| Type | Private |
|---|---|
| Industry | Food (Bakery) |
| Founded | 1930 |
| Headquarters | Irving, Texas, U.S. |
| Key people | Brian Driscoll, CEO |
| Products | Brands such as Wonder Bread, Hostess, Nature's Pride, Merita, Home Pride and Dolly Madison |
| Revenue | $2.798 billion USD (2008)[1] |
| Net income | -$143.68million USD (2008) |
| Total equity | -$461.71million USD (2008) |
| Employees | 20,000 |
| Website | http://www.hostessbrands.com |
Hostess Brands, Inc. (formerly Interstate Bakeries Corporation (IBC)) is the largest wholesale baker and distributor of fresh bakery products in the United States, and is the owner of the Hostess, Wonder Bread, Nature's Pride, Dolly Madison, Butternut Breads, and Drake's brands. For many years it was based at 12 East Armour Boulevard, Kansas City, Missouri. After it emerged from bankruptcy in 2009 it moved to Irving, Texas.[2]
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Ralph Leroy Nafziger founded Interstate in 1930 in Kansas City as a wholesaler selling bread loaves wrapped in gingham wrapping to grocery stores. In 1937 Interstate merged with the Chicago baker Schulze Baking Company.[3]
In 1943 it acquired Supreme Baking Company in Los Angeles. In 1950 it bought O'Rourke Baking Company of Buffalo, New York.
In the 1950s and early 1960s purchases included Ambrosia Cake Company, the Remar Baking Company, the Butter Cream Baking Company, Campbell-Sell Baking Company, the Kingston Cake Bakery, Cobb's Sunlit Bakery, Schall Tasty Baking Company, Sweetheart Bread Company, and Hart's Bakeries.[4]
In the late 1960s it acquired Millbrook Bread, Baker Canning Company, Shawano Farms, Inc. and the Shawano Canning Company.
In 1969 it changed its name to Interstate Brands. Its signature brands were Butternut and Blue Seal breads, and Dolly Madison cakes. Butternut Breads was a manufacturer of bread products that had been in business since 1902.
In 1975 it was acquired by Data Processing Financial and General Corporation, known as DPF, a computer leasing company, that ran into difficulties with IBM during the period of the IBM antitrust battles). As a result, DPF was interested in changing business models, and using its cash to take over a low-tech company. The merged company, with headquarters in Hartsdale, New York, took the name, "DPF," until the divestiture of the remaining technology assets. At that point, it changed the company name back to Interstate.
During the DPF era, the company invested heavily in its plants and also acquired Silver Loaf Baking Company, Eddy Bakeries, and Mrs. Cubbison's Foods, Inc.[5]
In 1981 DPF completed the sale of its remaining computer systems and renamed the company back to its original Interstate Bakeries and moved its headquarters back to Kansas City.
In 1986 it acquired Purity Baking Company and Stewart Sandwiches followed in 1987 by Landshire Food Products.
In 1987 management took the company private and it bought the Merita/Cotton's Bakeries division of the American Bakeries Company.
In 1991 the company changed back to Interstate Bakeries and went public again.
In January 1995, it acquired Continental Baking Company, for $330 million and 16.9 million shares of Interstate stock from Ralston Purina. It bought San Francisco French Bread Company, John J. Nissen Baking Company, Drake's, and My Bread Company.[6]
Under ex-Merita Baking head Charles Sullivan, Butternut and Wonder Bread operated with different cultures: Butternut was unregimented and each bakery was a self-contained profit center; Wonder Bread was very "procedural and by-the-book." This caused some problems early on. In both cultures, snack cakes were more profitable due to economy of scale and logistics. When extended-shelf-life enzymes were developed for bread, the hope was to convert the system of many small inefficient bakeries into an efficient network of a relatively few giant bakeries like their snackcakes operation. However, the recipe using the new enzymes caused the bread to have a different taste and texture,[7] and other market forces like a resurrection of the Atkins diet and competitor Krispy Kreme doughnuts affected pricing and sales volume.
On September 22, 2004, Interstate Bakeries filed for chapter 11 bankruptcy. The company also named a new chief executive. James R. Elsessor, who had taken over as CEO for Charles Sullivan, was replaced by Tony Alvarez. Interstate Bakery's stock, which had been at one time $34/share, fell to $2.05/share as they declared bankruptcy. At the time it was the longest bankruptcy in US history. With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009.[8] The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate's union workers made contract concessions in exchange for equity.[9]
Since declaring bankruptcy, Interstate has closed nine of its 54 bakeries and more than 300 outlet stores. It has also reduced its work force from 32,000 to 22,000 people and has pulled out of some markets. In 2009, Hostess Brands did not renew their agreement to produce Sunbeam Bread for the Northeastern U.S. LePage Baker's of Auburn, Maine assumed the contract to produce Sunbeam Bread for that region. [10]
By December 2011 it was reported that Hostess Brands was on the verge of filing for bankruptcy a second time after it suspended payments for union pensions was struggling to remain current on its $700 million loan.[11]
Effective November 2, 2009, the company was renamed Hostess Brands, Inc.[12]
In the United States, these include:
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