General Discussion
In reply to the discussion: if you ran hostess what would you do? [View all]jmowreader
(50,555 posts)The first thing I would have done is NOT sell the company to LBO sharks.
Hostess had one massive problem: the product line stayed the same for decades. They fell into the trap of buying innovation - the last expansion of their line came by purchasing Dolly Madison. So new products were key. Maybe a core of six to eight always available SKUs and 100 seasonal products. No one would eat pumpkin snack pies except in November and December, but they'd eat the fuck out of them then. Do something to create excitement.
Next and biggest problem: Hostess Had no unique items. Large percentages of their sales came from white bread. Bigger problem: as a contract baker they made a lot of their competition.(Next question: in areas where most of the bread is either Wonder in a Wonder bag or Wonder in a house label bag, what provisions are being made to tide them over til Grupo Bimbo can buy the local bakery?) House brands sell at lower prices in part because they wholesale cheaper. I actually would have ditched Wonder years ago and created a line of flavorful premium breads to only sell under my own brand. Let supermarkets own the commodity bread space. No one buys Wonder-type breads because they're tasty, but because they hold deviled ham so well.
Next problem is the bakery network. It is aging and needs upgrades - common in post-LBO companies.
So basically, my solutions are:
1. No vulture capitalists
2. New and exciting products
3. Better and more efficient plants
4. Don't compete with my customers
This used to be basic business. Today business sees next quarter as long range planning.