Twinkie Down: Hostess Tumbles

by Claudius J West

Twinkie box

Scarcity increases value, an economic maxim that showed its power when boxes of Twinkies (8 per box) started selling for $100 on Ebay after the announcement that Hostess was shutting down production.

I wondered if the failure of Hostess was because consumers had wised up to the dangers of junk food and were turning their backs on the venerable spongecake. No, not quite.

“The 82-year-old Hostess, which has about $2.5 billion in sales . . . is one of the largest wholesale bakers and distributors of breads and snack cakes in the United States. . .” (Reuters)

Two and a half billion dollars in sales, and Hostess can’t manage to keep its doors open? How is that possible?

Twinkie

Still looking delicious after all these years.

You can find the details in the Reuters report here.

My barebones summary of the report would be this: the executives took concessions from labor in 2009 but instead of investing the concession money into restructuring their financials or updating their operations and equipment, the executives took the money and ran.

Don’t worry about the $2.5 billion shortfall in bread and snacks. Others will be happy to find ways of filling the gap and pocketing the 2.5 billion. Another  business will buy the Twinkie name and formula. Before you have time to replace them in your heart with a Little Debbie Devil Creme or a Drake’s Ring Ding, they will be back on the shelves and selling for a lot less than $100 a box.

Until that time, I recommend selling your stock in deep-tried Twinkies. Lord save the county fairs.

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