Dive Brief:
- Hostess Brands, Inc. reported net revenue of $184.5 million in the quarter ended March 31, an increase of 15.2% or $24.3 million when compared to last year at the same time. Net income for the first quarter came in at $24.2 million, an increase of $11.9 million, compared to last year.
- The company’s gross profit came in at $79.3 million, an increase of $9.2 million, or 13.2% year over year.
- “We are pleased with our strong start to the year and continued ability to gain market share,” Bill Toler, president and chief executive officer, said in a statement. “Our 2017 new product initiatives and our holiday and seasonal programs provided solid growth in the first quarter and we are optimistic about their potential for the year."
Dive Insight:
Hostess hasn’t been shy about innovating products in the sweets space during the last year, as it’s teamed with Nestle to release a line of collaborative ice cream products under Hostess brands, such as Twinkies, CupCakes and Sno Balls; released Deep Fried Twinkies in the frozen aisle; and teamed up with Kerry Convenience to enter the hot dispensed beverage category.
The company’s decision to tap into existing, well-known brands is a trend that has been growing throughout the food industry, and Hostess’ strategy seems to be a sound one, with sales coming in strong this quarter. Other new launches for 2017 included Chocolate Cake Twinkies, Golden Cupcakes and White Fudge Ding Dongs.
Nielsen’s U.S. SBG category data revealed Hostess ranks second in market share within the Sweet Baked Goods category. It is the leader in both the donut and snack cake segment. Its new product initiatives and holiday and seasonal programs provided solid growth in the first quarter and the company is optimistic about the rest of 2017.
Looking ahead, the company projects net revenue of $781 million by the end of the year. Hostess has not been shy about its willingness to embrace snacks and sweets. Almost a quarter of all snack food eating (24%) now occurs during main meals, up from 21% five years ago, according to a study from The NPD Group.
In its earnings release, the company said it is well positioned to grow and enhance shareholder through a series of programs. "These key strategic initiatives are focused on further core distribution expansion, continued new product initiatives and line extensions, the pursuit of white space opportunities and serving as a platform for future acquisitions," the statement said.