Investments let Hostess brands rise again
Three years ago, iconic products like Wonder Bread and Twinkies were dead, killed in a bankruptcy that shut down the once-thriving Hostess bakeries of a Kansas City-based company.
Today, at bakeries in Lenexa, Kansas, and Emporia, Kansas, and other spots around the country, the brands are reborn. Phalanxes of loaves, buns and snack cakes are baked, packaged and shipped, bound for consumers who never lost appetite for them.
At the reopened Flowers Baking Co. plant in Lenexa, 9,000 loaves an hour, two shifts a day, five days a week enter an oven the size of a tennis court. The Wonder and Home Pride breads, along with bun production, line retail shelves the next day.
Ninety-eight miles southwest of the Lenexa bakery, staggering daily totals — 1.8 million mini-doughnuts, 1.4 million chocolate cupcakes, 1.5 million Twinkies — shoot through production lines 24 hours a day, six days a week in the new Hostess Brands LLC snack cake plant in Emporia. Within minutes, they’re out of the oven and snuggling into plastic sleeves, bags and boxes.
There’s scant sign that low-carb, low-sugar diets are winning the American palate. Even as the new Hostess company makes a foray into producing a healthier whole grain muffin elsewhere in its system, the sugary old favorites still rule. In fact, the Emporia plant is working on a new brownie line for another sweet option.
The paths to resurrection of the old Hostess Brands Inc. brands may be as convoluted as the conveyors winding through the bakeries. But the results are not hard to follow. Some of America’s most recognizable brands are back in business after labor turmoil, debt burdens and a second failed attempt at bankruptcy restructuring led to shuttering 36 bakeries and firing 18,500 workers in November 2012.
The renaissance was gradual and partial. It first required asset sales of Hostess Brands Inc., a successor to Kansas City-based Interstate Bakeries Corp.
Interstate had slid downhill from a mid-1990s peak when it was the largest wholesale baker of bread and snack cakes in the United States. In fact, national brand recognition prompted the company to rename itself in 2009 as Hostess Brands Inc. But by 2012, the company had failed, union contracts were severed, and its brands disappeared.
Fast forward to 2013. Flowers Foods, a publicly owned baking company based in Georgia, paid $355 million in court-ordered proceedings to acquire 20 closed Hostess bread and bun bakeries. To date, Flowers has returned three former Hostess sites to production — in Lenexa, Knoxville, Tennessee, and Henderson, Nevada (Another former plant in the Missouri/Kansas region was not re-opened and is for sale.)
Separately, a private investor partnership of Metropoulos and Co. and Apollo Global Management LLC paid about $410 million to buy five of the former Hostess snack cake bakeries. It re-opened four. But after amping up production in Emporia, it closed one, leaving bakeries in Columbus, Georgia, and Indianapolis in operation. Emporia’s site came back on line in mid-2013 after being dark for only half a year.
In rebirth, the Lenexa plant now has about 100 Flowers Foods employees — all in management, bread production or skilled machinery operation. Another 70 workers in packaging and warehouse operations are supplied by an employee leasing company.
Paul Frankum, president of Flowers Baking Co. of Lenexa said about two dozen of the plant’s workers had worked there before. He said pay on the bakery line starts at $13.50 an hour and rises to a top range in the $20s. According to a union leader who previously dealt with the plant, that’s about $5 an hour lower to start than union members earned before the shutdown.
The private investor partnership that bought Hostess snack cake assets has kept the corporate headquarters of the new Hostess Brands LLC in Kansas City. CEO Bill Toler and a staff of about 90 manage the company, making decisions about product mix and production of Twinkies, Hostess Cupcakes, Donettes, Zingers, Snoballs and the newer brownies.