We Fixed It, You're Welcome - Getting Twinkies Out of a Jam | Saving Smucker's Hostess Acquisition

Starting point is 00:00:00 Welcome to We Fixed It. You're welcome. The show where we take over companies, you come along for the ride, and we try to put them back better than we found them. Welcome back to We Fix It You're Welcome with an all-new episode and the kickoff of season four. I can already tell this is going to be our best season yet. We are rested up and ready to take on anything and everything that needs fixing. That includes culture, business, questionable industry trends, and when specific companies need a helping hand to get them out of a tough situation, we're on. On it. Such is the case today. We're talking about that icon of cuisine, that staple of youth diets, the dessert that passes as a casual snack, the Twinkie. Turns out, things haven't been so golden for Twinkies and parent company hosts this since they were acquired by smuckers only three years ago. If you look at the sales, it's crisis mode in Twinkieland. We're going to try to bring this brand back to what it once was. That's what we're here to fix. That's going to take effort, so I know we'll need some help here. Please say hello to Rebecca Johnson. Rebecca devoted much of her career to Frito Lay, where she was VP of marketing. Among

Starting point is 00:01:07 many things, she launched baked lays, so you can already thank her for that. She's worked with Chili's, Maggiano's, Applebee's, and a host of restaurant brands. In addition, she was a senior vice president for the American Heart Association, so she might bring some health consciousness to our conversation, too. And now she's leveraging her expertise in new ways. Rebecca, welcome to our show. What did I miss? And what are you up to these days? Thank you for that. And I am so excited to be here today talking about things we love to eat. So I am a lifelong marketer and now I'm a board advisor and what I call a CMO whisper where I help CMOs bridge the gap between strategy and execution. And also what I love doing decades in the food world and the brand world is taking

Starting point is 00:01:55 legacy brands and reimagining them, reinventing them, rejuvenating them and make them connect with what made them so great to begin with. That's great. Thank you, Rebecca. I love that work, too. And we're thrilled to have you here. Twinkies is maybe the ultimate legacy brand. So we got a lot of work to do.

Starting point is 00:02:13 And you'll see that we always get hungry on our food-themed episodes. I could use a sugar spike, but what Hostess needs is a sales spike. So take us into it, Chino. Yeah. So today we're talking about a very sweet deal that turns sour. Smokers 5.6 billion dollar bet on Hostess, the brand behind iconic sweet treats like Twinkies, Ho-Hos, Donnettes, and Ding-Dongs. As you mentioned, Darren, back in 2023, the company called it expansion and a clever way to enter the snack aisle.

Starting point is 00:02:43 And at an industry event, Mark Smucker, the CEO of Smuckers, even bit into a Twinkie and said, taste like growth. But three years later, the numbers tell a completely different story. Smucker's Snackers' Snack division has been in a sales decline for six straight quarters. The company has booked nearly $3 billion in impairment charges, and the iconic Twinkie has become a lesson in what happens when a famous brand doesn't quite spit the system trying to run in. So what went wrong?

Starting point is 00:03:17 Well, Twinkies doesn't behave like the well-known shelf-stable pantry smuckers products that we know and love, predominantly sold in grocery stores and big box retailers. In fact, Twinkies has a 65-day shelf life, and 40% of all hostess brand sales run through convenience stores. So this week we'll be impacting where Smokers' Strategy went wrong and asking the big question every brand should ask before it buys a legacy icon. Are we buying growth or are we buying a problem? Let's died into it. The poor Twinkie. I love it, Twinkie.

Starting point is 00:03:57 So this is making me kind of very, it's making me very sad. But I think one of the things, and I think Rebecca, you and Aaron can talk about this from a brand and marketing perspective is I do feel like operationally, that's my expertise. They miss the mark, as Chino mentioned, because you're talking about something that has a very short shelf life versus something that has a longer shelf life. But there are examples where bigger companies have been merged together that aren't. exactly the same. They're adjacent brands, but the acquisition actually worked. So an example would be Hershey and Dotts pretzels and Skinny Pop, right? They, they really, Hershey's bought Amplify Skinny Pop in 2017 and Dotts pretzels in 2022. Those are not sweet treats. Those are not chocolatey sweet treats that were used to from Hershey's, but it was going into a move into the salty snacks. The one thing that

Starting point is 00:04:57 they did is they really kept those brands kind of singular in the sense that they didn't force those brands to kind of come into like the candy aisle, right? They kept them separate and the founders operating instincts invested in these dedicated salty snacks because this is how they were going to grow. And they have grown 103% in retail sales in those arenas. So I feel like there was a miss on smucker's side because really if you think about it, it is a very different idea. And then the thing is there is that growth opportunity because I'd love to talk about this a little bit. I know Rebecca, you talked about transformation in marketing and expansion and growth. But what about the fact that for so many of us, we grew up on hostess? So I love the foil-wrapped

Starting point is 00:05:51 ding-dongs. I had twinkies in my lunchbox, those kinds of things. Now, we have kids. So what about bringing that nostalgia angle back into it? So instead of saying it tastes like growth, Chito, maybe you say it tastes like home. That's such a great point. Adi is a former CMO that got my hands on a number of legacy brands. The legacy brands have something most new brands would love to have. They've got awareness.

