November 28, 2012
By: John Clark
Hostess Brands Inc., perhaps best known for its creation of the iconic Twinkie, officially announced that it is closing its doors, several months after filing for bankruptcy protection, according to a report from ABC News.
Sources say the company announced that it is planning to close its operations, but many of its favored treats could continue to live on under new ownership.
Due to rising worker costs, evolving American tastes, and years of management mistakes, industry analysts have been predicting the demise of Hostess for a long time. And these dour predictions finally proved correct earlier this month.
Sources note that Hostess dramatically reduced its marketing efforts in recent years, as it wrestled with rising debts. At the same time, its competitors introduced new, healthier snacks, while Hostess relied on its traditional unhealthy treats.
The company, which was founded in 1888, is best known for producing Twinkies, a cake-like snack with 150 calories and 4.5 grams of fat packed into a relatively tiny snack.
And despite the company’s decision to close its operations, it still holds several valuable assets. Company CEO Gregory Rayburn told sources this week that the company pulled in $2.5 billion in revenue last year alone.
In addition, the Twinkies product brought in $68 million in revenue in 2011. However, this revenue was not enough to offset mounting debts and rising labor costs, which forced Hostess into bankruptcy protection this January.
And after the company failed to reach an agreement with its labor union, it decided that life after bankruptcy would be not be terribly profitable, which led to the Texas-based company’s abrupt, but not surprising, demise.
The news, however, is not all bad for American consumers. Sources believe that several of the company’s most popular brands, including Ding Dongs and Ho Ho’s, will eventually be purchased by another pastry maker.
There may, however, be a brief period of time between the removal of these items from store shelves and their reincarnation under new ownership. So fans of these popular Hostess snacks might want to stock up on the tasty treats before they become impossible to find.
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