By Emily Jansen
The Hostess brand,
and the famous Twinkie have been around for almost one hundred years. However,
last year, Hostess went bankrupted, and affected the lives of every Twinkie
lover around. Not only were the consumers affected, so were the producers. 18,500
Hostess workers lost their jobs when 33 factories were shut down.
Everyone knows the
outlook on Hostess products, and with the new fad of healthy foods sweeping the
nation, the want for deep-fried junk food quickly diminished. The demand for
these products has decreased greatly over the past few years. With the combined
factors of losing business and the unionization of factory workers (creating
much higher wages) the Hostess Company had a net loss of 1.1 billion dollars.
How could the debt
possibly become this large? According to Forbes, they say the greatest mistake
of Hostess, was the fact that they did not change to meet the demands of the
consumers. Instead of creating healthier products, they tried to keep the
products they already had, popular. They made a slight attempt to delve into
the 100 calorie fad, and made Twinkie Bites, but obviously they did not become
very popular. It is very possible for companies like these to change. Like
Coca-Cola and General Mills, who created new products that prospered, maintain
to stay in high demand with a higher array of products.
Because of these
conditions, Hostess filed for bankruptcy in 2009. After this, the unions agreed
to lower labor costs, saving a total of $220 Million, and Hostess lenders loaned
a total of $360 Million. Unfortunately, this still could not save the company,
leaving them overwhelmed with debt.
The two biggest
problems Hostess suffered from was the issue of high labor costs and small
margin for error. If these problems had been solved, the company could have had
the possibility of never going bankrupt in the first place.
Of course,
Twinkies still exist today, through all of the nonsense. Luckily, due to the
factors of the economy, Hostess products can live on. Once the Hostess Company
went bankrupt, they were able to sell their products to the next highest paying
company willing to buy the products.
When Hostess went up for bid, it sold for $410 Million, for the products
alone. “Hostess chose a joint offer from Apollo
Global Management LLC and C. Dean Metropoulos & Co. as the lead bid for
Twinkies and other cake brands.” Thankfully for us, we can now still go to the
nearest grocery store to buy our favorite brands.
Because
of the loss in these products, the demand spiked. Once the consumers could no
longer buy the products, they wanted them more. Luckily, we can now have them
again and the demand has decreased slowly over the past few months.
This
all relates to the process of economy, through the factors of supply and
demand. The demand decreased at a severe rate, and the Hostess Company did not
broaden its supply, causing a failure in the system, leading to the bankruptcy
and closing of Hostess products.
http://www.forbes.com/sites/quora/2012/11/21/did-hostess-go-bankrupt-in-2012-because-people-no-longer-find-twinkies-appealing/
This is one of the many examples of businesses that fail to morph their products/services to what the consumers wanted such as circuit city and blockbuster. As times change, new technology and new fads develop. As the past has shown, companies must adjust to these changes otherwise they will be left in the dust. Hostess is just another example of the need for businesses to morph to new technology and new fads.
ReplyDeleteIt is interesting that when twinkies were stopped being sold in stores the price that people could sell twinkies for online went way up. When the supply was basically nothing the price of twinkies went up to about $100 a box on ebay.
ReplyDeleteThat goes along perfectly with what we are currently learning. As supply of Twinkies decreases and demand stays the same, prices will rise and if supply keeps decreasing price will get up to crazy amounts. As far as I know there are really no substitutes for Twinkies so if they were really going to go away forever it would be interesting to see just how much people are willing to pay.
DeleteI was not aware of how much the preferences of the consumers affected the outcome of a company. A business needs to learn how to evolve with the constant changes of the consumers and economy in general. Without them evolving, they created a hole for themselves and forced a lot of people to suffer from this. Creating a large debt and forcing people to become unemployed. It is very important that other businesses picked up the slack because it was an important company.
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ReplyDeleteI was completely aware they went bankrupt and I shall miss my favorite snack brand because we all know the knock offs can't compare to the real thing. But, it seems like Hostess was stuck in its old ways of conducting business and failed to utilize modern thinking to prevent them from bankruptcy which I've found out from your writing. Other companies saw the opportunity and silently went in for the kill -- that was the end of Hostess.
ReplyDeleteIt is interesting to think that with all the new healthier products being sold, and the larger markets with these products, they would not change their ways or even reduce some of the fat and sugar intake of their cakes. Most consumers found that the amount of calories they get in a twinkie is the same amount they can get with 2-3 Fiber One brownies or any other kind of cake, creating a lower demand for the Hostess treats. Maybe, if Hostess had been flexible and altered their recipes or created more healthy choices, they could have been able to control their own products.