Starting point is 00:06:18 They've got shelf space. They've got an infrastructure that works. Right. But at the same time, the problem with iconic brands is that they're competing in a changed snacking world. And while the core challenge for legacy brands is balancing their iconic status with today's evolving snacking and lifestyle preferences, right? So a brand cannot live off nostalgia alone. They have to be able to drive growth and innovation with modern consumers meeting their needs. And sometimes the needs of the consumers are diametrically opposed to the operating system, right?

Starting point is 00:06:55 So think about Frito Lay, a wonderful, I mean, just an amazing company with amazing portfolio brands where Lays potato chips, those potato chips have a very unique manufacturing process. While Bakelays has a very different manufacturing process. So there had to be a strategic shift in an investment in a bait platform to be able to drive that innovation into the marketplace. And we also had to shift our target audience. It was no longer men. It was women who actually bought fake lays, took them into their closet and ate them while no one was watching. All right. So we had to take a total pivot.

Starting point is 00:07:38 The organization had a pivot from what its core competencies were, maintain the core. and added more. And that's, that kind of thinking is difficult. It's challenging. But what choice do you have? Right. Well, and I think the consumer, you were really brought up a really important component of it, which is the consumer tastes are different now, right? So as a parent, you know, you're looking at veggie snacks, you know, you're looking at all the good things, low sugar, low trans fat, you know, that is something that, you know, that is something that, you know, our society in general is really trying to get more healthy. So I agree with you, Rebecca, the nostalgia angle of like a Twinkie where you don't know, I mean, I'm kind of surprised

Starting point is 00:08:25 it only has a 65 day show life. I kind of thought, you know, I don't know what's it. I thought it's 65 years. You could put it in a time capsule, I thought. So I think that that is a very big component of it as well. And you really bring up a really good point because operationally, when you think about the shifts, we talked about this with Brad Reese. You know, we talked about Reese's and Hershey's. You know, there's so much that goes into that. And you have to invest in that future and not knowing, right, like whether or not that's going to take is a huge risk, I think, for a lot of these companies. Absolutely.

Starting point is 00:09:05 Absolutely. Even in the restaurant world, when they introduced to go or just delivery, that is a whole deal. different way to deliver the service, the food, than in restaurant experience. So being able to flex and add to that operational competency takes a lot of work. Right. But again, what option do you have if that's, you're following the consumers and their needs to stay relevant? The only way to grow is to deliver value to the consumers. And that comes from understanding what their needs are. Rebecca, you've done this kind of work on the biggest stages there are. Is we're hostess and smuckers, were they incompatible to start? Was there ever a chance? Is this a missed opportunity or just

Starting point is 00:09:49 never meant to be? So HOSES has strong distribution in C-stores, convenience stores, while the other brands have strong distribution in grocery stores. So you would think they would be expansive in nature. You think that they would be able to increase snacking occasions because they offer a wide variety of products. But in some cases, the financials get in a way, right? So if the distribution system is built on grocery stores and large packages and now C stores are built on small packages, that's, those are two very different ways to drive your P&L. So I think there has to be, you have to be able to, the organization has to be able to manage all kinds of business models. And that can be difficult when the organization is accustomed to a business model that has

Starting point is 00:10:45 been very successful for a very long time. It throws a monkey wrench into everything. Yeah, Rebecca, I think you hit the nail right on the head because smuggers actually reportedly split the grocery store and convenience store sales teams. So they were speaking to each other from an operational perspective, this is two separate different ways to go about selling a product. Not to mention the shelf life, right? We know that smuckers, I don't know the last time I checked my peanut butter or jam, I have no idea when the expiry is in my current pantry compared to a Twinkie, which is only 65 days. So by nature, it's a different way of consuming that product. And so how you sell and what your go-to-market strategy is, even though it's an icon.

Starting point is 00:11:34 brand is different. And I think those operational, that operational mismatch has been one of their biggest challenges, not to mention they absorbed a lot of some of the debt that Twinkies had had it already. So they were coming in a bit of a deficit. And then with kind of these, you know, quarter after quarter sales decline, it hasn't really helped the picture. And another big thing we continue to talk about is the consumer habit, right? So, you know, pre-COVID. And, you know, pre-CO, during COVID, we were all snacking, snacking a lot. And that was the time that they were starting to negotiate a lot of these deals. And so obviously, post-COVID, that snacking boom has really cooled off.

Starting point is 00:12:19 And so, you know, I think the challenge here is that hostess was not able to really change those tastes and that snacking habit. And smuckers bought into that when the snacking face is cooled. So I think, again, looking at a different strategy when right now consumer behavior is all about health and, you know, macros and protein is everywhere, right? I don't think making a protein twinkie is the answer. But I think branding it in that nostalgia way that you mentioned, Melissa, is a brilliant type. Hey, I'm wearing my quince shirt. It's blue. It's lightweight, which is non-negotiable for late summer.

Starting point is 00:13:00 I'm happy. I'm wearing my quince mini dress, which is a summer staple, particularly in this humidity. It's the hottest day of the year today, and I am cool as a cucumber in my quince. The thing I love about quince is that it's not just clothing. I have the luggage, and they had bedding, bath, kitchen staples, jewelry. Yeah, and I didn't have to go to the store. It's something I would have picked out anyway. I really like it, but I got it at home.

Starting point is 00:13:29 Love their stuff. It's really thoughtfully designed and very intentional. Upgrade your every day. Go to quince.com slash fixed it for free shipping on your order and 365 day returns. Now available in Canada and the UK too. That's QINCE.com slash fixed it for free shipping and 365 day returns. Quince.com slash fixed it. If you've ever worked for any company anywhere, you know there's the process that's supposed to have. and then there's what everyone actually does. The problem is, most leaders can't see that gap, which makes it pretty hard to know it's actually worth fixing.

