Death of the Twinkie?

[ERD50]

Not sure where you get your info... from the little that I can see, it was not a viable company without major changes or it would not have gone into BK...

What did the hedge funds pilage Maybe they did, but without facts this is just BS...

And wouldn't the BK court have some say over this?

-ERD50

 

[HawkeyeNFO]

Sounds like the union got what they wanted. They told the company, "make us a better deal, or shut down!" And that is what is happening. Congrats to the union.

 

[Chuckanut]

The last time I checked Price was a function of supply and demand. Cost of production is not a direct part of that. I can make a twinkie like product in my kitchen for about $6 a twinkie. But, I doubt if many people are willing to pay that price plus profit just because I have high costs. On the other hand, if people are willing to pay 50 cents for a twinkie and I find a way to reduce costs by 7 cents a twinkie, why should I reduce the price? ( Well, I might want to expand the market penetration or run a competitor out of business in order to help my long term profits).

Obviously, pricing is not quite this simple, but the idea that price is only a function of cost is not correct. Supply and demand are what count. Costs influence supply, of course.

 

[W2R]

There is a limit on how many baked goods I can allow myself, due to my weight problem. To be honest would so much rather choose hot, freshly baked French bread instead of a Twinkie if/when I can afford the calories and carbs.

Surely in the 21st century we can make better choices for ourselves and our kids. At least, that would be my hope. But on the other hand, if there is actually demand for Twinkies, then I hope they bring them back. I just won't contribute to that demand.

 

[Bestwifeever]

There is a limit on how many baked goods I can allow myself, due to my weight problem. To be honest would so much rather choose hot, freshly baked French bread instead of a Twinkie if/when I can afford the calories and carbs.

Surely in the 21st century we can make better choices for ourselves and our kids. At least, that would be my hope. But on the other hand, if there is actually demand for Twinkies, then I hope they bring them back. I just won't contribute to that demand.

I think this is the real key to the Hostess demise. Not a lot of so-called healthy choices in the Hostess arsenal, not a lot of buyers, not a lot of shelf space in stores.

 

[ERD50]

The last time I checked Price was a function of supply and demand. Cost of production is not a direct part of that. I can make a twinkie like product in my kitchen for about $6 a twinkie. But, I doubt if many people are willing to pay that price plus profit just because I have high costs. On the other hand, if people are willing to pay 50 cents for a twinkie and I find a way to reduce costs by 7 cents a twinkie, why should I reduce the price? ( Well, I might want to expand the market penetration or run a competitor out of business in order to help my long term profits).

Obviously, pricing is not quite this simple, but the idea that price is only a function of cost is correct. Supply and demand are what count. Costs influence supply, of course.

They are all inter-related. It isn't just supply/demand - it is supply/demand at a given price point.

Sure, in a vacuum, cost of production doesn't matter. If 'the market' places the value of a Twinkie at 50 cents, it is as you say. If it costs you $6 to make them, you close shop. If you reduce costs and still get 50 cents, you can keep the savings.

But the consumer has alternatives. So if your competition found the same cost savings that you did, they will probably try to take business from you by undercutting your price. And then you do the same to maintain market-share, and everything hits an equilibrium again. The real key is finding cost advantages beyond your competition.

Early in my career, we had a product that was a near monopoly in the market. I recall asking one of the product managers why we didn't raise the price and just make a 'killing' on that product. He said that we would be 'subsidizing' our competition. He explained, with high prices the competition could make that product inefficiently, invest in R&D, and still make a profit. That would give them experience and a foothold in the market, and they would get better. He said we were better off taking a good (but not great) profit over a longer term, than to try to over-graze the pasture (to switch to a metaphor in the middle of the stream).

-ERD50

 

[HFWR]

Hostess Brands - Wikipedia, the free encyclopedia

Lots o' blame to go around, but I think the "legacy" costs of pensions and such are being "blamed" for much of the problem, not so much current costs. Much the same as the much maligned Postal Service...

 

[Koogie]

Really? I have not been able to find any references to the hedge funds making money.

One of the best articles on this is from last summer in Fortune Magazine.

I do think that in the end Hostess will be sold, probably to Bimbo (owners of Sara Lee, Ball Park (buns), Entenmann's and many others), unfortunately, I also think the manufacturing will be opened as a non-union shop or out of the country.

I do agree with you that there is a lot of blame to go around.

Apparently they are still going to make all this crap up here in Canada as the brands are owned by local companies here... gotta say they aren't anywhere near as popular here as in the States though. We prefer to pollute our arteries with Timbits and dutchies..

 

[Texas Proud]

And wouldn't the BK court have some say over this?

-ERD50

Over what That the company is viable or that the hedge funds made a killing


I would say most of the time if a company requests to be liquidated in BK, the BK agrees...

