A few months ago, Twinkies appeared to be on the brink of extinction. The snack cake was disappearing from store shelves across the U.S. because of consumer fears that the cakes would be no more. Hostess Brands — which at that time included Wonder Bread, Ding Dongs, Ho Hos, Zingers, and a couple dozen other snacks and foods — filed for Chapter 11 bankruptcy protection in January 2012 and began shutting its doors by November.
But last week, private equity firms Apollo Group Management and Metropoulos & Co. snatched up the “snack cake” portion of Hostess for $410 million, and on March 19 a Manhattan bankruptcy judge officially approved the sale. Metropoulos & Co. has purchased several instantly recognizable all-American brands, including Bumble Bee Tuna, Chef Boyardee, and Pabst Blue Ribbon, but Twinkies might be their most iconic holding yet. C. Dean Metropoulos, the 66-year-old founder of the firm, will serve as CEO. But it’s up to his two sons — Daren, 29, and Evan, 32 — to breathe life into the business again.
(MORE: How Much Is Twinkies Worth?)
TIME spoke to Daren and Evan last week about why they bought the Hostess brands, their plans for new lines of Twinkies (think low-cal snack cakes), and whether they’re going to tinker with the decades-old Twinkie recipe.
So, why buy Twinkies?
Evan Metropoulos: It’s an iconic brand and it’s something that millions of Americans love and enjoy. It’s very much worth saving.
But the Hostess brands have been struggling for years. Do you think those brands still have value?
Daren Metropoulos: Throughout the turmoil that the company has had the last few years, the consumer base has not declined. There continues to be strong demand for these products in the marketplace, and we feel we can capitalize on that with some fresh new marketing ideas and some more consistent sales efforts.
EM: Our father is very, very talented as a turnaround specialist, and he has taught us that these brands are resilient and very hard to take down. They have a hard consumer loyalty and with some TLC and some good management fundamentals, these brands can flourish and grow with new audiences.
You guys own a bunch of well-known American brands — Chef Boyardee, PBR, now Twinkies.What’s the common thread in all those?
EM: I don’t know that it always makes sense. We’re talking about several different acquisitions over many years. Luckily some of these brands, because they’re so nostalgic, have struck a chord with younger hipster consumers and people that are on the pulse of what’s trend-setting. If you look at the stock market today, you’ll see a premium being paid for brands that are all-American brands that people grew up with, like Clorox, Smuckers. Those stocks are at all-time highs. I think people pay a premium for what they know, what they’re comfortable with.
DM: The commonality has always been that they’re great iconic heritage brands that have intrinsic value. These brands, no matter how badly they’ve been mismanaged, cannot be killed over time. They just need a fresh perspective. They need reinvestments. What we’d like to do is create efficiencies in these companies and reinvest those profits back in product innovation, new marketing ideas, restructuring the sales force, making it a better company from all different angles and on all levels. We move quickly. We don’t like to be slowed down with analytics or bureaucracy. We like to put together a team of people who have a sense of urgency and share the same same vision for these brands, and we move quickly to cut through the red tape, beat the pavement, and try to get better displays, better shelving, better pricing.
EM: Don’t forget, these brands are very coveted trophies. But once these giant conglomerates get a hold of them, they become lost in the shuffle. They become mismanaged because they don’t have entrepreneurs behind them pushing for results, pushing for innovation, for new products. They just become part of a larger investment scheme. So if we could get some individual brands away from some of these conglomerates, we could do miracles with them.
But hasn’t the era passed when parents are putting Twinkies in kids’ lunchboxes and regularly eating them as a snack? It seems like more Americans today opt for foods that are more nutritious.
DM: Listen, we’re never going to neglect the consumer that loves to buy Twinkies at the convenience store. But we also have to realize that tastes change. So of course we’re going to look to reinvest and innovate new products, whether they be 100-calorie packs or healthier alternatives. I think a grocery strategy would be more targeted towards mothers and healthier options for children and younger consumers. Conversely, there will be an independent convenience store strategy that looks to nurture the core consumer.
How do you think the brand was mismanaged over the years?
EM: I don’t know necessarily that it was mismanaged. I can’t say that it was. I think there were some outside factors that gave the management team some challenges that maybe we won’t have in the future to deal with. I think there are brand extensions and new business opportunities like dollar stores that Hostess hasn’t even tapped into.
What did you guys actually buy?
DM: We’re getting the Hostess brands, which are Twinkies, Ho Hos, Ding Dongs, Cupcakes, Donettes, Zingers, Snoballs, Dolly Madison. And you get the recipes, also.
You actually get the recipe. Like, Here’s the Twinkies recipe. Here it is on this card.
DM: Yeah. Absolutely. And let me tell you this. Research and development will be a big part of this going forward, in terms of increasing shelf life. Currently these products have a 45-day shelf life. We think we can make that better in some respects. And we think there’s always things we can do to refine the taste and the quality and especially in new product development.
So you’re going to change the Twinkie recipe?
EM: I don’t know if the product needs to be improved, per say. I think the product is excellent, and there was no issue with the product amongst consumers. What I think we’re trying to say is that when you’re starting or using new baking facilities and you have a fresh perspective — and one of the things we’ve always valued over the years is research and development — there will be opportunities to look at baking them to make them as fresh and tasty as possible and to get to the consumer as quickly as possible and to be priced as fairly as possible.
How will the marketing the change? There are reports Zack Galifianakis is on board to be in Twinkies commercials.
EM: I can’t say that is accurate. I can say that we know him. We’ve exchanged e-mails. He’s a huge talent now and I don’t even know if the schedule permits.
DM: I think a lot of it will be guerrilla marketing that we’ve done with many other brands in the past, building on the retro nostalgia of these brands. And we think there’s serious opportunity to develop a merchandise business. So I think it’s going to be a mix of very guerrilla-type, tactical creative marketing and then some more traditional stuff. There could be possibilities for 30-second media advertisements. But certainly there will be an element of guerrilla marketing, or social media marketing, through Twitter, through Facebook, through Instagram, to really get some great viral buzz.
What are your day-to-day responsibilities? And what will your dad be doing?
DM: Our father’s going to be the chief executive officer. We will have roles at the Hostess company. Nothing too defined yet because we’re still putting this deal together. But we will be intimately involved every step of the way.
When can we expect Twinkies to be back on store shelves?
DM: We’re shooting for the summer to get the products back out there.
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