How Twinkies Became a $5 Billion Problem

This Twinkie [music] tastes like a $5 billion mistake. In 2023, J.M. Smucker paid $5 billion for Hostess, betting that America's appetite for [music] Twinkies, donuts, and Ding-Dongs would keep growing. During the pandemic, people were snacking a lot. Hostess gave Smucker entry into a roughly $65 billion snack market. 3 years [music] later, the [clears throat] deal isn't tasting quite so sweet. One of the biggest problems was hiding inside the package, shelf life. A Twinkie lasts about 65 days. That sounds like [music] a long time for a cake, but it's much shorter than Smucker products like peanut butter, canned coffee, and pet food, which can last [music] a year or more. That means Hostess products have to move much faster through the supply chain, leaving less room for delays, production problems, or forecasting [music] mistakes. And according to current and former executives and employees, that transition didn't go smoothly. Before the acquisition, Hostess's IT systems controlled nearly every step of a Twinkie's journey, from a retailer's order to production and shipping. Smucker's effort to fold Hostess into its own systems [music] resulted in late and incomplete orders, according to people familiar with the business. But Smucker's execution wasn't the only problem. Consumer habits were changing, too. People stopped spending as much money on snacks as healthy eating trends continued, and Americans began using [music] weight loss drugs. There are some signs of progress. Donut sales rose 13% in the latest quarter, and the sweet baked snacks division recently posted its first year-over-year profit increase. Buying an iconic [music] American brand is one thing. Successfully running it turns out to be much harder, even when it's as famous as the Twinkie.