wasn’t going to be the flagship of the Hostess brand, then maybe the industrially made sweet snacks like Twinkies could keep it in competition; but how many moms have been trying to keep such nasty, unhealthy products away from their kids in the last 25 years?

I think there is something to this.  If you want a total sugar/fat/calorie bomb, just go to the bakery section of your local supermarket.  There you will find enough calories to keep the entirety of India alive for a day.  All sweet, all fatty, all delicious—and made with things like sugar, cream, butter, vanilla, and so on.  But if you want something with undefinable textures–gooey and sticky to the point of rubbery, sweet to the point of teeth-itching, indescribable flavors (like the non-coconut parts of a Sno-Ball)—then you must reach for the industrially produced sweet snacks.  To put it succinctly:  your local bakery can’t produce a Twinkie.  They can come close, but they can’t achieve it.  Twinkies are unique. Industrially unique. And I suspect that Healthy Mom has been more likely to reach for the appearance of “local and fresh” than “industrial and unique” over the last several years.  That is, when she wasn’t reaching for carrot or celery sticks.

The third point is not obvious at all, and it regards my special expertise:  Hostess pies.  Hostess pies had become increasingly difficult to find.  For some reason, I seldom (if ever) found them in supermarkets during my last, say, ten trips to the States.  You had to know where to look.  Truck stops were a good choice.  7-Eleven was nearly a sure bet.  But other outlets—like Sheetz stores (remember, I moved to Germany from Pennsylvania)—switched over to other brands.  (The last time I bought my cherry pies from a Sheetz, I bought 10 cherry pies made by JJ’s.  Only six made it into my freezer here in Germany. )  Meanwhile, the supermarket chains tend to have either their own brands (like Safeway) or alternative brands (like JJ’s or Drakes (which is owned by Hostess—nothing like competing with yourself, huh?) or Little Debbie).

And listen to this:  although I have visited large portions of the United States over the last decade, I have personally never seen a Hostess Cherry Pie at a Wal-Mart.

Think about that.  An industrial, nationally produced food product that isn’t distributed through Wal-Mart.

This amuses me because of the dreams I talked about in a previous post.  My dreams in which I’m frustrated because I can’t seem to find a Hostess pie are not simply referencing the fact that I can’t buy the pies in Germany; they are also a reflection of the fact that I have also had difficulty finding them in the United States in the last decade or so.

So my own suspicion is that Hostess has—for probably two decades—been the victim of its own management.  Its own management didn’t know how to face up to regional and local competition, didn’t know how to keep increasing sales on distinctively unhealthy products as the demand for healthier products increased, and it didn’t know how to maintain a reasonable distribution of at least some of its products.

jj

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