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Starting point is 00:15:09 Yeah. You're right, you know, the snacking habits, what consumers are looking for are healthier ingredients. I'm not saying all the way too healthy, because that's green beans and asparagus, but healthier alternatives. So could they have failed that cream? For instance, I was in the grocery store yesterday, and I saw Duncan Hines. I felt they were brilliant. They had their keto cake mix, and then they had their regular cake mix. Their keto mix was actually three times the pricing of their regular, right?

Starting point is 00:15:47 It was on the top shelf three times. Probably a much smaller group of people would buy that, but probably highly incremental. I would buy it, right? But then the price. power that a brand can get by being innovative, tapping into not fads, but truly lifestyle changes, which is what's happening in America today, we'll become much more aware where our food comes from and how important nutrition is. We still don't want to give up taste. No one's giving up taste. But we are making better choices and expect that from the products

Starting point is 00:16:22 we buy. So think about instead of a cream filled, could it be a dark, rich chocolate? Or smucker filled, jelly filled. I mean, like, why not? Like, have a, like, you know, have a seasonal, a seasonal tasting. So it's summertime. Yeah. So, like, a twinkie filled with, you know, blueberry jam or whatever it might be would be amazing. I think, Rebecca, I did a little search today as well. I dropped by the grocery store. And one of the things that I was very surprised at because I did have a friend that worked at a grocery chain. She was high up in the grocery chain. And we talked about like shelf placement. She was the chief legal counsel. So she said there was a lot of contract negotiations about shelf placement, right? And,

Starting point is 00:17:16 when I went in, I was surprised to see hostas had all of its, the twink boxes of twinkies and everything in the snack aisle, which, okay, it's a snack. But it's next to the healthy snack, right? Like, so, like, of course, as a mom, I'm going to pick, like, I'm going to pick this something that says like zero fat, zero sugar. And I'm not going to pick a Twinkie, right? So I felt like that was the placement of it. I know they want to be in the snack aisle. but they're almost, you know, like they should maybe be next to the Oreos or something. You know what? They should be next to something that kind of fits what their flavor profile is.

Starting point is 00:17:58 And then the other thing I was thinking about just to make it feel more comfortable is, you know, when you leave the grocery store, I mean, I know now there's a lot of self-checkout. But even if you go in, they have like the grab and go kind of thing. and so that's where they really should be focusing and putting those individually packaged products right there so that you can grab them and go right and like you know make it more like from a nostalgia perspective that's really what we're used to with Twinkies so I do I did think that was interesting and I think Rebecca you bring up a good point is that like where it is on the shelf matters you know ideally they say for example this is what my friend's shared with me. I love this. That anything that's like at like adult level is premium, right?

Starting point is 00:18:52 Like that's where mom and dads go to shop. Kids level, like if you ever noticed, cereals, sugary cereals, they're down lower because the kids are grabbing lucky charms, things like that. So I just thought that was an interesting thing because there is a lot of strategy. And I know Aaron and Rebecca, you as marketing people really, think about that and it just felt like that didn't make sense the product placement. And it was interesting because when I was in there, they had somebody was restocking some other shelves. And I could hear him on the phone talking to headquarters saying, well, I'm looking at it right now. And that's not where they have us placing it. So should I move everything? Right. And I thought,

Starting point is 00:19:38 you know what? He knew like he's not supposed to just put it right where the empty space was. He's like, we pay for this premium place of where we're placing this. So again, I think that there's a whole lot of dynamics here on whether or not smuckers really thought this out about how they should be really providing this experience to the consumers and the actual people out there. Well, it really goes back to that shopper experience and understanding what consumers buy together and eat together. There is a reason why there's children.

Starting point is 00:20:14 chips and dips next to each other. There is a reason why chips and colas are across the aisle from each other. There is a reason for that, and that's because you eat them together. So if you eat them together, why not buy them together? Right. So that proximity is really important, especially some of these more impulsive items, indulgent impulse items. You have to put them right where the consumer is more likely to be attracted to them and

Starting point is 00:20:42 want to buy them. the smaller convenience items are at the checkout. The bigger bags are in the aisle. But thinking through that whole shopper experience, from the minute they walk into the minute they walk through the aisle, if they go around the store versus through the aisle, thinking through every angle of that shopper experience and being at a hands reach.

Starting point is 00:21:03 I think that's really important too, because if we remember, it's a 65-day shelf life. It isn't like smucker. So putting it beside these healthy, organic things that just sit there, it doesn't work. So to your point, Rebecca, yes, putting it in front of the checkout, where it's more of that impulse buy because you know what you don't want to do is grab that Twinkie because you're saying, let me treat myself, but then you realize it's expired because they didn't realize it's been sitting in the back for the whole time. That is not great for

Starting point is 00:21:29 postis as a brand to, you know, if you're going to introduce yourself into grocery stores, if it's constantly expired and you're having to do recalls, that's not helping your brand as well. So really looking at that consumer and shopper marketing experience and thinking through that strategy is important. And, you know, I want to go back to the idea of, you know, using some of the smuckers brand and, you know, innovating some of the product, right? Like, why didn't they stress test this in the channel before buying it, right? Why didn't you play some of these? And again, they may have, right? I don't know, again, with the R&D and acquisition teams.

