AWSI: Twinkies are a Survivor Thanks to the Brand Whisperer…

A memorable Chevy ad during the 2012 Super Bowl showed the automaker’s Silverado truck AND Twinkies surviving the Doomsday Mayan Apocalypse. Four years later, Twinkies are not only a survivor, their parent, Hostess Brand is planning to list on the stock market this fall as part of a deal valuing the company at $2.3 billion (yes, “B” as in billion!).

The Wall Street Journal reported the dramatic turnaround of the company is a windfall for investment firms Metropoulos & Co. and Apollo Global Management LLC ( Brand Whisperer**). They bought the Hostess snack-cake brands out of liquidation in 2013 and it appears that the deal would fetch them returns of more than 10 times their original investment of $185 million.

Actually, checking another source, we found out that Apollo and Metropoulos put up $185 million in cash and borrowed another $500 million to buy the snack-cakes business’s assets, including recipes and four factories that were empty save for some unused equipment, covered in plastic at the time investors toured them.

They rolled up their sleeves and re-invented the company (which traces its beginnings to 1919, and it grew by absorbing competitors — resulting in the company having 372 separate bargaining contracts for workers, 5,500 delivery routes and a vast production system).

By buying the Hostess assets out of bankruptcy, Apollo and Metropoulos took them on free of employee benefits and other labor obligations that had weighed down the company.
Free of those burdens, the firms set out to upend Hostess’ business model. They streamlined the Kansas City, Mo., company’s production by paring the number of bakeries and upgrading them with larger ovens and robots to pack Twinkies into boxes.
The old Hostess, which included Wonder Bread and other brands, employed some 19,000 people. The Twinkies purveyor now has merely 1,200 employees.
They expanded distribution — Twinkies, Ho Hos and other treats are available in new locations that include movie theaters and Carl’s Jr. restaurants.
Direct deliveries to stores stopped since Hostess no longer sold bread.
Less than four months after they took over, the sugary mix of rich cream filling encased in a tubular yellow cake were back in stores—with an extended shelf life.

Next up, frozen fried Twinkies.
Acquisitions like the in-store bakery it bought last month, should continue to drive growth.

Mr. Metropoulos called Hostess “one of the most profitable consumer businesses in the U.S.,” saying it has a gross margin of 43%.

Impressive! Truly impressive!

You can read the official press announcement here.

Sounds Familiar…

And there’s more to this success story. To us, it seemed very familiar to the rebirth of Pabst Blue Ribbon beer (AKA PBR). So we poked around and guess what? Same mastermind / investors / brand whisperer at the helm.

Let’s rewind to 2010. The Wall Street Journal did a story (Meet the New Owners of Pabst Blue Ribbon: The Brothers Metropoulos) about investor C. Dean Metropoulos agreeing to buy Pabst from the charity that runs the beer maker for about $250 million.

The Journal reported Metropoulos’ sons, Evan, 29 years old, and Daren, 26, were expected to play key roles in running the company.

The article also noted the elder Metropoulos, 64, is known for his savvy deal making, such as his $2.2 billion sale of Pinnacle Food to Blackstone Group in 2007 and the $2.9 billion sale of labels Chef Boyardee and Bumble Bee Tuna to Con Agra in 2000, his sons are less tested.

Four Years Later (2014)…

We thought it was quite apropos that Metropoulos was referred to as ‘Mr. Shelf Space’ in this article which described his playbook for success as being deceptively simple:

Buy a well-known brand that has lost its “mojo.”
Re-energize it with new packaging, maybe, or a high-profile ad campaign.
Sell the newly hyped brand for a handsome profit; repeat.

The strategy works, Metropoulos says, because he can think more creatively and devote more attention to a brand’s future than its overextended conglomerate owners could. Mr. Metropoulos told Time magazine:

We move quickly. We don’t like to be slowed down with analytics or bureaucracy.

Line Extensions with Legs (2016)

We noticed two Twinkies extensions that serve as “move quickly” proof points.

1) Anne D’Innocenzio, national retail writer for The Associated Press, reported that Walmart and Hostess collaborated to bring deep-fried Twinkies out from the realm of county fairs and into commercial packaging. Walmart has a one year exclusive.

2) Hostess has teamed up with Sony Entertainment to release Key Lime Slime Twinkies to coincide with the new Ghostbusters movie.

That’s a Wrap!

For us, everything we’ve read so far has put the Metropoulos family on our radar ( “must-watch”). Furthermore,
the Post article pointed to something Mr. Metropoulous said regarding his targets being mostly nostalgia brands with household names that “no matter how badly they’ve been mismanaged, cannot be killed over time.”

Indeed! Twinkies are surviving AND thriving AND no longer the butt of jokes (like showing up in the Doomsday Mayan Apocalypse Chevy ad).

Which makes us wonder… What nostalgia brand is next?

Thanks for reading and #SCMF!

—The Gang

strong> Bonus Content

Here’s a write-up: Twinkies Survive Doomsday Mayan Apocalypse 2012 – Silverado Super Bowl Ad

And here’s the ad:

Notable: This ad includes the Big Boy (see our other recent post). He should have been upright as he is another survivor!

Check out Twinkie the Kid

You get a big delight with every bite…

And as long as we’re going the vintage route, here’s an old school commercial for Pabst.

Want to know what beer folks think about PBR? Watch this piece.

Here’s a song that pretty much fits the theme of this AWSI post: Survivor – by Destiny’s Child.
Lyrics include:

I’m a survivor (what?)
I’m not gon’ give up (what?)
I’m not gon’ stop (what?)
I’m gon’ work harder (what?)
I’m a survivor (what?)
I’m gonna make it (what?)
I will survive (what?)
Keep on survivin'(what?)