3 Growth Strategy Examples from Hostess Brands

3 Growth Strategy Examples from Hostess Brands

Growth Through New Products, Product Extensions & Limited Time Offers

The iconic products of Hostess are part of the American cultural landscape and offer some tasty growth strategy examples. The brand has appeared in movies (Ghostbusters, Die Hard, Zombieland), songs (Junk Food Junkie) and recipes (Twinkie® tiramisu). 

Twinkies® even have their own day, falling on April 6 in 2022, when Hostess gave them out for free.  Twinkies® have attained immortality with the urban legend that they have an endless shelf life (in reality, 45 days, with an average 7-10 days actually on the shelf). I would prefer to believe that they achieve truly divine status when battered and deep fried. 

Others see the Twinkie® in a more villainous role and put it on the “Best & Worst Baked Goods on Shelves in 2021” as one of the worst “with 280 calories and 390mg. of sodium per two cakes, they aren’t the best for you.” 

Regardless of their place in any particular pantheon, the baked goods under the Hostess brand have proven themselves relentless drivers of growth, fueled by the introduction of new products, product extensions and limited time offers (LTOs). Keep reading for more details on Hostess growth strategy examples.

Sweet History Sets the State for Growth Strategy Examples

The Hostess brand snack cakes and other baked goods were founded on the idea of product expansion when the Continental Baking Company moved beyond bread and introduced the cream filled chocolate cupcakes (sans the squiggle) in 1919.  More baked goods followed:

  • Twinkies® in 1930
  • Donettes in 1940
  • Snoballs in 1947
  • Ding Dongs and Ho Ho’s in 1967

While the products had wide appeal, antiquated plants and legacy pension plans created profitability issues that resulted in bankruptcy in 2004 and again in 2012.  Sadly, Twinkies®, CupCakes, Ho Ho’s and all the Hostess products were off the shelf.  Investors (Apollo Global Management and C. Dean Metropoulos) purchased the Hostess brand and its trademarks at a November 2012 liquidation sale and by July 15, 2013, Hostess products were back on retailer shelves.  The company went public using the ticker TWNK in 2016.

3 Growth Strategy Examples from Hostess Brands

Growth Strategy Examples from New Products

Hostess Brands have been growing their product portfolio since 2013 to meet the needs of consumers in more occasions (e.g., on-the-go snacking) and expanded channels (C-stores).   New products have included:

  • 2015 Mega muffins
  • 2015 (C-store), 2019 (grocery) Danish
  • 2018 Jumbo Donettes
  • 2021 Muff’n Stix
  • 2021 Crispy Mini’s
  • 2021 Baby Bundts
  • 2021 Boost Caffeinated Donuts

New products are supported by packaging architecture.  Single serve for C-store, 6-12 multi unit packs for grocery and 14+ for warehouse formats.

3 Growth Strategy Examples from Hostess Brands

Growth Strategy Examples from Product Extensions

Product extensions have been even greater than new products with the introduction of new flavors of cake, cream and frosting to popular products like cupcakes, Twinkies and Donettes.  Cupcakes have experienced considerable innovation beyond the chocolate cake and chocolate frosting of the 1919 version, including:

  • Birthday cake
  • Golden
  • Orange
  • Iced lemon
  • Strawberry

Twinkies returned to their “roots” in 2005 with banana creamin the classic sponge cake  (the original cream flavor until WWII created banana scarcities).  In 2017, a chocolate sponge cake with vanilla cream was added to the Twinkie line up.

Many products are now offered in a wide variety of flavors:

  • Danish comes in 7 flavor combinations including cherry/cheese, blueberry/cheese, apple cinnamon and mixed berries/cheese
  • Jumbo Honey Bun has 3 flavors: glazed, iced and devil’s food
  • Donettes’ regular line up includes powdered, double chocolate, glazed, crunch and chocolate frosted
  • Crispy Mini’s, introduced in 2021, already has a new flavor in 2022 with chocolate mint
3 Growth Strategy Examples from Hostess Brands

Growth Strategy Examples from Limited Time Offers

Hostess is a master of both the traditional LTO (comes and it goes) and the seasonal (like the Shamrock Shake, an annual limited run).  Since its 2013 return to shelves, consumers have enjoyed such flavors as:

  • Sea Salt Caramel CupCakes
  • Sundae CupCakes
  • Dark Chocolate Raspberry CupCakes
  • I Love You Cakes
  • Unicorn CupCakes
  • Carrot Cake Donettes
  • Strawberry Cheesecake Donettes
  • Cotton Candy Twinkies
  • Lemonade Stand Twinkies
  • Moonberry Twinkies
  • Key Lime Slime Twinkies
  • While Chocolate Marshmallow

And, many consumers look forward to holiday-themed and seasonal offerings like:

  • Red white blue Twinkies
  • Holiday peppermint Twinkies
  • Holiday mint chocolate Twinkies
  • Patriotic CupCakes
  • Shamrock CupCakes
  • Candy Corn CupCakes
  • Snoballs: green for St. Patrick’s Day, white for Christmas, orange and neon green for Halloween, lavender for spring

Growth Strategy Examples from Collaborations

Unwilling to leave any stone unturned where the power of the Hostess brand can inspire a new product, Hostess has entered into what they call “collaborations” to expand the Twinkie universe with products like:

  • Twinkie-flavored Oreos
  • Single-serve coffee, cappuccino and hot chocolate pods with Victor Allen: Twinkies, Snoball, Honey Bun, Ding Dongs
  • Ready-to-Drink (RTD) iced lattes from the Horseshoe Beverage Company: Twinkies, Snoball, Honey Bun, Ding Dongs
  • Twinkie cereal from Post introduced in 2020

Hostess Growth Strategies Pay Off

Revenue doubled to $1.14B in 2021 from 2014 revenue of $554M.  Market share has also grown in the same period from 14% (share of sweet baked goods category) to 21%.    In a March 2022 bakingbusiness.com article, the CP of innovation and growth, Tina Lambert said,

“Our innovation revenue in 2021 exceeded our goal to have 15% of our annual revenue to come from new products launched in the last three years.” 

Further growth through the introduction of new products is expected in the future with the 2020 creation of the Innovation Lab, where new products are created and tested by bakers, researchers and product testers.  The Twinkie train looks unstoppable.

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Comments (1)

Hello, Connie (and hi, Michal),
What an insightful article! I knew the company was innovating but had no idea how fast and copiously.
Hostess is innovating in branding ways, too, BTW.
Stay tuned!
Colleen

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