Starting point is 00:22:06 I know that there is a lot of auditing that goes around that, but I think stress testing this would have been really great because you'd have found immediately that the model for convenience stores is completely different in terms of the economics on the grocery shelf economics too. And so, you know, providing these stress tests, you know, tasting and bringing out new products where you can collaborate together is a way that, again, would. of really help boost both brands. And going back to something we always love to talk about, the experience, right? Maybe you had a little pop-up of the Twinkies times Smuckers blueberry jelly filled, right?

Starting point is 00:22:49 And you make it a bit of a moment there and you see and that's the stress test. And if it works, great. Maybe you roll it out into larger production. But I think they missed a mark on a lot of that kind of R&D. When I'm seeing, I sit on a board and they have a number of grocery stores

Starting point is 00:23:06 that they own and manage. And that is the sustainability in clean packaging and clean labeling. And private label is doing, at least I think, in many cases, a really good job of providing value, providing

Starting point is 00:23:22 clean labels, providing sustainability. It's the absence of the negatives that they're pulling out yet. The products still taste good, but consumers are getting what they're looking for, which is a cleaner eating experience. So that is something, too, that I think hostess could really look into.

Starting point is 00:23:40 Yeah, I think it's interesting, too. Thanks, Rebecca. That hostess wasn't sold. It wasn't a fire sale. You know, from my understanding, smuckers paid multiples for it. And I'd imagine they're envisioning a rosy future. But if you think about the economics of it, I wonder, you know, consumer trends are cyclical and they come and go. And we're on a health kick right now as a society.

Starting point is 00:24:01 But maybe we won't be a few years later. So I wonder if it's one of those hold it in wait type of scenarios. I don't know if that's the case because the revenues are downtrending pretty fast. So they can't just hold it and do no harm. It didn't turn out to be that type of situation. But I wonder if maybe a percent. Some of their thinking was let's just keep this status quo and then offload it to another buyer in a hot market. But if that's the case, it backfired.

Starting point is 00:24:34 Yeah, I think that you bring up a really good point, Erin, because you have to wonder, I mean, we talk about companies and we talk about acquisitions, mergers, bankruptcies, all the things, the transformations of companies all the time. And there's this due diligence that's involved in regards to whether it gets acquired, whether it goes through, you know, a reorganization, whatever, chapter, you know, 11, whatever happens. And it feels like they have the time to do their due diligence. And so I'm not sure if we're maybe, maybe we're missing the mark. And Rebecca, maybe you could tell us this. But maybe Smucker's actual, you know, I'm trying to give them the benefit of the doubt. Maybe their actual strategy was that

Starting point is 00:25:17 they wanted to become a bigger brand like Frito way, right? Where they're, where it's more than just smuckers jam jelly, right? Like that they were going to go. into multiple lines of food products. And maybe this was, you know, kind of putting their foot in here. Like they're like, oh, these are, you know, prepared snacks, you know, la la, la. This is a beloved brand. You know, we can do this. And yet they didn't really kind of think about how that was going to merge with their own current operations,

Starting point is 00:25:51 their own organizational culture, whether they even wanted to merge them. Because I think we just talked to, you know, I just mentioned Hershey's. and dots pretzels, right? Like, do you have to merge them or can you, you know, somehow use your forces and, and your seat at the table, Rebecca, right, to actually grow both and sustain both of those different lines? And then, you know, maybe it's like smucker enterprises ends up being like the big thing over the top, right? And then they have, they have, you know, these convenience stores now, they have hostess, they have smuckers, maybe they're going to have, you know, some other snack, you know. By Snyders and have a salty division. Right, you know, or a fresh division,

Starting point is 00:26:35 right? Like they're going to have, you know, like the protein packs that like Oscar Myers and all those guys do. So like anything. But I just feel like maybe we're missing something here that there was something in smucker's mind from a business strategy. I hope that they thought. But it's just, it doesn't seem like it's hitting the mark because if they're not, neither one of them is growing. I mean, This isn't a nonprofit. Hey, I'm wearing my quince shirt. It's blue. It's lightweight, which is non-negotiable for late summer.

Starting point is 00:27:05 I'm happy. I'm wearing my quince mini dress, which is a summer staple, particularly in this humidity. It's the hottest day of the year today. And I am cool as a cucumber in my quince. The thing I love about quince is that it's not just clothing. I have the luggage and they have bedding, bath, kitchen station. People's jewelry. Yeah, and I didn't have to go to the store.

Starting point is 00:27:32 That's something I would have picked out anyway. I really like it, but I got it at home. Love their stuff. It's really thoughtfully designed and very intentional. Upgrade your every day. Go to quince.com slash fixed it for free shipping on your order and 365 day returns. Now available in Canada and the UK too. That's QINCE.com slash fixed it for free shipping and 365 day returns.

Starting point is 00:27:57 Quince.com slash fixed it. If you've ever worked for any company anywhere, you know there's the process that's supposed to happen, and then there's what everyone actually does. The problem is most leaders can't see that gap, which makes it pretty hard to know it's actually worth fixing. That's why I like Scribe Optimize, which automatically discovers workflows across your approved business applications. No interviews, no workshops, just how work actually happens.

