- Hostess Brands is moving its corporate headquarters from Kansas City, Missouri to Kansas City, Kansas. President and CEO Andrew Callahan said on an earnings call with analysts earlier this month that the relocation will save the company tax money and allow for "additional consumer-driven profitable growth."
- The maker of Twinkies, Ding Dongs and Ho Hos will receive tax incentives and tax credits from Kansas and local governments starting a year after the move, according to the company.
- Hostess also plans to build a consumer research center, which will be located at the same site as the headquarters. It will contain a laboratory, sensory test kitchen and focus group space, the company said. The new facility is scheduled to open during the first half of next year.
Hostess Brands stands to gain tax incentives and tax credits from state and local governments in Kansas, plus it will presumably be able to cut operational costs by locating its new R&D center with its corporate headquarters.
Callahan said on the call that Hostess found it "cumbersome" to try and collaborate and coordinate with its R&D team in a separate facility. He said that work proved more expensive and time-consuming in two places. The company is hoping that the move will improve its in-house innovation capabilities and expand capacity for new product development.
"So the ability to co-locate makes us … much faster, makes us much (more) nimble. It enables us to look at a breadth of ideas a lot faster, so our R&D team can really do faster prototyping and testing and other things related to our products," he said in a Seeking Alpha earnings transcript.
Several other major CPG companies have relocated their headquarters in recent years. Conagra Foods moved from Omaha, Nebraska, to Chicago in 2015, shedding 1,500 administrative positions in the process. The food maker was able to leverage Illinois tax incentives and potentially attract staff by doing so, according to The Wall Street Journal.
In 2017, Nestlé relocated its U.S. headquarters from Glendale, California, to Rosslyn, Virginia. The world's largest food company said more than $16 million in state and county tax breaks helped fuel the move, along with close proximity to Congress and lobbyists.
Earlier this year, Mondelez International also announced it would move its global headquarters and more than 400 employees from the northern Chicago suburb of Deerfield, Illinois, to a new office building in downtown Chicago. The Chicago Tribune reported no tax incentives were granted to entice Mondelez to relocate.
There are other incentives beside tax breaks that can prompt food companies to move. Mondelez spokesman Thomas Armitage told the Tribune that being part of the Windy City's booming foodie and tech scene will help to connect the company to "a city that represents the millennial vibe." The location could foster consumer insights and also appeal to prospective employees, he added.
Cities and counties are appealing to food companies through tax breaks, employee referrals, related infrastructure services and existing supply chain resources. The Midwestern region is especially targeting manufacturers and processors by touting access to transportation and employees, plus proximity to food firms already there.
The success of such efforts may indirectly cost taxpayers through tax incentives and credits, but states and local governments could also see hundreds or even thousands of new employees relocating to the area. In addition, the spending they bring and the taxes they pay could have a positive impact on the area.