Hostess could tap growth trends though rumored Give & Go deal, says analyst
Give & Go and Hostess have both declined to comment on recent media reports that they are discussing a potential deal, but Mintel food & drink research manager Chris Brockman said acquiring the Canadian business would help Hostess exploit opportunities for selling more natural, healthier, and premium products.
“Hostess’ portfolio comprises legacy brands that come with a lot of baggage and it’s debatable whether products like Twinkies and Ding Dongs can truly evolve to meet current and emerging consumer trends,” Brockman told BakeryandSnacks.
Hostess' Twinkies rely on nostalgic appeal, he added, as seen during the public outcry when they temporarily disappeared from shelves following the former Hostess Brands’ bankruptcy in 2012.
Growth opportunity
“Give and Go could give the company an interesting set of brands – such as Kimberley's Bakeshoppe and Original Two-Bite - in some of the better growth opportunity areas,” Brockman said.
According to a 2014 Mintel report, 61% of US consumers said gourmet/premium cakes and pies were worth paying more for, and 81% said cakes and pies should be eaten in moderation. Brockman said the report reflected concerns over health, although taste and indulgence remained the dominant drivers of sales.
Give and Go’s presence in channels such as food service, as well as packaged retail, is also attractive to Hostess as it offers growth opportunities, Brockman said.
Highly acquisitive rivals
“International expansion is one of the best opportunities available to Hostess and its existing brands, so having a more internationally orientated business such as Give and Go to leverage off is also an asset,” he added.
North America’s bakery market is quite mature, Brockman said, and acquisition is one of the key routes to growth. Hostess’ competitors, such as Grupo Bimbo and Flower Foods, have been highly acquisitive in recent years and are seeing good progress as a result.
