Relax, Twinkies likely to live on

Relax, Twinkies likely to live on

As shortages go, it pales in comparison to the gasoline woes the Northeast suffered after Hurricane Sandy. Nonetheless, panic-buying set in among fans of Hostess Twinkies and other baked goods after the company Friday announced plans to shut down.

In reality, the snack foods don’t last indefinitely, but even if Hostess liquidates like the filling in a deep-fried Twinkie, the golden cakes still have a shot at outliving the company that makes them.

An acrimonious standoff between management and the 5,000-plus members of its bakers’ union prompted Hostess Brands CEO Gregory Rayburn to announce that the troubled company would close the doors on its 83-year history, triggering an outpouring of grief and childhood nostalgia on Hostess’s Facebook page.

“Already-baked Twinkies will continue to be shipped and sold, but when they run out... no more Twinkies,” said Marcia Mogelonsky, director of insight for Mintel Food & Drink.

Only hours after the news broke, stories and photos began surfacing of cleaned-out grocery shelves across the country as fans made a run on Twinkies and other Hostess products. Spokespeople from Wal-Mart and Kroger had no comment as to whether the retailers were prepared for a potential onslaught of would-be stockpilers. NBC News correspondent Mara Schiavocampo purchased a “lifetime supply” of Twinkies, saying, “they are my single favorite junk food indulgence.”

If this is Twinkie the Kid’s final ride into the sunset, it would also be the end of an era at the State Fair of Texas, which popularized an improbable hit: the deep-fried Twinkie. “Although there may never be a shortage of foods to fry, the Twinkie would be missed at fairs and in lunch boxes across the country if it didn’t survive,” said fair spokeswoman Sue Gooding.

Hostess could see a final surge of sales as fans make a run on Twinkies, Hostess cupcakes, Ho Hos, Ding Dongs and other treats. Spokespeople from Wal-Mart and Kroger had no comment as to whether the retailers are preparing for an onslaught of would-be stockpilers.

Rayburn said the shutdown will be nearly immediate. “Essentially, people are going to be sent home today,” he said. The entire wind-down, which includes selling plants, stores and other assets, will take more than a year.

In an interview with CNBC, the CEO laid the lion’s share of the blame at the feet of the striking union. However, he acknowledged that management missteps, particularly ones that saddled the company with debt when it last emerged from bankruptcy after more than four years of restructuring in 2009, also contributed to the company’s current situation.

Despite the company’s tough talk, though, Hostess still needs to get permission to liquidate from Judge Robert Drain, who is overseeing its Chapter 11 restructuring. An interim hearing is scheduled for Monday afternoon and a final hearing is scheduled for Nov. 29.

Hostess has broached the prospect — or threat, from its unions’ perspective — of liquidation before without following through. But today, Rayburn said that even if the union relented and agreed to accept the 8 percent percent pay cut and nearly 20 percent hike in benefit costs, “[It’s] too late. We’re done.”

The CEO did offer a ray of hope for Twinkie fans. “I'm hopeful that we can sell the brands,” he said. “I think that obviously competitors will be looking at those and then they have to make a judgment.”

“I imagine they’ll definitely be able to find buyers,” said bankruptcy attorney Jeff J. Friedman, a partner at Katten Muchin Rosenman. “There could be a gap, but I’d be surprised if that gap was measured in anything more than weeks or months.”

Mogelonsky said possible competitors who might want to buy Twinkies or other Hostess Brands intellectual property include Entenmann’s owner Bimbo Bakeries, Tastykake manufacturer Flower Foods or Little Debbie baker McKee Foods.

“Other possible buyers are private label and food service suppliers including J&J Snack Foods, which supplies a number of food service outlets and convenience stores or one of the big orphan brand adopters’ [like] Pinnacle or ConAgra,” she said.

Research company Packaged Facts estimates that snackers buy $125 million of Twinkies a year. Buyers would have to weigh those figures and the nostalgia value against the reality that — in spite of vocal protests from fans on Facebook — fewer Americans are eating Twinkies today. Although 12 percent, or 25 million households, currently buy Twinkies, that number slipped from 15 percent in 2004.

Friedman said it’s in Hostess’s interest to sell its big name brands quickly, since customers could switch to a competitor’s products, or use the absence to choose healthier snacks. “These are going to start to lose value as time goes on,” he said. Unlike the Twinkie of urban legend, the brand won’t stay fresh forever.

I don't really eat them so it's no great loss to me.