ReplyDeleteIts cool to see how much consumer can really affect a market a lot, but even though Hostess was one of the main reason it led itself into a down fall. They didn't really change anything about them to influence consumer demand, so demand went down. Bankruptcy could've been prevented if hostess try to adapt to the changing market.
ReplyDeleteThis a great example illustrating how the competitive forces of the market have the ability to totally dismantle a corporation. The bankruptcy and shutdown of the company did lead to a huge surge in wanting the product but as we can tell now the demand has decreased. I agree with Eric, it was really weird to see how when scarcity of the product became an issue the price was driven way up, which makes sense if you analyze a supply and demand graph. This was a really cool topic that was analyzed here.
ReplyDeleteI think that the key factor in Hostess going bankrupt was definitely not meeting the demands of consumers. Twinkies were extremely popular in the past but America has realized that putting aside these fun deep fried snacks are the start in living a healthier lifestyle. If Hostess would have came up with a healthier line of products they would not have gone out of business. One of the hardest things for companies like Hostess is that few Americans want to buy fatty snacks. This speaks volumes relating to how if the demands of the consumers are not met, the business cannot thrive.
ReplyDeleteI was very surprised that a company so large had not conformed to its consumers as well as it should have. Immediately after it went out of business, Twinkies were being sold for an outrageous amount, and I think that shows well how supply and demand can affect a product. I agree with Abbey, Hostess was not meeting the demands of the consumers, and if they had been able to come up with healthier, better options they may have been able to stay in business.
ReplyDeleteI never realized how consumer preference can affect a market. When this event happened, I was shocked and did not believe it at first. Since Hostess is such a large company, I was surprised to hear that it went bankrupt. I believe that Hostess was not meeting the demand of the consumers. I also agree with Katlyn, stating that if Hostess were to come up with a healthier option, they may have been able to save themselves.
ReplyDeleteBeing a lover of twinkies and hostess it was terrible figuring out that they were going out of business. I was really never unstatisfied with their products which is the weird part. I don't know a single person that really doesn't like the products that hostess put out but I don't think that it was totally on the consumer expectations but rather it was on the FDA and for the health reasons Hostess had to go out of business. Without being able to please the FDA is a very easy way for businesses to go out of business. So instead of consumer expectation I would call it FDA expectation.
ReplyDeleteI find it very interesting that despite the increasing health fad, Hostess did not change their products to be more healthy to appeal to more consumers. That would have been smart on their part and probably could have saved them from going bankrupt. The fact that they were bought out and came back, though, shows that they are truly popular and they can withstand the changing consumer tastes.
ReplyDeleteAlthough Hostess products are not as popular as before they went bankrupt I can understand why they did not want to change their product to meet the needs of the people. We all know that nutrition fads don't always last, and being in the Hostess business they probably believed that soon everyone would be back to eating their products. Unfortunately the company was too far gone, and people moved onto the next snack cake. Now Hostess is back, but not as popular as before because they did not meet consumer needs. Although it would have been better to come up with a healthier choice, it was just not in the cards.
ReplyDeleteI believe that now since Hostess has begun selling their products to the public once again, the demand for them has gone up since a lot of people were shocked by the comeback. While, in a short while, the demand for them will go down again once people go bored with the idea of Hostess beginning making products again.
ReplyDeleteIf people didn't buy the hostess products while they were still available, I don't know what the big craze over having to buy them was. Unless they want to save a twinkie for hundreds of years to have one of the last remaining twinkies on earth. Not that you would want to take hostess brand foods for granted, but that is what happened with this company. Occasionally people would buy a box of their hostess twinkies or donuts or whatever else it was because they always knew their would be more. But then all products disappear and everyone goes psycho over a box of something they would not get otherwise. If people actually wanted to buy these and did buy hostess products on a regular basis, then I don't believe hostess would have had to file for bankruptcy or disappear overnight. Now people are sad that they can't get a twinkie (or couldn't). People took twinkies for granted and only wanted them when they couldn't have them.
ReplyDeleteI think this is probably the best topic I have read about so far. And Ithink it is so funny that, as a nation who has one of the highest percentages of obesity in the world, we still brought this super unhealthy product back to the market. It was just one of the many high-fat snacks that we have in today's market but once they announced that they were going out of business and Twinkies would no longer be made, people went nuts and stocked up on them. Just goes to show how much of a demand they really had.
ReplyDeleteIt is crazy how much the demand for the Twinkies increased to the point where some people were spending thousands of dollars on them. It’s interesting to see how people only want something when they feel the scarcity of the resource. It could actually be to a company’s advantage to have more scarcity because they could then have a higher demand allowing a company to have a higher price for a product.
