Largely unknown to those outside the US, the fate of the all-American snack brand Twinkies has been on many consumers' lips across the pond in the last 72 hours.

News of the demise of Twinkies owner Hostess Brands even cropped up among ex-pats in the City of London on Friday afternoon, with just-food overhearing Americans commenting on the fate of the company and bemoaning the lack of innovation that has been central to the group's recent woes.

Hostess has been operating under Chapter 11 bankruptcy protection since January but a strike this month has, the company insists, brought it to its knees. On Friday, Hostess said it would wind up the business and this week it will start the process of selling off bits of the company.

The union behind the strike has claimed mismanagement by successive regimes has led to the downfall of the company. Back in January, just-food reported how analysts believed Hostess had failed to adapt to consumer demand for healthier products and had been slow to innovate.

The arguments between company and union over why the Twinkies owner has failed will continue but attention is already turning to the parts of Hostess that could find buyers. Hostess believes brands like Twinkies could find new homes, although it concedes some bakeries will likely have to close. The US bakery sector does suffer from over-capacity.

Flowers Foods is seen as one of the "most eligible acquirers" for some of the assets, while reports in the US have touted the likes of Mexico's Grupo Bimbo and Pepperidge Farm bakery brand owner Campbell Soup Co. as potential suitors. Private equity cannot be discounted and C. Dean Metropoulos & Co has also reportedly indicated its interest in any fire sale.

The collapse of Hostess has proved a bitter one with the company and union publicly criticising each other. Union officials have claimed former Hostess CEO Brian Driscoll, who left the company in March, was awarded a pay rise equating to treble his salary as the group was filing for bankruptcy protection.

Driscoll is now at US snack firm Diamond Foods, a company that faced its own problems prior to him joining the business.

Last week, Diamond finally restated its accounts for its 2010 and 2011 financial years, lowering the level of profits it generated. The numbers had to be looked at again after an accounting scandal that led to the departure of its former CEO and CFO.

Driscoll said Diamond was looking to the future, with a "new strategic direction" and a "strong brand portfolio". However, the road to recovery is likely to be a long one, with a fresh approach to sales and marketing and with a lot of work to do to repair its relationship with suppliers after the scandal.

Diamond's much larger snacks rival PepsiCo was making its own headlines at home last week - through plans to launch a range of what campaigners called "caffeinated" snacks.

PepsiCo said it was still "optimising" the design of the products but defended its work in developing the lines. The caffeine in the products, it said, will come from coffee. The snacks, it insisted, have been developed "specifically" for adults and will not be marketed to children.

There is, however, heightened scrutiny of products containing caffeine in the US. The Food and Drug Administration is looking into reports of illness or death of people who took products marketed as "energy drinks" or "energy shots". Of course, PepsiCo's new products do not have the same make-up of those products being looked at but it is an issue all food and drink manufacturers would do well to bear in mind.

PepsiCo's NPD news last week also included the opening of an R&D centre in China. The Shanghai facility, it said, will be a "hub" for product development in Asia.

While PepsiCo emphasised the site will look at how to manufacture products tailored to local tastes, UK food and drink exporters were busy trying to convince Chinese retail buyers why they should stock their products.

A trade delegation spearheaded by the UK government visited China, a market British food and drink exporters should be targeting urgently, an industry association told just-food. UK firms can provide Chinese consumers with safe, healthy products, the UK Food and Drink Export Association said.

Catering to local tastes or emphasising the apparent 'quality' of imports. Two contrasting strategies being used to tap into what remains set to become the world's largest economy during this decade.

Until next time...

Dean Best
Managing Editor
Web: http://www.just-food.com
Email: editor@just-food.com
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