There is a lot of chatter this morning on the demise of Hostess, the maker of the always well-preserved Twinkie. Predictably, sides are lining up blaming the bakers’ union and private equity investors. But let’s try to strip away the emotion from this issue and look at it rationally.
Americans like to eat. More importantly, they like to eat stuff that tastes good. The market has answered with more choices and better taste. Walk into your local convenience store and today you will see fresh baked goods and other fast foods under warming lights tempting the passerby. Out of the way, around the corner, you will still find packaged snack cakes of a less recent vintage at a price that often exceeds the fresh offerings. Stop by the grocery store and you are likely to see several kinds of fresh baked bread and rolls in addition to the pre-packaged, preservatives laden offerings from the likes of Hostess and Sara Lee.
Grocery stores and convenience stores are not in the business of changing trends. They compete to offer what the customer demands at a price that makes them a profit. If consumers picked the pre-packaged items and panned the fresh stuff, you can bet your last dollar that the grocer would meet that demand with more Hostess snack cakes and less fresh items. And if demand was such that Hostess sold more product, labor costs would not be the issue that they are today.
The world changes. Tastes change. The wealth of a society can be measured by the choices made by its consumers. What passed for tasty a generation ago is no longer the preference of the masses. This is creative destruction. It may be messy and it may be cruel but it is essential if the marketplace is to provide for the wants of the consumer.