Flowers ‘very confident’ in strength of snack cakes business

by Eric Schroeder
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THOMASVILLE, GA. — Hostess Brands, L.L.C. relaunched certain Hostess snack cakes brands, including Twinkies and Ho Hos, last month, and McKee Foods Corp. is set to reintroduce Drake’s cakes such as Yodels and Devil Dogs in mid-September, but even so, Flowers Foods, Inc. is “very confident” in the strength of its own cake business, Allen Shiver, president of Flowers, told analysts as part of an Aug. 13 conference call to discuss second-quarter results.

“Since we acquired the Tastykake brand in 2011, we have increased sales significantly, almost doubling our cake sales,” Mr. Shiver said. “Consumers across the South and Southwest and more recently, New England, are responding well to the Tastykake brand.

“We believe that direct-store delivery, or D.S.D., is the most effective distribution system for fresh snack cakes as it is for fresh bread and rolls. Tastykake is distributed throughout our D.S.D. system, which serves about three quarters of the U.S. population. Our distributors are in the stores daily and providing the best possible service to our customers.”

Mr. Shiver said Tastykake sales “have grown at a good pace” since Hostess snack cakes left the market last fall.

“Our brands, our broad product offering, the freshness and the quality of our products, and our customer service have helped us gain new business,” he said. “We realize that Hostess cakes may have a place in the market but we have confidence that our cake business will weather that reintroduction very well.

“In the first two weeks since Hostess reentered with cake, I.R.I. data shows that our cake brands have maintained their share. Interestingly, the cake category as a whole increased as Hostess came back into the market. So again, I will say that we have confidence in our cake business.”

Flowers’ confidence in the snack cake business extends to its Mrs. Freshley’s brand, which is Flowers warehouse distributed brand. Mr. Shiver said the brand so far is “holding up.”

“There are many of the qualities from a product assortment standpoint, customer relationships are helping to hold onto that business, but obviously as Hostess reintroduces, that is a direct competitor to our Mrs. Freshley’s business, and we are doing everything that we should be doing to hold onto the gains that we have generated,” he said. “But that business is important to us and we intend to hold onto it just like Tastykake.”

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