Hostess Cupcake Case Study

Since they entered the snack food market in 1919, Hostess introduced their classic Hostess CupCake and their famous Twinkies, which were invented in 1930 and became their best-selling snack cake. Less than a century later, Hostess filed for Chapter 11 bankruptcy protection in 2004. Hostess managed to fend off the temptation to sell and emerged from bankruptcy in 2007. However, in an article detailing Hostess’s recent past Steven Bertoni explains, “After over a decade of failing health that saw two bankruptcies and five different CEOs, Hostess finally died on Nov. 16, 2012” (Bertoni, 2015). Since the time Hostess introduced itself to the world almost 100 years ago, they’ve fluctuated between success and hardships. With their past bankruptcy …show more content…
They are now implementing a growth grand strategy in order to increase sales. Steven Mufson of the Washington Post summarized one of the bankruptcy problems as “management’s failure to freshen up a stale product line and keep up with consumers’ changing tastes” (Kelley, 2012). Management failed to plan ahead in the past, but Hostess management has learned from their mistakes and are now encouraging new ideas. When Hostess liquidated, other companies such as Flowers Foods, purchased the rights to their bread products, including Wonder Bread and Nature’s Pride. Since selling that portion of their company, Hostess is going in a different direction, “This summer, it began selling white and wheat bread under the Hostess name” (Jargon, 2015). Now they are directly affiliating their brand name with the product, a main part of their promotional strategy of their marketing mix. Hostess is also forecasting new consumer trends by looking into indulgent snacks that have a healthier twist. Jargon quoted Hostess CEO Bill Toler saying, “We have a mindful eye into healthier trends and we’ll launch some whole grain muffins this fall, but our primary focus is on being an indulgent snack,”(Jargon, 2015). In this new day and age, society is looking down upon high-calorie snacks and focusing more on healthier alternatives, which is a newer market that Hostess is …show more content…
The new Hostess is establishing only three bakeries, located in Indianapolis, Columbus, and Emporia. The plan behind this idea is to make these three factories as efficient as possible with streamlined production and a $20 million Auto-Bake system. This is the fastest and most efficient system to get the job done, requiring only 500 employees to produce over 400 million Twinkies a year. Bertoni compares the new Hostess output to their past, “output that under the old regime required 14 plants and 9,000 employees”(Bertoni, 2015). The innovation is responsible for Hostess’s competitive advantage, something they didn't have before. Another change that Hostess wants to develop sometime in the future is having the company go public, “Our plan would be to make it a public company”(Jargon 2015). Top management, in this case the CEO, is developing a strategic goal, that when the time is right, will be implemented. With the new strength behind Hostess’s production innovation and new goals being developed by top management, prospects are looking up for the once failing company.

Hostess is focused on achieving a brighter future after coming out of their second bankruptcy. They plan to fulfill this goal by implementing a new growth strategy and reworking their distribution model with the possibility of going