Last month marked the demise of Hostess Cupcakes, Twinkies, Devil Dogs and a plethora of other popular brands from the 1950's including Wonder Bread. On November 21 Hostess Brands got final approval to close it's 33 bakeries and put 15 thousand people out of work.
The company has had tough sledding over the last ten years. Ownership has blamed the union for the demise because they would not agree to any more concessions and the union naturally blamed management with top mangers continuing to get obscene bonuses while the business floundered.
What hasn't been discussed however was the lack of innovation shown by this company. The snack segment of the food market was the fastest growing segment over the last decade. It has been growing at a pace greater than ten percent a year. Hostess made absolutely no effort to develop new products to cater to the shift in America towards healthier snacks. They could not even change their marketing campaigns.
Hostess continued to sell it's products to the same people who ate them in the 1960's. This aging population no longer had the stomach for most of the foods produced by Hostess.
Instead of changing it's products to attract a new customer base they continued as if the 1960's never ended. If they could have grown 10 percent per year which is the amount the total snack food segment has grown they would have had the revenue to meet their expenses and pay down their debt.
Innovation is important for all businesses if they are to compete in today's global marketplace. It does not matter what your market share used to be. What matters more is what your market share will be next year.
Instead of investing in new technologies and updated marketing techniques, Hostess management looked at shareholders profits above all else and led the company into the last round up.
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