Starting point is 00:28:23 Its live dashboard gives you a clear view of how work gets done across all your teams. So you can see which tools are being used, where time is being spent, and where the biggest inefficiencies are hiding. And it doesn't just point those out. It explains why they're happening and recommends ways to fix them with estimated time savings built in. That's way more useful than just knowing where the problems are. What I also like is that this is about leadership visibility, not employee monitoring. In fact, user level data is anonymized by default and sensitive information is automatically redacted, and none of it ever leaves your firewall. So you're getting true operational insights without compromising anyone's privacy. To see S-S-C-R-O-O-T-O-T-O-T-R-O-P-O-T-R-E-O-T-R-E-E-T-I-T-I-T. I'm sure they're

Starting point is 00:29:15 looking at the indulgent snacks. The indulgent snacks are growing, but the question is, then there's some losers and there's some winners as there are with any category. But those that are women winning are highly innovative, right? So I remember being a PepsiCo food service division at the time it was called, and now it's Yum organization. And I was at, I was a marketing manager at the time. And the leader, our CEO, wonderful, wonderful leader. And we were trying to go into the more rotisserie chicken, as you might recall. And he said, we sell 20. $20 billion of fried chicken every year. I am not going to apologize for that.

Starting point is 00:29:56 So there was this need to be more healthier, but yet really embrace the indulgent nature of the core of the brand. And I think with them, with hostess, it is embracing that indulgence, but you do have to provide that more healthier snacking and different alternatives. Right. And I think with a merger and acquisition, it's so, I've seen so many, when you look at it financially, and you think about in the terms of creating this bigger world for the brand, it's very enticing. The financials may look great, right? They may look great. But it comes down to the cultures of an organization and how people are compensated.

Starting point is 00:30:40 Right. Think about the route service drivers, if they're a direct store distribution system. They're going to put the items on the truck that make the money, right? They're going to go to the business. big drops that make the more money. So there is a financial economic incentives already built in to your core business that have to be considered with a merger. And maybe they considered that or maybe they thought they would, we just keep the sales forces and the distribution systems totally separate. But it's usually one of the other wins. There's this type of war and there's

Starting point is 00:31:13 need for synergy to make the financials work that create that tension in the end that ultimately many mergers and acquisitions don't work because of that. The stakes get so much higher, the more you pay for that company and the more you pay for the brand. So Nathan's famous hot dogs just sold for, I think, $450 million. By comparison, hot dog on a stick that got offloaded for $8 million. And that's for an iconic American brand. I think between all of us, we could make some calls and raise $8 million. Maybe not, you know, we'd have to come up with more capital to revitalize it.

Starting point is 00:31:47 But just to own a piece of American history and just such an indelible brand over time, you will, I can see paying a vanity metric above and beyond what the current financials dictate. But when you pay that much more over and above based on futures, the stakes get incredibly high. Exactly. there was when dine was formed, Dine Equity, and that's a combination of I-Hop Applebee's being acquired. I-Hop acquired Applebee's and became Dine. And one of the ideas was to combine the two, right? Put them both under one roof, had one central kitchen.

Starting point is 00:32:29 You provide breakfast, lunch, and dinner, 24-hour snack, eating. It's going to be big and beautiful. Well, the franchise structure was so different that you couldn't I mean, you could build the building, but the way the business models were set up, individual franchisees versus very large franchisees on apples, that just wasn't going to mix. And I think 15 years later, they're testing the IHop Applebee's under one roof. But it took a really long time. And we always called Dine at the time when I was there and we were starting out. It was a $9 billion startup.

Starting point is 00:33:07 And that's how we thought about it. Well, and I think that it gets back to what is the consumer behavior in consumer psychology, because was it here that we were talking about IHOP? I can't even remember where I talked about IHOP. But I think it might have been our first season, that we talked about IHOP and they were trying to do the change it to like a burger. Like, right? They had like a burger instead of the pancakes. Off peak hours. Yeah.

Starting point is 00:33:37 Yeah. And I was like, I'm going to IHOP at 6 p.m. for pancakes still. Like, what is this? Like, you know, I don't want IHOP to be my burger place, right? That's around the corner. That's, you know, apple bees or chilies or something else. So I think it's very interesting because I think that like when you try to really like push your strategy or push, you know, your objective into something that isn't really there, that's when it causes a lot of problems. And I wonder if with smuckers and hostess, did they try to, you know, maybe they should have really done more design of the operations and the organization around the customer's buying patterns and the customer's behaviors versus just trying to merge those two existing structures?

Starting point is 00:34:26 Because it just feels like neither one of them has really benefited from either. and really, you know, you could really see that an integrated coverage and integrated business plans could really work. But it's because the products are different, because the products have different selling cycles and growth cycles, we really have to think about how you really build that and how you continue to grow that. And Rebecca, I mean, you hit that, you hit it right at the beginning when you said, and consumers are fickle, not. but their tastes change, right? And so now we're all looking for these healthy convenience snacks, right? You know, so how do you kind of lean into that? And, you know, you can say this ain't, this isn't your mother's twinkie anymore, right? It's a gluten-free filled with amazing, fresh berry jam, you know, snack. It tastes just as good. It's, it's, you know, you get that

Starting point is 00:35:30 little sweet treat that you wanted, and it's individually wrapped, so it's easy to put in a lunch bag or put it in, put it in the car, whatever you want to do, right? Yeah, Melissa, you make a great point. It's no longer one-size-fits-all, like it used to be, right? It really comes down to occasions and segments and becoming more personalized, which is hard for big manufacturing concern, because it's easier to make the same, replicate the same thing over and over and over again. That's how your economies of scale work. But now you're having to, okay, maybe this, you're putting yogurt into the Twinkie, and here you're putting chocolate, and here you're doing small packs,

