Addendum to The Snack-Cake Wars

Addendum to The Snack-Cake Wars

 

Last week I presented, as an installment of my regular column, On The Money, Financial Advice for the Working Class, a piece called The Snack-Cake Wars. While I covered the story of consolidation and collapse within the snack-cake industry from a free-market perspective, my research revealed other dark, chocolaty forces at work, beneath the heavily frosted surface.

 

While its doubtful that Hostess could withstand Little Debbie’s pricing advantage for long, under the present economic conditions, I uncovered incontrovertible evidence of a secret branch of the Little Debbie empire, responsible for covert “Black Ops” attacks against the Hostess network, that certainly hastened that company’s recent demise.

 

These “Black Ops” teams, mounted a campaign against Hostess, responsible for hamstringing the company’s response to cash-flow problems, and demoralizing the staff and management. The actions taken against Hostess involved numerous episodes of espionage and sabotage, and culminated with the murder and kidnapping of American citizens.

 

Little Debbie Smile Squads These highly trained, seasoned mercenaries, know martial arts, carry fully automatic assault weapons, high explosives and have air power to back them up. They often travel in small, blacked out, armored vehicles invisible to radar, and carry out missions with impunity, seeming at will.

 

Early Sunday morning of January 15^th, Little Debbie Smile Squad 6 broke into the Simi Valley home of J. Thomas Twinkie Jr., aka The Twinkie Kid, and murdered him, execution style, in his own bedroom. Smile Team 6 also kidnapped Twinkie’s wife Tina and stole computers, flash drives and documents from Twinkie’s home.

 

Hours later, Smile Team 6 Dumped the lifeless body of the man who invented, developed, and marketed the immortal snack-cake that bears his name, into the Pacific Ocean, somewhere between Catalina and Kuala Lumpur. Soon thereafter a video of the entire gruesome assault and murder appeared on a Youtube video posted at a radical Little Debby fan website.

 

The J. Thomas Twinkie Jr. murder, and the kidnapping of his wife struck fear throughout the Hostess network. If Little Debbie could murder Twinkie, in his fortified compound on his vineyard in Simi Valley, they could strike any of them, anywhere. Twinkie’s murder crippled and demoralized the Hostess network, right at the moment that they needed to wrestle with the short-term cash-flow problems plaguing the company. In many ways, Twinkie’s murder sealed Hostess’ fate.

 

Twinkie’s murder outraged Californians, and Simi Valley Sheriffs issued an arrest warrant for Little Debbie herself, as well as Does 1-6, the as yet unidentified members of Smile Squad 6. The murder and kidnapping of US citizens by a multinational snack-cake superpower raised issues of sovereignty, due process, and human rights. Angry crowds burned effigies of Little Debbie at protest marches all over California.

 

Still, Little Debbie snacks remain on grocer’s shelves all over America, because everyone knows, that without the nausea that Little Debbie snacks induce in the poor and down-trodden people who eat them, the oppressed masses would certainly rise up in an unstoppable rebellion leading to complete chaos.

 

So, despite the public outrage, the arrest warrants, and the condemnation by elected officials, Little Debbie continues to operate with impunity in the US. If you are considering stepping into the vacuum in the snack-cake industry left by Hostess, to compete with Little Debbie, head-to-head, be prepared. Little Debbie is one tough cookie.

On The Money, The Snack-Cake Wars

On The Money

Financial Advice for the Working Class

The Snack-Cake Wars

Recently, I found myself tempted, at a gas station register, by “Zingers”. You may recall, “Zingers”, I know I do, as frosted snack-cakes, packaged three to a pack, in three distinct colors, pink, off-white, and dark-brown, with three correspondingly different blends of artificial flavorings. Packages of “Zingers”, as I recall from my fondest childhood memories, always conspicuously bore the image of “Snoopy”, the beloved beagle from the comic-strip of old, Peanuts, by Charles Schultz.

 

Dolly Madison, not the President’s wife, but the company of the same name, that manufactured “Zingers”, had a deal with Schultz, and one of the big three TV networks to sponsor all of the Peanuts TV specials. For decades, Dolly Madison and Peanuts were inseparable.

So, when I saw these “Zingers”, as I paid for my fill-up, I looked for my old friend “Snoopy.” He wasn’t there. Apparently, “Snoopy” was the first victim of the Snack-Cake Wars. Then, instead of the Dolly Madison logo, I saw the word that shocked me to my core, “Hostess”.

 

“Hostess!” Had Hostess mounted a hostile snack-cake-takeover? How could the SEC Allow it? Don’t we need competition in the snack-cake market? How could they let “Big Twinkie” gobble up its chief competitor? What choice is left to snack-cake consumers? Little Debby?

You can’t be serious. Little Debbie is to snack-cakes, what Hamms is to beer, or what Ripple is to wine. Who will compete with Hostess in the upscale snack-cake market?

 

What do you mean you don’t consider “Twinkies” upscale? Have you ever tasted a Little Debbie Moonpie? A marshmallow smooshed between two pieces of cardboard tastes better than a Little Debbie Moonpie.

