Hostess shutdown prompts snack cake buying binge

Soon after hearing that Hostess Brands Inc. was shutting down for good, Lisa Renee Clark wasted no time dashing out to the Wonder Hostess Bakery Thriftshop in Glen Burnie.

But by midday Friday, she was almost too late. The Twinkies had sold out. Supplies of Wonder white bread were dwindling. And the shelves appeared bare of Ho Hos. Finally spotting two boxes of the cream-filled snack cakes, Clark snatched them up.

"So many fun, good things from my childhood are going away," said Clark, 43, a self-employed production assistant and camera operator from Pasadena. "It reminds me of school lunch."

Nostalgia for Hostess' iconic snacks and Wonder bread drove consumers to the outlet on Furnace Branch Road and area grocers Friday to buy Hostess products by the bagload.

On Friday, the 82-year-old company announced it will liquidate and fire more than 18,000 workers, saying a nationwide strike by bakery workers forced a shutdown of operations. And consumers stocked up, fearing Hostess treats would disappear forever, though it's more likely the brands will be sold off and returned to the market by new owners. Shoppers at Giant Food and Safeway stores in the Baltimore area were buying large quantities of Hostess foods, both grocers reported.

"I can't imagine being without Twinkies," said Edythe Smith, of Annapolis, who also loaded up on Hostess Donettes and CupCakes while shopping with her daughter at the thrift shop.

Hostess, which once ranked as the largest U.S. wholesale baker, had suffered declining sales for years as American diets shifted to more health-conscious choices and as labor and ingredient costs rose. The company filed for Chapter 11 bankruptcy protection from its creditors in January. The Irving, Texas-based company blamed striking workers for its latest move.

"Companies in bankruptcy don't have any margin for error," CEO Gregory F. Rayburn said Friday in an interview with Betty Liu on "In the Loop" on Bloomberg Television. "We just didn't have enough workers crossing the picket line."

Rayburn said in that interview that Hostess intends to ship its bread and snack cakes until supplies run out and plans to sell its assets, which include 36 bakeries and 565 distribution centers. Hostess closed three of its plants Nov. 12. The company said it determined Thursday night that not enough employees had returned to work to restore normal operations.

But both Giant and Safeway were told Friday that the company's shipments that day would be the last.

"Our stores are running low on the Hostess products," said Jamie Miller, a Giant Food spokesman. "There was a limited production of the Hostess products this week, and we won't be getting any additional deliveries. Once it's gone, it's gone."

At Safeway, Wonder and Hostess brand products also were in high demand Friday, with grocers and drugstores around the nation reporting similar situations.

"People are buying up the items very quickly, and some were buying them in large quantities," said Gregory A. TenEyck, a spokesman for Safeway's Eastern Division.

A few people hoped to profit from the sudden, depleted supply, listing Twinkies, Zingers, Coffee Cakes and CupCakes for sale on eBay. A 10-pack of Twinkies is available for $24.99 and four 10-packs are listed for $99.99 on the auction website, Bloomberg reported. That compares to a 10-pack of Twinkies listed for $3.29 on online grocer Peapod.

At the Glen Burnie outlet center Friday, retired couple Allen Small and Kathleen Demby loaded six bags of Hostess goodies into their truck: doughnuts, cakes, Twinkies, fruit pies. Demby said she planned to freeze most of it and enjoy it a little at a time.

"I remember when I was little, Wonder Bread was around," said Small, noting that he grew up in Washington, D.C., and remembers the Wonder bakery there.

"It's a shame," added Demby, of Brooklyn. Hostess made "all the best cakes and pies. Their doughnuts are delicious. It was nice to have a cup of coffee and a doughnut."

Inside the store, where loaves of Wonder Bread sold for 99 cents, customers were surprised to learn the company had shut down the credit card systems and was only accepting cash.

"I have never seen this many people here," said Lynna Mae, a customer who works as a hair stylist at Z-Image at a shopping strip next to the bakery outlet. "It's sad. It's part of history … going away."

Behind the outlet center, at a Hostess distribution center, rows of delivery trucks with the familiar red, blue and yellow Wonder Bread logo sat parked on Friday. One worker outside the center offered a "no comment" before heading back inside.

Workers represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after a bankruptcy judge in White Plains, N.Y., imposed contract concessions opposed by 92 percent of the union's members. The union had called the proposed labor contract "horrendous."

"The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share," the union said Thursday in a statement. Hostess "attempted to resolve the mess by attacking the company's most valuable assets, its workers."

In the past 15 months, Hostess has unilaterally ended contractually obligated payments to the workers' pension plan, and demanded as much as 32 percent cuts in wages and benefits, the union said in the statement.

On Friday, the company asked the judge overseeing the bankruptcy to hold a Nov. 19 hearing to approve the company's request to liquidate. Some workers will be retained to clean plants and mothball equipment, Hostess said.

Bakers' union members "crippled the company's ability to produce and deliver products at multiple facilities," and "bakery operations have been suspended at all plants," the company said in a statement.

Officials at the International Brotherhood of Teamsters, which represents Hostess drivers, were "incredibly disappointed" and "angry" about the shutdown, Rayburn said. The Teamsters, which had ratified a new contract with wage concessions of 8 percent and benefit reductions of 17 percent, urged the bakers' union Thursday to let members decide by secret ballot whether to continue the strike.

Rayburn told Bloomberg that potential buyers have expressed interest in parts of the company, but that labor contracts and pension obligations have deterred bids for the company as a whole.

The company also makes the Dolly Madison, Drake's, Merita and Butternut brands.

"Hopefully, someone will buy the brands, and some of the brands can live on, but that's a pretty small consolation for people who are out of work," Rayburn said.

Clark was one of many customers on Friday echoing that sentiment.

"I hope someone takes it over," she said. "I can't imagine this not being a profitable business."

Restructuring specialists told Reuters the brand names were likely to be more valuable once they are separated from inefficient factories and sold to nonunion competitors.

"Can you imagine what Twinkies will go for? Jiminy!" said a person who did not want to be identified because his company planned to bid to be the liquidator. "And Wonder Bread? These are 100-year-old brands. They have to be worth a lot."

Bloomberg News and Reuters contributed to this article.

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