Hostess twinkie update.

[blackhawk]

You may have heard that Hostess Bakery plants shut down due to a workers'
> strike. But you may not have heard how It was split up. The State
> Department
> hired all the Twinkies, the Secret Service hired all the HoHos, the
> generals
> are sleeping with the Cupcakes and the voters sent all the Ding Dongs to
> Congress.

 

[waltky]

Granny says dat's another business destroyin' American jobs by goin' south of the border...

The Twinkie: Will it return as a Mexican expat?
November 17, 2012 - Hostess Brands is liquidating its business after 82 years, which means some of the most iconic brands of the century may be up for auction. Will Twinkies become a foreign import?

Who knew there were so many Twinkie diehards? The announcement that Hostess Brands would shutter and liquidate its 33 bakeries – including its Twinkie-making plant in Illinois – sparked a fevered Boomer nostalgia ironically belied by the fact that it’s been years since most people have bit into that impossibly long-lasting and sticky-sweet miracle of artificial confectionery. (Today, about 12 percent of US households buy Twinkies, down from 15 percent in 2004.)

But news that Twinkie bars are now selling at gold bar prices on eBay hints at opportunity: In fact, global firms are already lining up to bid on the iconic brand names – Ding Dongs, Ho Ho’s, Wonder Bread, Drake’s – in order to prepare many, if not all, for reissue. The brands “most likely will be purchased by a competitor that will bolt the additional sales to a more efficient delivery system,” David Pauker, a food industry restructuring specialist, tells Reuters. “The company itself won't survive.”

Food producers ConAgra and Flowers Food, the American company behind Nature Valley granola, have expressed interest and so has Little Debbie baker McKee Foods. But another possible bidder hints at the future of Twinkies and maybe the US bakery business as a whole: Mexico’s Grupo Bimbo, the world’s largest bread baking firm, which already owns parts of Sara Lee, Entenmann’s and Thomas English Muffins. Bimbo has already sniffed around the bankruptcy proceedings that have haunted Hostess for a decade, in a bid to further expand its North American portfolio and pad its $4 billion net worth. Bimbo reportedly put in a low-ball bid of $580 million a few years ago, Forbes reports, and may be rewarded for that move since the Hostess kit-and-kaboodle may fetch more like $135 million today.

But the big question is whether the same problems that haunted Hostess – high sugar prices tied to US trade tariffs, changing consumer tastes, and union pushback against labor concessions – will squeeze whatever profit is left in the brands. Especially if a Mexican buyer is involved, production may go the way of the Brach’s and Fannie May candy concerns: south of the border. With US sugar tariffs set artificially high to protect Florida sugar-growing concerns, a non-unionized shop with access to lower-priced sugar in Mexico could be the Twinkie lifeline, economists suggest.

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Did Congress kill the Twinkie? The tariff tale behind the Hostess demise.(+video)
November 16, 2012 - Since 1934, Congress has supported sugar trade tariffs. In a sign of the power of the sugar lobby, Hostess picked unions, not the lobby, to fight when it had to cut costs to stay in business.

It’s the end of a lunchbox era as baked icons such as Twinkies, Hostess CupCakes, and Wonder bread face extinction amid a contentious labor dispute, which ended Friday in the declared liquidation of Hostess Brands Inc., the Texas-based confectioner. So far, Big Labor has gotten the brunt of criticism for the demise of Hostess, since the Bakery, Confectionery, Tobacco Workers ,and Grain Millers union refused, despite warnings from fellow union heads, to return from strike at some 20 facilities nationwide. That forced CEO Gregory Rayburn to declare, after two rounds of bankruptcy proceedings, that “it’s over.”

Yet as the political recriminations echo amid news of 18,500 lost jobs in an already sluggish economy, some economists suggest that Americans shift their blame from Big Labor to the role Congress might have played in writing the Twinkies’ obituary. And that, economists say, may come down to one sweet little word: sugar. Since 1934, Congress has supported tariffs that benefit primarily a few handful of powerful Florida families while forcing US confectioners to pay nearly twice the global market price for sugar.

One telling event: When Hostess had to cut costs to stay in business, it picked unions, not the sugar lobby, to fight. “These large sugar growers ... are a notoriously powerful lobbying interest in Washington,” writes Chris Edwards of the Cato Institute in a 2007 report. “Federal supply restrictions have given them monopoly power, and they protect that power by becoming important supporters of presidents, governors, and many members of Congress.”

Such power has been good for business in the important swing state of Florida, but it has punished manufacturers who rely on sugar in other parts of the United States, the Commerce Department said in a 2006 report on the impact of sugar prices. Sugar trade tariffs are “a classic case of protectionism, pure and simple, and that has ripple effects through other sectors of the economy, and, for all I know, the Hostess decision is one of them,” says William Galston, a senior fellow at the Brookings Institution in Washington.

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