Starting point is 00:36:08 and here you're doing big packs, and here you're doing gigantic packs. There's a lot more complexity thrown into the system, which means your innovation pipeline has to be clearly laid out, and the whole organization has to make it shift. It's not just throwing a product out there. It's a whole organization has to be able to adapt, and change over time. Yeah, and if you're having trouble keeping the machine running, just as it is with your

Starting point is 00:36:35 core product, is that the time you're really going to double down and put more money into R&D and create this long-tail strategy of here's what our product will. It's going to look like. Are you just worried about, we got to sell more units? Exactly. When I was working on Cheetos, I love that brand. It's such a wonderful brand. One of the critical decisions we had to make, because it wasn't growing for a long time,

Starting point is 00:37:00 was who do we serve? At the time, was it moms that actually buy the product or was it kids that actually consume the product? And that was a big decision that it was a major decision because the marketing would go into very different directions, right? And we chose at the time, because we could target the actual kids. Get kids to ask for Cheetos by name. Mom, bring me the Cheetos.

Starting point is 00:37:28 Don't bring me the other stuff. Bring me the Cheetos, yes. And we did all kinds of fun things. Took a long time to get the organization. I remember asking, I just need six months, one Cheeto shape. We're going to introduce Paa's. Six months, one bed. And that was all we got.

Starting point is 00:37:49 I love it. You know, the Cheetos is funny because my daughter at her middle school when she was a couple, 10 years ago. They banned hot Cheetos. Yep. Because they made the desks all that red. I loved it. They called it out. They were like, they sent a note to all the parents.

Starting point is 00:38:11 Like, no hot Cheetos were allowed at the school. That's funny. But that goes back to innovation and being, and really understanding walking a mile in your customer shoes. And it's so easy to market to yourself, right? I wouldn't do that, says the marketer. Well, are you really the target? Can you really walk in the mile of that mom, that busy mom?

Starting point is 00:38:39 I was a busy mom with three children, sports and band, and you name it. I mean, I needed to bring the snacks that day. How do you really understand that I have five minutes to choose the snacks and be at the soccer field? Do you really under, if I'm a C-store customer, I may be a construction. worker, filling up the, who is the customer, who is the consumer, and how do they use your product? That's a huge question to answer, because we can functionally all eat Cheetos. We can functionally all eat Twinkies. I saw a Mountain Dew commercial recently from the late 80s or maybe early 90s, and it had a cowboy in it drinking Mountain Dew. And yeah, it's in the name. It's, you know,

Starting point is 00:39:23 mountain, but there were no gamers. There were no, you know, youth generation. It took a while figure out who's this product for. And once they did, it took off like lightning. But, you know, it had no no core identity before that. It was just another option. Absolutely. Well, I want to talk about like the heritage brand. We talk about innovation. And I think the other thing too is, again, they were coming in at a deficit. So they didn't have all the money in the world to, you know, come up with all of these different product lines, which is why, again, understanding who that customer is that they're serving when it comes to host it. So if we were discussed it now and to like dive into this brand, you know, it's people who are open to indulging, right? And I think, again,

Starting point is 00:40:04 leaning in on that would be great. I do like the idea of making, like, a healthier option for more of those grocery stores. But at the end of the day, a Twinkie is a Twinkie. And this heritage brand is known for being that kind of guilty pleasure that you run to the convenience store to go and grab and get your little click fix. And I don't think that's something, even though the market is saying, you know, yes, we want to be healthy. There's also a lot of people who are saying, I'm also sick and tired of seeing everything being green and having protein. I just want to enjoy, you know, my little sweet treat.

Starting point is 00:40:38 And maybe lean into that and kind of poke fun that. We talk about that a lot in different episodes with brands being self-aware of what's going up and almost being the anti what's happening and being the name of, if you're going to pick a sweet treat, go and grab a Twinkie. And, you know, we've created these different, you know, little collaboration with Smuckers. And now you can get your little blueberry jam Twinkie as a test. But we can't have a thousand product lines. So do, you know, pick one or two in different markets, test it out.

Starting point is 00:41:11 And also see where that makes sense. Because right now their biggest challenge is, are you a grocery store item or you live in the convenience store still? And until they can get bad answered, it's really hard to kind of move forward. Hey, I'm wearing my quince shirt. It's blue, it's lightweight, which is non-negotiable for late summer. I'm happy. I'm wearing my quince mini dress, which is a summer staple, particularly in this humidity. It's the hottest day of the year today, and I am cool as a cucumber in my quince.

Starting point is 00:41:43 The thing I love about quince is that it's not just clothing. I have the luggage, and they have bedding, bath, kitchen staples, jewelry, Yeah, and I didn't have to go to the store. That's something I would have picked out anyway. I really like it, but I got it at home. Love their stuff. It's really thoughtfully designed and very intentional. Upgrade your every day. Go to quince.com slash fixed it for free shipping on your order and 365 day returns. Now available in Canada and the UK too. That's QI-N-C-E dot com slash fixed it for free shipping and 365-day returns. Quince.com slash fixed it. If you've ever worked for any company anywhere, you know there's the process that's supposed to happen,

Starting point is 00:42:30 and then there's what everyone actually does. The problem is, most leaders can't see that gap, which makes it pretty hard to know it's actually worth fixing. That's why I like Scribe Optimize, which automatically discovers workflows across your approved business applications. No interviews, no workshops, just how work actually happens. Its live dashboard gives you a clear view of how work gets done across all your teams. So you can see which tools are being used, where time is being spent, and where the biggest

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Starting point is 00:43:38 I agree with that is being very clear in who you serve, who should target audience, and also strengthening the core. You're not going to product extend off a weak core business. It's not going to work. All we'll do is fall in itself. So how do you strengthen the core? It's getting your distribution right. It's getting your quality right.

