Hostess to File for Bankruptcy: Should We Worry or Celebrate?
The Wall Street Journal reported that Hostess is filing for bankruptcy for the second time in recent years.
Twinkies, Ho-Hos and Wonderbread may still have a place in our hearts – at least in those hearts nostalgic for a simpler time with simpler carbs – but it appears that fewer Americans are keeping a place for the spongy products in their stomachs. For the second time in recent years, Hostess plans to file for bankruptcy. They are currently over $860 million in debt.
The question is, should we be worried or rejoicing?
Many are probably happy that Hostess, which is in the business of producing products that look disturbingly like food, is having trouble convincing Americans to eat their allegedly edible products. The company itself cited the low-carb mania during their previous bankruptcy filing. While I don’t necessarily equate low-carb with healthy, it appears that their more recent business woes indicate that simply scaling down to serve some niche Twinkie market is not going to work. People don’t want to eat this crap.
Of course, Hostess currently employs 19,000 people – not a paltry number. After their last bankruptcy filing, they laid off 10,000 workers (at that time going from 32,000 to 22,000). Bankruptcy will inevitably lead to more large-scale lay-offs.
Yet while that concern is important, it’s not the only caveat here. Let’s just pretend for a moment that some new company, let’s call them HealthyTreetz, hires all the people laid off from Hostess to manufacture tasty Multigrain! EXTRA FIBER Brown Rice Syrup Cookiez. There is still one huge problem/question – that is, despite American’s increasing apathy for Hostess products, we as a nation are still not very healthy. According to the United Health Foundation, the obesity rate in America has gone up almost every single year since 1990 (and has increased every year since 1998) and currently stands at 27.5%. Despite the fact that Hostess recently cited rising sugar and flour prices as part of its troubles, companies like Coca-Cola and Tyson Foods, which sells products like frozen “any’tizers” that encourages one to eat at any (and, presumably, all) times, seem to be having few troubles; they’re still in the top 100 of America’s largest corporations. While the WSJ also claims structural issues at Hostess have contributed to their current woes, the fact that their sales are basically flat, with Twinkies actually declining, seems strange since poverty levels on the rise, a situation where would believe more people would be purchasing low-cost, high-calorie foods.
So if the bankruptcy of Hostess doesn’t signal the U.S. making less sugary “food” choices, what does it tell us? It tells us, in short, that just because Americans don’t want to eat this crap doesn’t mean they don’t want to eat that crap. It’s more likely that, among its other problems, Hostess is simply an old company that has been left behind in a new age of advertising, social media, and overall slickness. While a Twinkie might warm the cockles of your heart, it’s probably the shiny package of Cheetos that will get snapped up off the shelf.
[Image from Wikimedia Commons]
Follow us on twitter@thefastertimes