Fascinating story lines ahead for Hostess
July 12, 2016
The pending acquisition of Hostess Brands L.L.C. by a group led by Gores Holding, Inc., launches a new chapter in an exciting story for Hostess and the snack cake industry. Since the 2013 revival of Hostess, a new model of warehouse delivery adopted by the company has been pitted against the traditional direct-store delivery model retained by other leading snack cake makers.
With the return to Hostess as a publicly traded company, how this fierce tug of war plays out will become even more visible. In a July 5 conference call, Hostess chief executive William Toler said the company’s model is supported by three efficient plants currently operating at no less than 80% of capacity and formulations with much longer shelf life than competitors’.
“Today we have about a 16% market share,” he said. “Old Co. was just under 22%, so we have room to grow to get back to our Old Co. levels.”
Mr. Toler went on to say Hostess share with Wal-Mart Stores, Inc., traditionally a warehouse customer, now exceeds its Old Co., success that may imply challenges fully regaining share with traditional D.S.D. customers. Whether the share numbers shift significantly in the years ahead will be just one of many fascinating story lines sure to unfold going forward.