Working brand magic: reviving Twinkies

An estimated 50M Twinkies are now on or arriving to shelves across the country. C. Dean Metropoulos’ private-equity firm, Metropoulos & Co., is the primary owner of the new Hostess Brands LLC, out of Kansas City, MO. What Metropoulos is trying to do is instructive for brand valuation and provides a great checklist for a turnaround.

1. The former Hostess was burdened with $1.3 in debt…that debt is no more;
2. Innovation is a stated focus of the new company (expect to see healthier products, for example, and new flavors and textures);
3. Factories have been consolidated, forcing those remaining to operate at closer to 90% capacity (these remaining plants are being modernized);
4. The former Hostess had nearly 80% of its employees represented by unions…there are no unions in the new company;
5. Hostess thrift stores have been shuttered;
6. Distribution will expand into tens of thousands more outlets;
7. Average compensation levels have been reduced;
8. Poor selling products are being eliminated;
9. The Wall Street Journal reports a multimillion-dollar marketing campaign will support the brand, with "The Sweetest Comeback in the History of Ever" a prominent slogan. The campaign will feature outdoor ads, a Hostess food-truck tour and extensive social media.

The pattern is predictable. Metropoulos has been involved in 78 consumer acquisitions in the last 25 years, with a reported average ROI in excess of 44%.