Twinkie Town?

It seems like Twinkies really can last forever.


Image Source: Wikipedia

Three years ago, the iconic brand ran into financial trouble. Sales were down 20% from the year before. The parent company claimed that consumers had migrated to healthier foods. Twinkies just weren’t relevant in the baked-kale / chia-seed era. In November 2012 Hostess wound down operations and sold off its assets. It looked like Twinkies had finally hit their expiration date.

But the brands didn’t go away. Twinkies, Ding-Dongs, and Ho-Hos were purchased by a couple of turnaround specialists, managers who had resurrected classic products like Pabst Blue Ribbon and Vlassic pickles. The problem wasn’t the market, but management. After refitting some factories with advanced robotics and reengineering their products’ shelf life, Twinkies went back into stores after an 8-month hiatus.

The results have been spectacular. Twinkie fans flocked to snap them up. Earnings last year were almost twice what was projected. The managers are on track to make over 10 times their initial investment.

One thing that makes our markets work is the ability to start over. Bankruptcy wiped out the old inefficient distribution system, which made selling the snacks at Wal-Mart and in vending machines infeasible. The prior owners didn’t go to debtors’ prison; they were simply replaced by new, more competent management. And there were no bailouts.

But it didn’t happen without a lot of hard work and risk-taking. Twinkies could have gone the way of Tab Cola and Commodore Computers. Instead, we still have a snack that’s rumored to be indestructible. Only it’s not. The only thing that lasts forever is human innovation.


Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
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By | 2017-07-17T12:22:57+00:00 May 8th, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
Leave a comment if you have any questions—I read them all!
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