Hostess: Rest in Commodity and Labor Cost Management Peace

On Friday, we decided to have some fun with the unfortunate demise of Hostess. Per the video, I actually did go to the grocery store during a lunchtime jog to see if they had any Hostess products left. I was amazed that not only did they have a decent selection, but that the products were so inexpensive. I was able to scoop up over ten pounds of Hostess treats for less than twenty bucks (which added to the calories I burned on the run back to the office, no doubt).

One could look at this situation and simply place the immediate blame of Hostess' demise on union labor. And there is some element of the truth to this, at least the speed at which the firm shut its doors last week. But what really doomed Hostess, from those we know in the industry, was continued years of poor financial and general management, including a lack of centralized procurement practices focused on mitigating and managing commodity price risk, among other areas.

While we can all grieve over the loss of the infamous and long shelf-life Twinkie (stop by our company freezer anytime if you want one, as we got quite a haul on Friday), the death of Hostess should be a lesson to all manufacturers, CPG companies and retailers to not take their eye off the commodity price, materials management and operations efficiency ball. Anyone simply blaming Larry Hoffa for the death of the Ho-Ho alone clearly did not learn their lesson.

- Jason Busch

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