- Hostess Brands announced Monday the completion of its acquisition of in-store bakery company Superior Cake Products, maker of the Superior on Main brand of sweet goods.
- Superior Cake Products also manufactures premium baked goods sold through in-store bakeries at retailers, which is a fast-growing segment, according to data from Nielsen Perishables Group FreshFacts.
- This is Hostess' first acquisition since the brand reappeared on the market with new owners, Apollo Global Management and Metropoulos & Co., in 2013.
Hostess has long been a legacy brand in the baked and sweet goods segments. But since its return and new ownership, the company has been focused on innovation and strategic expansion beyond the Twinkies and Zingers.These moves have ranged from adding bread to its portfolio and adopting trending flavors, such as Pumpkin Spice Twinkies, to partnering with other manufacturers to create cross-segment indulgent products.
But the first acquisition for a "new" company is a major step and signifies both the plan for expansion and a direction for that expansion. For Hostess, that's continuing to move toward innovation, which is a key selling point for Superior's products, and category expansion, with a focus on premium products and the in-store bakery channel.
Hostess CEO Bill Toler calls the acquisition a "powerful opportunity" for the company to capitalize on "the upward indulgence trend in the baked goods arena." The concept of "upward indulgence" is being seen in other categories, particularly chocolate, where major manufacturers like Nestle and Hershey are putting more emphasis on premium chocolate products. These have included the expansion of Nestle's Cailler (Swiss) and Damak (Turkish) brands into the U.S. or Hershey's 2015 launch of Hershey's Kisses Deluxe or recent acquisition of barkTHINS.
With its new acquisition, Hostess maintains its focus on innovation while moving into the premium and fast-growing in-store bakery channel. This positions the company to potentially reap financial benefits more quickly and make more strategic acquisitions in the sweets space, which continues to be strong, as even health-conscious consumers purchase indulgent products.
Late last year, Hostess was rumored to be in talks to purchase Give and Go Prepared Foods Corp, according to Reuters sources. Give and Go is a Canadian manufacturer of thaw-and-serve sweet baked goods, including Two-Bite Brownies and Kimberly's Bakeshoppe cupcakes. That deal hasn't moved forward, and Hostess was one of several bidders for the company.