Deep Fried Twinkies demonstrate how Hostess can take its iconic brands into other categories.
 
New directions

Longer term, looking to “white space areas,” seeking opportunities beyond the company’s “core aisle” is key, Mr. Toler said.

Progress also has been made in breaking into the club store business, historically an area of weakness for Hostess, he said.

Mr. Toler also commented about better-for-you opportunities at Hostess. While holding true to the company’s position principally as an indulgent snack maker, he said the company continues to explore ways to clean labels, including the removal of hydrogenated oils, simplifying labels and descriptions and considering removal of artificial flavors and colors.

“So we’re trying to remove the negatives where we can do that without compromising taste,” he said. “We’re also thinking of adding positives such as adding whole grains into our muffins, which we’ve done. Since we’ve done that, the muffin business is up double digits. So we’ve turned a small business that was negative into a positive. We think that’s a way to approach nutrition.”

He said whole grain content and nutritional makeup of the muffins allow the products to qualify under the Smart Snacks in School regulations of the
US Department of Agriculture, giving a new generation of consumers exposure to the Hostess brand.

While Hostess has stepped forward only gingerly in the realm of acquisitions, with its relatively modest purchase of Southbridge, MA-based Superior Cake Products, Inc., Mr. Toler said the company is poised for significant further steps.

“Right now, we’re a sweet-baked goods company business inside a shelf-stable and in-store bakery company with a little frozen with Deep Fried Twinkies,” he said. “If you think of us as a snacking platform, it gets much broader, both with how we might use the Hostess brand and how we might use other brands or other products. So we think of it as the broadest platform is snacking and then it goes immediately to sweet then it goes to shelf-stable in-store bakery and frozen. The pipeline is pretty long.”

Mr. Toler sees plenty of opportunities going forward. “There are more things to do in frozen, there are more things to do in shelf stable, and some of our channels we have unique competitors who only compete in one or two channels,” he said. “There may be great opportunities to pick up as well. So we think the merger and acquisition potential here is very rich. We think there already has been a good bit of activity in those spaces.”