 

[ERD50]

Over what That the company is viable or that the hedge funds made a killing


I would say most of the time if a company requests to be liquidated in BK, the BK agrees...

Sorry - regarding the hedge funds. I'm not sure the details are clear anyhow, and maybe this happened before the BK court got involved. But if they were in BK, I would think the court would have some say regarding the HF pulling any profits out?

-ERD50

 

[Midpack]

Pretty amazing how "we" can take a simple OP topic and turn it into an Econ/PolySci 101 debate. Where else have I seen this kind of thing?




At least I didn't "help" this time, maybe I'll learn one of these days...

 

[FIREd]

I tried to buy a box of twinkies for DW this morning, but they were all gone. Looks like people have gone into hoarding mode.

 

[mickj]

I tried to buy a box of twinkies for DW this morning, but they were all gone. Looks like people have gone into hoarding mode.

twinkies | eBay

hoarding and price gouging.. the government needs to intervene now!

 

[ERD50]

Pretty amazing how "we" can take a simple OP topic and turn it into an Econ/PolySci 101 debate. Where else have I seen this kind of thing?




At least I didn't "help" this time, maybe I'll learn one of these days...

What's 'simple' about a company going into BK? This is like a Hollywood drama - Unions fighting Capitalists, greedy hedge funds, a bad economy, a familiar old brand name, health food concerns. All we need is some racy romantic liaison or something between competing factions.

-ERD50

 

[Texas Proud]

Sorry - regarding the hedge funds. I'm not sure the details are clear anyhow, and maybe this happened before the BK court got involved. But if they were in BK, I would think the court would have some say regarding the HF pulling any profits out?

-ERD50

Yes, I would agree that the BK would not let the hedge fund take out profits in BK... I was even questioning if there were any profits to take out before BK...

This is a wild guess (with no facts, just speculation)... but I bet that the hedge fund thought they could come in, redo the union contracts, keep the company alive and then flip it for a big profit...

The question that remains is if the brands have enough value for them to make a profit when they are sold...

 

[steelyman]

twinkies | eBay

hoarding and price gouging.. the government needs to intervene now!

That's the Facebookers, I guess.

I'm a Ding Dong guy. I don't have them often, but I like knowing they're there.

 

[Purron]

Pretty amazing how "we" can take a simple OP topic and turn it into an Econ/PolySci 101 debate. Where else have I seen this kind of thing?




At least I didn't "help" this time, maybe I'll learn one of these days...

My thoughts exactly! Gotta love this forum

 

[Janet H]

So sad...

 

[Donzo]

This is obviously another example of "to big to fail" Hostess needs government stimulus monies....or what's next, Snickers, milkyway, Suzie Q?

 

[Purron]

This is obviously another example of "to big to fail" Hostess needs government stimulus monies....or what's next, Snickers, milkyway, Suzie Q?

Did someone say Suzie Q?

Apocalypse Now - Suzie Q - YouTube

 

[IBWino]

So sad...

View attachment 15441

Are you trying to hijack the twinkie thread with a ho-ho?

 

[powerplay]

My goodness. I haven't purchased any Hostess products in decades and really don't want to.

 

[NW-Bound]

twinkies | eBay

hoarding and price gouging.. the government needs to intervene now!

I clicked on that link and found an eBay listing wanting $5 million for a box of 10 Twinkies. The price can only go up from here, so people need to hurry.

Box of Twinkies for $5M: Twinkies | eBay

It's a good thing twinkies last forever, because I suspect many will buy them as a collector item, and will not be eating them. By design, the standard twinkies are mummified straight out of the production line!

I tried to buy a box of twinkies for DW this morning, but they were all gone. Looks like people have gone into hoarding mode.

"You snooze, you lose" - Anon.

You may have to sell some of DW's company stocks to get funding, but the above is the new price one has to pay.

PS. There is a rumor that management of the company hoarded boxes of Twinkies just prior to shutting down the production line, with the hope of unloading them on eBay for obscene profits. I doubt that any contract lawyer ever thought of this possibility to write an appropriate prohibiting clause into management's employment contract. So, investors and employees may have no recourse now. Expect to see lawsuits and private investigators tracing down these last-day boxes of Twinkies for years to come.

 

[easysurfer]

No more twinkies?

Maybe the Mayan calendar is right after all.

 

[youbet]

Pretty darn depressing, but I'd bet the Twinkie brand will live on. Perhaps a guvmint deal involving moving the assembly line to General Motors..

+1

The factory that's closing is in Shiller Park, just down the street from me in the close-in Chicago suburbs. This is the home of gubmint [-]shinanigans[/-] deals. The workers are union. Expect a bit of your taxes to be subsidizing Twinkie production in the near future!