ReplyDeleteI never have been a big fan of Twinkies or Hostess products in general, but to think that they would ever become "extinct" is actually sad because it is somewhat apart of our culture; everyone was raised to know what a Twinkie was. But this is also a bit scary because we are a country with such high obesity and we still demand products like these. I know it is a choice of whether you want to buy the Twinkies or not, but these are the problems that America faces; people don't have self control. Congrats to the business who took Hostess products over because they have products that America will fail to let go of since they have been around for so long. I also found it interesting how they tried to keep up with other companies, but I think they just made the wrong choices of how to keep their popularity. In order to keep a business thriving, you have to please the consumers.
ReplyDeleteHostess is and always will be part of the American culture. In general hostess was one of the biggest and fastest selling twinkie corporation around. With high obesity rates in our country it seems almost right to get rid of the product causing this epidemic. Although with the extinction of twinkies also came a price. The many jobs lost disrupted the flow of the economy and lowered the employed percentage of the nation. Yet the corporation who took over Hostess knew what they where doing when they bought out the company because the country will always want their Twinkies. Yet as time is changing people are realizing the negative effects of the bad food produced from hostess so there will be a decline in the quantity wanted by society lowering the total revenue of the company. This negative effect will keep down sloping and I do believe that the company in charge of hostess will go bankrupt unless they produce healthier food or are more pleasing to the customer.
ReplyDeleteIf hostess would reduce their supply it would increase the demand. They could produce less which would decrease their costs. People would be willing to pay more if there was scarcity. The article says they went bankrupt because they didn't jump on the healthy bandwagon. Aren't Twinkies kind of known for being unhealthy and delicious. If they got changed to be healthy it would completely change the product. It like a paradox?
ReplyDeleteI agree exactly when you stated that Hostess saw a drop in sales because it didn't follow the healthy kick that our nation endured. As a trend of demand, the lack of following it caused tremendous damage for Hostess. Yet, even though you mentioned the 100 calorie Twinke bites, I can't imagine what healthy product that a business like Hostess could have provided to satisfy its consumers. The company is known for their unhealthy, but delicious, treats. Perhaps a changing of the recipes of the items could help the health benefits, but that would also drawback from the taste that most of the consumers are looking for in those products. All in all, it seems to make sense that Hostess couldn't find a way to fit the healthy trend, really making that a loose-loose situation for that company.
ReplyDeleteYou can talk about how sad it is, but is a natural reaction, as demand will never stay the same forever. The amount of competitors on the market is increasing, and if your product isn't considered the best by the consumers your sales will naturally decrease. In this particular case, the focus on being healthy has an effect, since the twinke bar contains a lot of calories
ReplyDeleteIt's not surprising to see Hostess go out of business considering the fact competition is growing a lot larger in today's economy. No one expected GMC to go bankrupt, don't get your hopes up on your favorite business suddenly going bankrupt/out of business because monopolies make such thing happen.
ReplyDeleteIt's interesting to see how the demands of consumers effects the outcome of a company. If Hostess would have listened to the demands of their consumers they could have stayed in business. Their failure should be a lesson to all. GOOD JOB EMILY.
ReplyDeleteThis is a perfect example on how the demand for a product can easily influence a business. It also shows how important ideas are, and that smart decisions need to be made when trying to save your business. Clearly, Hostess’s decision on trying to fit into the health fad did not work. Although it is a good thing that America is beginning to make healthy decisions, it is not good for businesses that sell junk food at an already low price.
ReplyDeleteThis article goes along perfectly with what we have been learning in class. As the supply of Hostess products was rapidly decreasing, the demand rapidly increased. While there were many rumors for what could have driven Hostess to go out of business, I don't think the Twinkies being "unhealthy" was the reason they went away. Although there are many health nuts in this country, we know that in America people will eat unhealthy. Overall, this connects perfectly with everything in class!
ReplyDeleteThis situation with hostess is a perfect example of how lowering the supply can raise the demand. As soon as Hostess was going out of business and people realized the supply was going to decrease and decrease until there was nothing left, the demand shot up. Also, I find it interesting that Hostess didn't make their products healthier to better suit the interests of the consumers. I understand that Hostess has a reputation for unhealthy yet delicious snacks, but I would think that they would be willing to change their products if it determined whether they go bankrupt or not. Overall though this was great topic because it showed how businesses have to make choices based on consumer interests to succeed, and also because it gives a perfect example of how supply and demand are directly related.
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