Back to the future
Discussing market share, Mr. Toler said Hostess currently stands at about 16% of the snack cake market, versus 22% when the company ceased operations in November 2012. He said the company expects to continue gaining share since its current growth rate is higher than the market average overall. He cited donuts as a case study for how Hostess will gain share in the future vs. simply trying to reestablish its former position.
“When we left the category, we had about a 50 share in donut,” he said. “Of course, that went to zero when we were off the shelves. Now we’ve rebuilt that to about a 38 share. But our competitors are still there, so it will be very difficult to get all the way back to 50. You’ve got to get back there with other innovations, other channels, like going into foodservice, in-store bakeries, dollar stores and drug stores where Hostess didn’t have great presence before. So our channel product mix will change, but we fully expect to achieve that 22 share over the next several years.”
He described Hostess’ “everyday grind growth” as conventional steps to regain share such as rebuilding distribution and increasing the numbers of items customers carry in their stores, principally through innovation. At present, Hostess offers four fewer SKUs than before the 2012 liquidation. Included in the mix though are bread varieties, including the recent introduction of bagels with 65-day shelf life, Mr. Toler said.
“It’s a nice analog to add on that will go primarily to the drug channel and some c-stores as well,” he said.
Mr. Toler devoted considerable attention to the new product pipeline at Hostess, including the launch this year of a chocolate cake Twinkie.
Other pending new products he described as perhaps even more ground-breaking.
“We’re launching white fudge-covered Ding Dongs right now,” he said. “It’s the first line extension for the Ding Dongs business, and we’re very excited about it. And we just announced a couple weeks ago we are doing peanut butter Ho Hos. You’ll see other peanut butter offerings later this year. That also will be the first line extension of Ho Hos. So that is some big news for us on — our 50-year-old icons like Ho Hos and Ding Dongs — our first line extensions on those brands ever.”
Deep Fried Twinkies were introduced last summer, and Hostess is rolling out Dolly Madison Zingers in Canada.
In another first, Hostess has reached a licensing agreement with Nestle USA, and soon six SKUs of Hostess co-branded ice cream will be introduced. In addition to a Ding Dongs ice cream sandwich, Mr. Toler said four or five other items will be launched in the spring when retailers “reset their ice cream set.” Under the agreement, Nestle will handle production, sales and logistics of the ice cream business.
The partnership helps Hostess “leverage our icons like Twinkies, CupCakes, Sno Balls and other things,” Mr. Toler said. “We’re pleased with our partnership with them. We think it extends the brand, gives the brand presence in more parts of the store and will add great value to us and to the overall trademark going forward.”
Continue reading to learn more about the future of Hostess.