In the 2009 post-apocalyptic comedy “Zombieland,” the gun-toting undead-hating hero Tallahassee, played by Woody Harrelson, was on a singular mission to hunt down the last remaining Twinkies in the world. Four years ago, Tallahassee’s fear that he would never again “enjoy the spongy outside and creamy inside” was shared by many fans of the iconic snack cake as the future of its maker, Hostess Brands, was in peril. Twinkie production, which had been ongoing since 1930, was halted and the snack vanished from stores shelves for months before Hostess Brands resumed production the following summer.
What a difference four years makes! The company reported sales of $658 million in the 12 months ending June 30. And this week, Hostess not only returned to the stock exchange but on Thursday announcedhigher third-quarter profit of nearly $34 million on sales of about $196 million, up from a loss of $4.1 million on sales of $158 million in the same period last year. The company’s share price has gained about 1 percent since its stock began trading Monday under an unusual format that doesn’t involve an initial public offering.
Hostess, Missouri-based maker of Ding Dongs, Sno Balls and Ho Ho’s, had been struggling for years — since at least 2004, when it entered its first of two rounds of bankruptcy protection. An oft-cited reason for its troubles has been that American diets are changing, that people are gravitating away from processed, sugary and oily foods. Almost every article written about Hostess’s woes have cited healthier eating habits.
But the idea that Americans are suddenly all going to the gym and eating salads isn’t reflected in public health data. Just this summer, the U.S. Centers for Disease Control and Prevention announced that the country’s obesity epidemic hit a new high, with a third of the country clinically overweight as American teens continue to pile on the pounds. And as any grocery store snack aisle proves, consumers still love their salty, sweet and oily indulgences.
“There’s no question there’s more awareness and that people want to eat healthier, but there’s a lot of people out there that say one thing and do something else,” Steve Stallman, a California-based food branding and marketing consultant, told Salon. “There are unlimited excuses of why you feel you might deserve a treat, from Trump being elected to having a bad day at work.”
Stallman, who has worked in food marketing and research for more than three decades, says he’s tracked consumer demand through the rise of the healthy eating trends that began emerging in the late ’90s. At the time, he says, analysts were predicting the sales would plunge for snack giants like PepsiCo, which owns Frito-Lay, as the country would flock to newer healthy options that were increasingly emerging in the marketplace. But the dire predictions never played out. Plus, people love their Twinkies.
The problem Hostess has encountered over the past decade is less related to a sea change in American diet and more due to its own mismanagement and overextension. The company filed for bankruptcy protection in 2004 under its previous name, Interstate Bakeries. At the time CNN attributed the downfall to a combination of declining sales “attributed to the popularity of low-carb diets,” but the company itself blamed excess capacity (it had 57 bakeries and 33,000 employees at the time) and higher costs of energy and ingredients. It also blamed the pensions of its unionized workers, raising speculation that Hostess entered bankruptcy protection in part to divorce itself from union workers. During bankruptcy proceedings that lasted nearly five years, a third of its workforce was cut and nine factories were closed.