 

Now, I hear that Hostess itself, currently teeters on the brink of insolvency. The news just gets worse, doesn’t it? How can that be? Did the Dolly Madison acquisition leave them over-leveraged and vulnerable, or did Dolly Madison and Hostess merge to fend off an all out assault by Little Debbie? Will Twinkies, Zingers, Ho-Hos, Ding-Dongs, Snowballs and Fruit Pies become a thing of the past, like passenger pigeons and black African rhinos? Will we stand idly by and watch it happen?

 

I know Little Debbie, or Lil’ Deb’ as they call her in “Da Hood”, has gained a lot of “street-cred” in recent years, while the Twinkie has seemingly become a victim of its own success. While oft ridiculed for its ubiquity and its durability, we should not forget that the Twinkie ranks as one of mankind’s greatest culinary technological achievements, for exactly those reasons.

 

Now it appears that sweet, innocent, Little Debbie, will gun down the Twinkie Kid, in cold blood, bringing to an end, forever, the golden age of snack-cakes. Clearly, its a race to the bottom now, and Little Debbie has a big head-start.

 

That’s what capitalism looks like. It’s bloody, its ugly, and it tastes like a marshmallow shmooshed between two pieces of cardboard, leaving all of the fondly-remembered snack-cakes of your youth, dead and buried in the dust of time.

Little Debbie doesn’t make fond childhood memories. Little Debbie reminds you of hard times, sad times, and desperate times. Little Debbie is what you eat when you can’t even afford McDonald’s. While Mickey D has “the Dollar Menu”, Little Debbie will hook you up, even if all you have is a quarter.

 

That’s how Lil’ Deb’ earns her street-cred. Little Debbie can turn hunger into nausea cheaper than anyone. Yes, Little Debbie has gotten rich off the hunger of the poor and down-trodden in these difficult economic times, and now she’s throwing her weight around in the snack-food industry.

 

Twinkies, on the other hand, have become the Pat Boone of snack-cakes, suburban, white, old-fashioned, and out-of-touch. I guess this is what the collapse of civilization looks like. Everything decent, noble, and righteous about our culture, gets cast aside, and torn asunder for any last scrap of profit that can be wrung from its corpse.

 

If you want your grandchildren to know the sweet, sweet, eternal softness of a Twinkie, you had better stock-up now. Every American family should have a stash of heirloom Twinkies, so that they can share with their children, the taste born of the very pinnacle of American social, cultural, and military dominance. While the American Empire fades into the dustbin of history, the taste of its brief triumph can linger on the lips of your descendants for generations, if you act now.

 

Your grandchildren will want to know what was so great about capitalism, that it was worth sacrificing 95% of the planet’s biodiversity for. If you buy a box of Twinkies now, you will be able to show them why it was all worth it.

 

A Boon for Investors?

Investors, if Hostess goes under, Twinkie production ceases, but Twinkie demand will continue. The laws of the free market say that under these circumstances, Twinkie prices will rise. Rising Twinkie prices means profits for shrewd investors who stockpiled Twinkies before the demise of Hostess.

 

Willard Dwarkin at Moodies Analytic says, “Hostess looks shaky right now, but as long as Twinkies remain in production, they can continue to meet demand at the current price. However, we expect a dramatic spike in Twinkie prices in the weeks and months following a bankruptcy filing by Hostess. Even if another company buys the Twinkie division, and continues production, we expect that pre-collapse Hostess products will maintain their appeal, and appreciate in value, not unlike “pre-CBS takeover” Fender guitars and amplifiers.”

 

To illustrate, Dwarkin added, “Recently, Dr. Pepper/Snapple brands made a deal to take over an obscure Texas soft-drink company marketing a product called “Dublin Dr. Pepper”. Since the takeover, unopened bottles of Dublin Dr. Pepper have sold for as high as $9,985, even though the identical product, Dr. Pepper still sells for under $1.00 a bottle. We think Twinkies have an even greater potential for appreciation.”

 

Dwarkin continued, “If however, Twinkies go out of production, which in our analysis, is about a 50-50 chance, we could see a dramatic rise in Twinkie prices that will continue to outpace inflation for the foreseeable future.”

 

“We expect that, in the future, Twinkies will trade like any monetized durable commodity. But, unlike gold or platinum, for which mining continues, constantly adding to the world supply, every time someone eats a Twinkie, the world supply will diminish by one. Twinkies are nearly as durable as gold, much lighter to transport, and have the added advantage over gold, in that you can eat them.”

 

Of course it is possible that a large run on Twinkies by investors may solve some of Hostess’s cash flow problems, possibly delaying, or even averting bankruptcy, but Dwarkin thinks otherwise. “Our numbers suggest that Hostess lacks the production capacity to respond to an unprecedented strong short-term demand. We feel a surge in investor interest in the Twinkie market could cause prices to surge well in advance of any bankruptcy filing by Hostess. In any case, Twinkie prices are not likely to drop much under any market condition, so we see very little risk to investors here. Moodies is very bullish on Twinkie futures right now.”

 

Obviously the snack-cake sector of the economy is undergoing dramatic upheaval at the moment, but the one thing you can count on, to remain stable for decades into the future, is the eternally soft, and immortally creamy Twinkie.