The Sweetest Comeback?

Hostess returns to find a sweets snacks market that has lost some speed

In late 2012, an iconic American snack-cake brand disappeared from store shelves when Hostess Brands Inc. filed for bankruptcy following a breakdown in negotiations with the Bakery, Confectionary, Tobacco and Grain Millers Union. Despite the ensuing furor in the media, few doubted that Hostess would return.

“The brand has value,” Technomic Inc. Executive Vice President Bob Goldin told Convenience Store News at the time. “It’s not going to disappear.”

This prediction proved accurate as Apollo Global Management LLC and Metropoulos & Co. purchased the Hostess and Dolly Madison brands for $410 million in March 2013, renamed the company Hostess Brands LLC and succeeded in their goal of getting Twinkies, Ho Hos and other products back in stores by the following summer. Since then, Hostess has been on a comeback campaign dubbed the “Sweetest Comeback in the History of Ever.”

But has it really been a sweet return to convenience stores? According to some industry insiders, the sweet snacks market isn’t the same as it was when Hostess disappeared — albeit temporarily — and the new Hostess owners have made a few changes that may or may not be well-received in the c-store channel.

“They’ve really lost their momentum and their flair,” said QuikTrip Corp. spokesman Mike Thornbrugh. When Hostess products returned to the shelves of the Tulsa, Okla.-based chain, which operates more than 650 c-stores, the company saw no sales bump.

Hostess’ competitors weren’t content to sit back and carry on business as usual during the company’s absence. They took advantage of the hole on shelves and “were very successful,” Thornbrugh said. “[When] you see an opportunity, you take advantage of it.”

Another potential stumbling block for the revived Hostess brand is its new distribution method. Prior to its bankruptcy filing, Hostess used direct-to-store delivery, but only reached approximately one-third of the more than 149,000 convenience stores in the United States. Today, Hostess Brands delivers to retailer-supplying warehouses. This has the potential to drastically increase its c-store footprint but from the retailer perspective, the change has its drawbacks.

“When you’re in business, time is money,” Thornbrugh said. “When you’ve got a brand that direct delivers…that’s very important, at least to us.”

Rich Seban, president of the new Hostess Brands, said the company has set an ambitious goal of making its snack cakes available everywhere that consumers can purchase candy. To lead this charge, the supplier recently hired candy and snack industry veteran Scott A. Ward as its vice president of sales for the convenience channel.

Ward brings more than 20 years of sales experience to his new role, having started his career with Sathers Candy Co. and Brach’s Confections. Most recently, he was with The Foreign Candy Co. Inc., maker of such brands as Rips Licorice and Yardstick Bubble Gum.

“Hostess cakes are iconic and have been part of the fabric of America for generations, but there is also tremendous passion for the brand today among consumers,” said Ward. “I am delighted to have the opportunity to work with convenience distributors and retailers to ensure our high-quality, fresh and delicious snack cakes are reaching our loyal Hostess fans across the country.”