Starting point is 00:43:58 Getting the marketing right. I went back and looked for really good marketing. I couldn't find really good current things. Yet I'm on TikTok all the time and there's tons of people baking. Where's the visibility of the brand in? today's context. And that is an innovation. That's just really great marketing, right? Not in a way to be in the culture. Yeah, I'm with you. I feel that vacuum too when I was trying to think of those indelible impressions lately of Twinkies or even open it up to hostess. It doesn't, they don't feel like

Starting point is 00:44:30 they're in the moment. But I think too, like even when we open this up, Melissa, you says it like, you know, you had the Twinkie in your lunchbox, as many people have. But you didn't realize that it was only 65 days. I actually thought it was like something that you have. in a bunker. So even just, yeah. So that was actually discovery upon doing this episode. And again, I'm not, you know, Gen Z. I'm not the one that is, you know, necessarily reaching for these sweet indulgent treats or the mom that's saying, okay, my kid mom's a Twinkie. And so if at this level, we don't understand your brand now, there's a lot of education you need to do as a brand. And I think Smuppers needs to look at that as well because we don't know what a Twinkie is anymore.

Starting point is 00:45:17 We know it as the convenience source. So bring it back to the forefront. Maybe help us redefine it. Maybe it is the sweet sheet we grab and that's what you're trying to sell us. But also remind us out it's 65 days because, again, we just don't have any impressions as of late as to what Twinkie is. And so for Smuckers, seeing that, I think that was in this as well and something and an opportunity for them to really lean into some more. It's interesting because I just went on the smuckers site to look at their portfolio. So the sweet bake snacks, which is hostess, this is all the hostess stuff is on there. They have,

Starting point is 00:45:55 obviously, the smuckers that we know and love the jelly. They have Jif peanut butter. And they have uncrustables, which are huge right now. Uncrustables are a big, big deal. So that's a wonderful thing. So that's probably where they're making all their money. Let's just be honest. Like, you know, everybody's talking about uncrustables. they have coffee which i didn't even realize folders duncan coffee like what like donkin like what the heck yeah and so and they have pet stuff right and i was going to use general mills and buffalo uh dog food as an example but i didn't but and i i thought that was funny but like they have milk bones paparoni's like all those that's under so again when we

Starting point is 00:46:41 when I originally mentioned, like, what is the smucker company's strategy, business strategy? It looks to be like they're trying to be the General Mills, the Frito Lays of the world, you know, the, the companies that have this expansive portfolio, I just think that maybe the snack division, they kind of, it was a little bit of a miss because they didn't think of, you know, like I think that there are other snacks like goldfish and like, like, other things that might have been a better fit, like, you know, for their ultimate portfolio. Yeah, let's give Smucker some credit because they, after saying that and hearing that, they're not new to this acquisition. They've figured out how to turn these brands around and create the multi-category experience. And they've done it successfully. So I don't know if they just bit off more than they could chew this time or it was just really a mismatch from the start. but maybe they have some grand vision that they're waiting to put out this magical 14 point plan

Starting point is 00:47:44 and it's all going to turn around but I think we'll get to we'll get to the fix before they do that's for sure well I want to fix it I've got some some thoughts from what we've all been saying I think we if they are at the the convenience store level that's where they're moving let's lean into that I like the idea of the grab and go and really making that prominent invisible. I'm picturing those standalone stands. I would say something like, don't forget the Twinkies and just make it, let's try to build the consumer habit, the habitual nature of, of course, you're going to need Twinkies on your way out. If they're not in the moment, the cultural zeitgeist moment, we're just forgetting that Twinkies and hostess are around. I would lean into

Starting point is 00:48:25 product placements, get them into the summer blockbusters, get him into the movies, whatever the next video game version of Fortnite is, like, you know, make your Twinkies be skins and beams. Just make sure we all remember that Twinkies and hosts are still around. I would get dietitians to be talking about Twinkies as a sometimes food or an acceptable indulgence. Maybe that's the word that I would use and try to push that agenda because, you know, out of all the things out there, if you have a Twinkie once in a while, it's probably not the worst thing for you. And if we can get some alignment and just own that a term like acceptable indulgence and link it back to Twinkie, that would be pretty, could be pretty magical at the, at the, at the, at, the register. I don't know how we feel about mascots and Twinkie the kid, but they've got something there potentially. It's right there. They bought it. So maybe that's something that could be leveraging

Starting point is 00:49:18 and get Twinkie the kid to have his own social feed and comment the way that Twinkies would. And yeah, let's go with the ingredient brands because they've got a full product across all those product lines. They can mix and match any number of ways, including, you know, Smuckers Jam. Why not? I completely agree. That would have been a great market test, the signal, are we compatible? Do we belong together? Because if the answer is no, they could have saved themselves a lot of money. But, you know, it may not, Rebecca, with your experience, it may not uplift Twinkie's grape. But it might remind us all that Twinkies original is what we love and then we all buy more of it. So I would love to, you ought to plus this up and add to it. But that's, that's, that's, that's,

Starting point is 00:50:07 from what we all talked about, that's my fix. And I, you know, did we fix it? Chino, what do you think? I think we did. We gave them some things to think about, you know, famous does not mean easy. Schmuckers took on a lot with buying the hostess brand. And there's completely different operational strategies here.

