Return of the Twinkie: Naughty but nice?

By Elaine WATSON

- Last updated on GMT

Return of the Twinkie: Naughty but nice?

Related tags: Hostess

Consumers, the marketers tell us, want healthier, more wholesome snacks with clean-labels and all-natural ingredients. So on paper, at least, the long-term prospects for Twinkies - returning to a store near you in a matter of days - might seem bleak.

But what consumers say they want - and what they actually buy - are two different things, says a new report from Rabobank entitled, ‘Return of the Twinkie’.

And provided Twinkies’ new owners Apollo Global Management and C. Dean Metropoulos & Co don’t meddle too much with what made the iconic cakes a hit in the first place, their $410m gamble might just pay off, says report author Rabobank global senior analyst Nicholas Fereday.

Hostess did not collapse because consumers fell out of love with its products

While the collapse of Twinkies’ previous owner Hostess Brands was greeted “with a certain amount of schadenfreude​” in some quarters, observes Fereday, the firm did not collapse because consumers had fallen out of love with its products.

In fact, Twinkies weren’t performing that badly when Hostess went under (retail sales were up 0.8% to $610m in 2012), he claims, while similar packaged cake and pastry brands such as Entenmann’s and Tastykake posted a 4.3% and 5.7% rise in sales in 2012 respectively.

Twinkie
Twinkies' old owner Hostess Brands filed for a full shut down and sale of its assets last November after nationwide strikes from members of the BCTGM, who were angered by a pay-cutting deal enforced upon them as part of a recovery plan to lift Hostess out of financial difficulties. The liquidation led to the closure of 33 bakeries, 565 distribution centers, around 5,500 delivery routes, 570 bakery outlet stores across the US and 18,500 job losses

“The turnaround in the fortunes of the Tastykake brand (click here​) shows us that snack cakes may be off-trend when it comes to health & wellness, but under the right management they can tap into the trends of indulgence, portability and affordability.”

Snack cakes offer indulgence, portability and affordability

And private label brands in the packaged cakes and pastries category have performed even more strongly, with sales at Kroger up 5.7% in 2012 and sales at Safeway up 5%, he points out.

And given that per capita wheat flour consumption has dropped 10% in the US since 1997 and sales volumes of many baked goods appear to be in terminal decline, the performance is even more respectable, he adds.

Meanwhile, the sales growth of products making many healthy label claims - including gluten-free, all-natural and whole grains - actually started to tail off in 2012, according to recent data from Symphony Consulting, he says (click here​).

No one buys Twinkies because they are healthy: ‘A recipe re-engineering might do more harm than good’

Shoppers still love to indulge, he says, and snack cakes are a convenient, portion-controlled, means of treating ourselves, something we are more - not less - likely to do in difficult economic times.

“Twinkies and many other snack cakes are iconic for a reason, and a recipe re-engineering might do more harm than good.

Tastykakes
sales of Tastykakes were about $241m when the brand was acquired by Flowers Foods in 2011. This year, bosses at Flowers are predicting sales will be around $400m

“Since they first started appearing in children’s lunchboxes, Twinkies have stoically withstood the changing times as consumers cycled through their low-carb, low fat and high protein phases. Remaining unreconstructed, true to their recipe, may explain their enduring appeal.

He adds: “In short, a gluten-free Little Debbie, a high-fiber Tastykake, a cupcake containing chia or similar attempts to ‘healthify’ indulgence is not the route to go.”

Twinkies could do well in fast-growing alternative retail channels

Finally, the fact Twinkies’ new owners are reportedly looking to switch from a direct-store-delivery model to retailers’ warehouses instead in order to increase distribution to drug stores, online retailers, discount chains such as Aldi, c-stores and dollar stores (click here​) - also bodes well for the brand’s future prospects, he claims.

And in these markets - where grocery sales are growing more strongly than in regular supermarkets - having a 45-day shelf-life (vs the previous 26 days) is a real plus.

“This long shelf-life means Twinkies may be more fully exploited through the growth in alternative retail channels.”

As excitement started to build around Twinkies' return, Walmart said it had already started stocking the iconic snacks at selected stores and would be fully stocked at all domestic US stores by 12:01 a.m. on Sunday, July 14 – a day before the national comeback.

A spokeswoman said: "Twinkie enthusiasts are encouraged to visit their local Walmart to pick up the first-run batch of Twinkies with collectible packaging, available exclusively at Walmart."

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1 comment

The Triumphant return of Twinkies

Posted by Sally Edelstein,

Our guilty pleasure is back with the triumphant return of Twinkies.
Long before these chemically laden sweet treats became the junk food darling of those in need of a sugar rush, there was a time when serving a Hostess Cake to the ladies-who -lunched-set was considered fashionable and quite proper indeed for the modern up to date housewife looking for time saving help. For a taste of how early Hostess Cakes helped the housewife http://envisioningtheamericandream.com/2012/11/19/how-hostess-cakes-helped-the-housewife/

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