Second Hostess bankruptcy part of distressing path toward resolution

by Josh Sosland
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When Interstate Bakeries Corp. emerged from bankruptcy in 2009 as Hostess Brands Corp., it was hoped that the company and the industry would, within a short period of time, begin a new phase of growth and greater stability. The operative word here is “hoped,” and it is doubtful that many close observers of baking truly expected such an outcome.

Because Hostess is no longer a publicly traded company and was tight lipped even by private company standards, much was unknown about the situation at the company. Still, concern grew steadily in the face of continued positioning in weaker categories, worrisome scanner data, murmurings about continued labor issues and a principal new product initiative that seemed designed to cannibalize a competitor far more than offering genuine innovation.

As evident as those difficulties may seem in hindsight, it’s equally clear that the path forward is anything but. What seems inevitable, though, is that the Hostess and Wonder brands will endure and that the trend in wholesale baking toward increased consolidation will continue. Finding a lasting resolution for Hostess Brands is likely. Still, for an industry facing the struggles wholesale baking is encountering, this development may only be characterized as distressing.

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