Starting point is 00:50:31 And so consolidating the two would be really important. Again, testing in the market is really important. understanding the client and making sure that you also remind us who your brand is. And I love a lot of these ideas. So I think that if they actually listen to us, Mark Smucker, if you can call us, we'd love to have you on. And I think we can give you some help with moving forward. Thank you, Chino.

Starting point is 00:50:58 Melissa, I feel free to add, but do we fix it? I think we got it started. I think that there's, I loved what you said, Aaron. I think there's a lot of great things there. I think one of the things is that I would love if they had a freshness display. So for those short life, short shelf life items, you know, you oftentimes see those in it in their own display case. You know, like you've seen the crispy cream donuts at the front or things like that. I think if they did something like that, that, I mean, I didn't even realize it was such a short shelf life.

Starting point is 00:51:30 I think that would also, that product placement is really important. And I think like doing some cross-pollination with these other brands, like it would be fun for them to say, hey, moms, don't have to think about it. Here's an easy lunch thing. And you got the uncrustables. You've got a ding-dong to add in for a sweet treat and then add in some, you know, some carrots or whatever else you want to add in. And you've got lunch to go, ready to go. And here they are and either have coupons ready to go or showcase that. I do think that's important.

Starting point is 00:52:03 And I love the idea of, like Rebecca said, the constant consumer tastes that are changing, that really testing those out. And I think we've seen this in some of our other episodes where, you know, tested out regionally, tested out seasonally, tested out locally. But really listen to your and really observe what their behaviors are. Like, do they think that that idea of like a blueberry-filled twinkie is just disgusting? like don't do it then, right? But like what is the other options that you have available to you? And I think that they will definitely be able to kind of build, continue to build and grow both of those brands.

Starting point is 00:52:45 Thanks, Melissa. Rebecca, everything we're suggesting is going to cost even more money to double down or triple down and revitalize and throw more resources at it. Is it worth it? Do we fix it? What's the choice? The choice is continued sales decline and revenue. line on this incredibly iconic brand that has so much emotional resonance, right? So I think it's an

Starting point is 00:53:11 opportunity to test. Innovation is all about test and learn. Number of quick tests. It doesn't have to be extremely expensive to learn quickly. It takes a lot of imagination and it takes some resource dedication. But go ahead and think about what is strengthening the core brand. Do I have the right quality product. What's my value, variety, and visibility play for the core? And then you add more, right? You could add the smuckers jelly, but is that going to resonate with whoever the target is? If it's in the C store, that's going to be different than in the grocery store. So really thinking through the start with your product. Get the product right. And then make sure you've got good visibility because there's just so much.

Starting point is 00:54:01 to choose from today and making sure that you stand out particularly in social and digital media. You don't need, it's good to have the big giant advertising budgets, but you don't need them anymore. You know, digital media has become the great equalizer. So finding the right partnerships,

Starting point is 00:54:22 the right platforms. I think it just needs a little imagination. You know, within their brand portfolio, I think Duncan, maybe they just own the coffee side, but the Dunkin' Donuts flavor, team up even outside their brand portfolio and do Starbucks pumpkin spice latte flavor. You know, again, we may not sell a billion of those,

Starting point is 00:54:42 but if we reawaken the core brand itself and just remind us all that Twinkies and hostess or should be part of our everyday life and awareness, like that can do a world of good. It's baked and play off the bait. Baked is generally where I perceive to be one of the healthier cooking platforms. Play off that.

Starting point is 00:55:00 baked and then bring in, you know, bring in some those smuckers flavors that have a healthier halo associated with them. And then go from there. I'm waiting for a raspberry filled, Rebecca. I would. I love it. Oh, that would be any berry filled, anything berry and yogurt filled. I mean, there's just so many ways. And I don't know. Very and yogurt. Like, can we, you know, like, there are a lot of ideas. You have to fall out of time. You put. Now I'm hungry again. Oh, my. my goodness. We did it again. They need a CMO whisper, Rebecca. That's what they need. Anytime. That's going to do it for this sweet, sweet episode of We Fixed It. You're welcome. Thank you, Chino. Thank you, Melissa. Before we go, special thanks to Rebecca Johnson for helping us kick off season four. We couldn't have done this one without you. Rebecca, how can everyone keep up with your CMO whispering and what you're doing? You can look me up on LinkedIn and it's Rebecca with 1C, Rebecca Johnson. So happy to help. Thank you, Rebecca.

Starting point is 00:56:00 Thank you to you, our listeners, whether you're a long time fixaholic or you're tuning in for the first time. We appreciate you. If you love this episode, you're welcome. There's a lot more to come. If you didn't, we just talked about Twinkies for an hour. I don't know how to make you happy. But either way, back for the next one. And you can also catch up on our archives at we fixeditpod.com.

Starting point is 00:56:21 And we've got a huge season ahead. Lots more where this came from. So get ready for that. And we will see you next time. We hope you enjoyed this episode of We Fixed It, you're welcome. We go into every episode somewhat cold, and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble.

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We Fixed It, You're Welcome - Getting Twinkies Out of a Jam | Saving Smucker's Hostess Acquisition

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