After last week’s decision by Hostess Brands Inc. to liquidate sent consumers rushing to buy Twinkies before they disappeared, the family that started the company more than a century ago was also stocking up.
“My wife ran out and bought a box of Twinkies and a box of Ding Dongs, because there are warm memories,” said Brant Ward, 39, who runs a website on the history of the original Ward Baking Co., founded by his great-great-grandfather, Robert B. Ward. His own 5-year-old son, Race, tried the cream-filled sponge cake for the first time last week.
Any potential buyer of the brands, which also include Wonder Bread and chocolate Ho Hos, will have to find a way to tap into that nostalgia to revive sales of baked goods that haven’t kept up with modern American eating habits. The Nov. 16 announcement by current owner Hostess that it would wind down after a protracted labor dispute is only the latest drama for a company and family that endured a history of battles with workers, price-fixing charges and even murder and extortion.
Hostess Brands and its second largest union agreed on Monday to try to resolve their differences after a bankruptcy court judge noted that the parties hadn't gone through the critical step of private mediation. That means the maker of the spongy cake with the mysterious cream filling won't go out of business yet.
The modern showdown culminated after the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union refused to end a strike started Nov. 9 that had disrupted production and deliveries. Management gave the union an ultimatum to return to work by 5 p.m. Nov. 15. The next day Irving, Texas-based Hostess said it was liquidating and eliminating more than 18,000 jobs.
Labor disputes and reports of strikes also dot newspaper clippings from 1912 to 1930, according to Brant Ward’s research. At one point in 1919, Ward Baking sued strikers for $100,000, or about $1.3 million in today’s dollars, for “unlawful acts” against the company. A month later a strike-breaker was killed on his way home from work by a striking employee.
During that same time, Ward Baking and a later offshoot, Continental Baking Co., laid the foundation for brands that were going for as much as $99.99 on eBay last week. Continental, formed by Robert B. Ward’s son, bought Wonder Bread in 1925, according to reports at the time. Ho Hos also got their start in the 1920s, predating the Twinkie’s introduction in the 1930s.
Ding Dongs, cream-filled chocolate cakes, didn’t come along until the 1960s and the company used a variety of characters, from cowboy Twinkie the Kid to Fruit Pie the Magician, to market the products. King Ding Dong wore a crown.
Maybe the most surprising thing about the company’s history is that it has lasted this long, said Steve Ettlinger, the New York-based author of “Twinkie, Deconstructed.”
Twinkies’ moisture comes from oil, their vitamins are fermented or created out of petroleum, and the main ingredient in the cream is probably an emulsifier called Polysorbate 60, Ettlinger said.
“They have a popular pull on us as Americans,” Ettlinger said. “They are cute. They are blonde. They are small. They are very sweet.”
Dwayne Wade from Detroit is one loyal customer who remembers buying his first pack of Twinkies four decades ago at the A&P grocery store when he was supposed to be buying cereal. Last week he loaded up with 10 boxes and 10 single packs.
“It’s something everybody loves,” said Wade, 52, shortly after making his purchases at the bustling Wonder Hostess Bakery Thrift in Eastpointe, Mich. “I guess they just managed their money wrong.”
Hostess filed under Chapter 11 for a second time in January, listing assets of $982 million and liabilities totaling $1.43 billion. The baker ended an earlier trip through bankruptcy court in 2009 when buyout firm Ripplewood Holdings LLC and lenders took control of Interstate Bakeries Corp., which was then renamed Hostess Brands. The Teamsters and the bakery workers’ union both made voluntary concessions in the first Chapter 11 reorganization.
Continental, the Ward Baking offshoot, changed hands several times in the last century and was eventually taken over in 1995 by Interstate, which failed to keep a lid on costs while sales plummeted. The Ward family no longer has a formal connection to Hostess.
Last week’s nostalgia-fueled snack buying belied the truth that the company hadn’t done enough to keep customers happy in the present, said Tom Julian, a brand consultant with a namesake firm in New York.
“As an American business, as an American brand with heritage, there could have been some way to evolve this company for their revered products,” Julian said. Levi Strauss, McDonald’s, Max Factor, Dr. Pepper, and Campbell’s are all brands that have moved forward, he said.
Starbucks Corp. (Nasdaq: SBUX), which isn’t a baker, manages to get fresh and appealing baked goods and sandwiches in its stores every day, and to do so profitably, Julian said. Kashi, owned by Kellogg Co. (NYSE: K), made seven grains popular with the masses, he said.
A new buyer may seek to replicate those models and bring back customers who fondly remember getting Twinkies in their lunchboxes. C. Dean Metropoulos & Co., the private equity firm that owns Pabst Brewing Co., is considering an offer, principal Daren Metropoulos said on Nov. 16. C. Dean Metropoulos, founder of the firm, has specialized in turning around brands such as Chef Boyardee and Bumble Bee Tuna.
Hostess will draw both strategic buyers and private-equity investors for its brands, Hostess Chief Executive Officer Gregory F. Rayburn said in a Bloomberg Television interview Tuesday.
There is still enough demand for Hostess’s products that another company could make them profitable by buying the brands cheaply and producing a lower volume of sales more efficiently, said Eli Portnoy, CEO of CultureRanch LLC, a Miami-based brand strategy consulting firm.
“They are really dinosaurs in the American diet because today we are encouraged not to eat that way, bleached flour and all that sugar,” Portnoy said. “But peoples’ eyes just twinkle at Twinkies. A Twinkie was the ultimate reward when you were a kid. People won’t admit to eating them, but they cheat.”
Founder Robert B. Ward would have been surprised by the image of his company as out-of-touch with the times, said Brant Ward, the modern-day chronicler who leads a research team focused on speech recognition at Nuance Communications in Sunnyvale, Calif.
Ward Baking was a lot like the Silicon Valley company where Ward works now, with electric delivery vehicles and amenities such as game rooms for the employees at the office, he said. The baking company produced the first factory in 1910 where ingredients were poured into the machines at one end and bread loaves, fully wrapped in waxed paper, came out the other end without any human contact, Ward said.
Wonder Bread is also credited as the first loaf to be pre-sliced by machine at the factory, the genesis of the phrase “the best thing since sliced bread,” Ward said.
“They were very high-tech for the time,” he said.
Ward Baking still wasn’t without its share of scandal. In a 1915 New York Times article, allegations surfaced that Ward Baking tried to fix the price of bread at 6 cents a loaf, from 5 cents, with several other companies. Similar charges show up over the next two decades of clippings.
At the time of founder Robert B. Ward’s death, Ward Baking was the largest bakery in the United States, according to his 1915 obituary in the Bakers Review. Ward, the son of a baker, was born in 1852 in New York City and started a company at age 21 that later became Ward Baking. He helped deliver bread when he was 8 years old because of a labor shortage caused by the U.S. Civil War.
After the company passed to his half brother, George S. Ward, more scandal and death plagued the family, according to Brant Ward’s research.
In 1922, George S. Ward’s son admitted to killing a man who was part of an effort to blackmail him for $100,000 over an undisclosed family secret, according to newspaper clippings collected by Brant Ward’s family. The case was eventually dropped under headlines claiming “Family Skeleton Guarded.”
The family’s exit from the business came with the deaths in 1929 of William B. Ward, Robert’s son, who had taken over in 1924, and the next year of his successor and brother, Charles A. Ward, Brant Ward said. The Ward family influence on Continental Baking ended in 1927, according to the clippings.
“Who knows, my son Race has been saying he wants to start a company like his great-great-great-grandfather did,” Brant Ward said. “Maybe he’ll be inspired by all of this.”
The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04-45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).