Little Debbie took over as reigning queen of the U.S. retail donut category and other brands seized market share after bankruptcy problems finally slew the former Hostess Brands, Inc. in November 2012. Yet due to new owners, the Hostess Donettes brand, once the category king, lives anew.

The changed landscape of the donut category was evident in sales figures from Information Resources, Inc., a Chicago-based market research firm.


Sales of Little Debbie branded donuts owned by McKee Foods, Collegedale, Tenn., reached $238,435,200 for the 52 weeks ended Dec. 1, 2013, which marked a 42% increase from the previous 52-week period. Little Debbie’s 15% market share in the donut category was about 5 percentage points higher than in the previous 52-week period.

The I.R.I. sales figures covered U.S. multi-outlets with convenience stores, including supermarkets, drug stores, mass market retailers, gas/convenience stores, military commissaries and select club and dollar retail chains.

Mike McKee, chief executive officer and president, spoke about how demand for Little Debbie branded products surged after the Hostess bankruptcy in a Sept. 26, 2013, on-line article in the Chattanooga Times Free Press. He said McKee Foods had boosted its overall hiring by 800 since November 2012 and had more than 5,000 employees.

While Little Debbie reigned as the top brand, Bimbo Bakeries USA, Inc., Horsham, Pa., led all vendors in the donut category. Company donut sales of $372,701,300 for the 52 weeks ended Dec. 1, 2013, marked a 16% increase from the previous 52 weeks. Bimbo’s market share of 23%, up 4 percentage points, was powered by its Entenmann’s brand, which had sales of $192,483,700, up 22% from the previous 52-week period.

Tastykake success continued for Flowers Foods, Thomasville, Ga. Donut sales for that brand soared 178% to $81,573,130. Mrs. Freshley’s, another Flowers’ brand, recorded a sales increase of 181% to $64,769,560.

Allen Shiver, president of Flowers Foods, spoke about the potential of the Tastykake brand, which includes snack cakes, during an Aug. 13, 2013, earnings conference call. He said the brand’s total annual sales at retail have grown to more than $400 million from $225 million in 2010.

“Tastykake, much like Nature’s Own, really has the potential to be a national brand with the same rate of growth,” Mr. Shiver said. “We are excited about Tastykake.”

Despite all the increases for companies and brands, the entire donut category saw sales slide 5% to $1,639,029,000 in the 52-week period ended Dec. 1, 2013. Unit sales of 789,268,000 marked a 6% decline.

The absence of Hostess Donettes on the retail level for about a six-month period undoubtedly had an effect. Hostess Brands, Inc. closed down in late November 2012.

A private equity group led by Apollo Global Management L.L.C. and C. Dean Metropoulos & Co. eventually bought most of the Hostess snack cake business, and a new company, Kansas City-based Hostess Brands, L.L.C., was formed. Hostess Donettes finally returned to retail shelves on July 15, 2013. By Dec. 1, sales had reached $72,035,160, still 80% down from the previous 52-week period.

Hostess Brands expects a warehouse distribution strategy, as opposed to direct-store delivery, to help it gain market share in donuts and other snack treats. An agreement with Dollar General, Goodlettsville, Tenn., will help, too. Dollar General on Nov. 25, 2013, said the majority of its 11,000 retail locations will carry five Hostess products. They include Hostess Donettes powdered mini donuts as well as CupCakes, Ding Dongs, Twinkies and Zingers.