Wonder Bread Lives!
Jan 14, 2013 23:04:39 GMT -5
Post by PrisonerOfHope on Jan 14, 2013 23:04:39 GMT -5
I don't see Twinkies mentioned in this story....
Wonder Bread lives!
Thomas Lifson
The wonder of capitalism includes an ability to correct failures and preserve the useful parts of failed endeavors. Compared to government projects, whose failure usually leads to increased budgets, capitalism conserves resources, and builds on success.
The bankruptcy of Hostess Brands, which generated tremendous publicity for the company's brands including Twinkies, Hostess Cupcakes, and Wonder Bread, is demonstrating the self-correcting nature of market mechanisms.
Flower Foods is the leading candidate to purchase six brands from the Hostess bankruptcy trustees, through a "stalking horse" auction. That means that other bidders still have an opportunity to surpass Flowers' $390 million bid, but if not, Flowers will make and sell Wonder Bread, Nature's Pride, Butternut, Home Pride, Merita, and Beef Steak brand products.
My guess is that Flowers will do an excellent job of reviving these products and will prosper. The company is a type that I have seen flourish in many industries: begun as a family business, in 1919 in Thomasville, Georgia, it has never taken its eye off the ball, promoting its management from within, so as to build expertise and loyalty, and focusing on quality and efficiency in its operations. The company made its first acquisition in 1937, a bakery in Tallahassee, and particularly after going public on the NYSE in 1982, the company has acquired, improved, and sometimes sold, a large number of baking-related brands and companies. They know what they are doing, and bring a higher level of skill to a still-fragmented industry.
Press reports are identifying Flowers as the baker of Tastykakes, the renowned Philadelphia snack, but that was a recent acquisition, in 1911. Josephy DiStefano of the Philadelphia Inquirer's Philly.com website wrote about that:
Costello Asset Management's Robert Costello:
"They did a phenomenal job getting the deal done. It could have been a bankruptcy," Costello told me. "It's an excellent company," he said of Flowers. "Return on equity is 18%. They're very efficient. There's no question they're going to change the way things are done here. It'll take a year, it won't happen overnight," he said. "Will (Flowers) cannibalize Tasty sales? Overall I think Tasty will benefit" if Flowers is able to market Tastykakes in parts of its Southern base.
Flowers had sought to buy Tasty in the past but talks led nowhere. Costello said Flowers would likely have closed Tasty's former Hunting Park plant if Pizzi hadn't built the new plant; if so, the move proved expensive for shareholders, while saving Tasty's Philadelphia jobs.
Flowers is publicly-traded, but the Amos McMullian family of Macon, Ga., remain major shareholders. Flowers makes Mrs. Freshley's sugary packaged snacks and Nature's Own breads, among other fresh and frozen products. Flowers is also a past owner of the former Mrs. Paul's frozen-foods plant in Pottstown.
So in the end, bread brands enjoyed by many consumers will continue to be made, only more efficiently than in the past. In capitalism, the capable get to use more of society's resources, because they use them well. Government in general, and socialism in particular, rewards failure. Whatever you reward, you get more of.
Read more: www.americanthinker.com/blog/2013/01/wonder_bread_lives.html?utm_source=twitterfeed&utm_medium=facebook#ixzz2I0twj3J6
Wonder Bread lives!
Thomas Lifson
The wonder of capitalism includes an ability to correct failures and preserve the useful parts of failed endeavors. Compared to government projects, whose failure usually leads to increased budgets, capitalism conserves resources, and builds on success.
The bankruptcy of Hostess Brands, which generated tremendous publicity for the company's brands including Twinkies, Hostess Cupcakes, and Wonder Bread, is demonstrating the self-correcting nature of market mechanisms.
Flower Foods is the leading candidate to purchase six brands from the Hostess bankruptcy trustees, through a "stalking horse" auction. That means that other bidders still have an opportunity to surpass Flowers' $390 million bid, but if not, Flowers will make and sell Wonder Bread, Nature's Pride, Butternut, Home Pride, Merita, and Beef Steak brand products.
My guess is that Flowers will do an excellent job of reviving these products and will prosper. The company is a type that I have seen flourish in many industries: begun as a family business, in 1919 in Thomasville, Georgia, it has never taken its eye off the ball, promoting its management from within, so as to build expertise and loyalty, and focusing on quality and efficiency in its operations. The company made its first acquisition in 1937, a bakery in Tallahassee, and particularly after going public on the NYSE in 1982, the company has acquired, improved, and sometimes sold, a large number of baking-related brands and companies. They know what they are doing, and bring a higher level of skill to a still-fragmented industry.
Press reports are identifying Flowers as the baker of Tastykakes, the renowned Philadelphia snack, but that was a recent acquisition, in 1911. Josephy DiStefano of the Philadelphia Inquirer's Philly.com website wrote about that:
Costello Asset Management's Robert Costello:
"They did a phenomenal job getting the deal done. It could have been a bankruptcy," Costello told me. "It's an excellent company," he said of Flowers. "Return on equity is 18%. They're very efficient. There's no question they're going to change the way things are done here. It'll take a year, it won't happen overnight," he said. "Will (Flowers) cannibalize Tasty sales? Overall I think Tasty will benefit" if Flowers is able to market Tastykakes in parts of its Southern base.
Flowers had sought to buy Tasty in the past but talks led nowhere. Costello said Flowers would likely have closed Tasty's former Hunting Park plant if Pizzi hadn't built the new plant; if so, the move proved expensive for shareholders, while saving Tasty's Philadelphia jobs.
Flowers is publicly-traded, but the Amos McMullian family of Macon, Ga., remain major shareholders. Flowers makes Mrs. Freshley's sugary packaged snacks and Nature's Own breads, among other fresh and frozen products. Flowers is also a past owner of the former Mrs. Paul's frozen-foods plant in Pottstown.
So in the end, bread brands enjoyed by many consumers will continue to be made, only more efficiently than in the past. In capitalism, the capable get to use more of society's resources, because they use them well. Government in general, and socialism in particular, rewards failure. Whatever you reward, you get more of.
Read more: www.americanthinker.com/blog/2013/01/wonder_bread_lives.html?utm_source=twitterfeed&utm_medium=facebook#ixzz2I0twj3J6
