The Rise And Fall Of America's Favorite Junk Foods | Rise and Fall | Business Insider Marathon

Summary

The video explores the rise, fall, and attempted resurgence of iconic American brands: Kraft Cheese, Jell-O, and Twinkies. Kraft revolutionized processed cheese but struggled with health concerns and shifting consumer preferences. Jell-O, once a symbol of wholesome family values, lost popularity as it became associated with artificial ingredients. Twinkies, initially a beloved snack, faced multiple bankruptcies before being revived through strategic changes. Despite setbacks, these brands remain culturally significant, showing resilience in the face of changing consumer tastes and economic challenges.

Takeaways

• 😀 Hostess went bankrupt twice before being revived by private investors Andy and Dean in a 363 asset sale.
• 😀 The investors acquired Hostess for $410 million, which included Twinkie recipes and five factories but no employees or inventory.
• 😀 Hostess transformed its distribution model from direct store delivery to a warehouse-based model to improve efficiency and reduce costs.
• 😀 To improve shelf life, Hostess invested millions into reformulating Twinkies to last up to 65 days, rather than the previous 25-day limit.
• 😀 With the new shelf life and distribution model, Hostess could deliver Twinkies to drugstores and dollar stores, expanding its market reach.
• 😀 Hostess focused on increasing factory efficiency, aiming to produce a billion dollars worth of cakes annually with a fraction of the labor and factories.
• 😀 Product innovation was key, including the introduction of mini Twinkies, although the product line was eventually refocused on indulgent versions.
• 😀 Twinkies' return to stores in 2013 generated massive buzz, leading to the tagline 'The Sweetest Comeback in the History of Ever.'
• 😀 In its first year after the revival, Hostess generated $555 million in revenue and achieved profit margins of 27%.
• 😀 By 2015, Hostess was producing 400 million Twinkies annually and saw a dramatic rise in profits, with Twinkies making up 80% of their output.
• 😀 The company was later taken public in 2016, with an IPO valuing Hostess at $2.3 billion—nearly five times what was paid for it.
• 😀 The success of Hostess continued through the pandemic as consumers bought more processed foods, and by 2020, net revenue reached $1 billion.

Q & A

How did Craft revolutionize the cheese industry in the early 1900s?

Craft revolutionized the cheese industry in the early 1900s by developing a method to create processed cheese with a longer shelf life using an emulsifier. This method allowed the company to mass-produce American cheese, which became highly popular, especially during times like World War I when the U.S. military needed non-perishable foods.

What role did World War I play in Craft's success?

World War I played a significant role in Craft's success as the U.S. military needed vast amounts of non-perishable food for soldiers. Craft supplied over 6 million pounds of cheese, which solidified its position in the market and accelerated its growth.

What challenges did Craft face in the early 2000s regarding its product ingredients?

In the early 2000s, Craft faced challenges regarding the ingredients in its processed cheese, particularly with the use of milk protein concentrate, which violated FDA labeling standards. As consumers became more health-conscious, Craft responded by relabeling products and removing certain ingredients like trans fats, but it struggled to regain its previous market dominance.

How did Craft attempt to adapt to the growing health-conscious market in the 2000s?

Craft adapted to the health-conscious market by removing trans fats from its products and introducing low-fat cheese options. However, despite these efforts, sales did not see significant growth as concerns about ultraprocessed foods continued to rise among consumers.

What happened to Jello's popularity in the 1970s and beyond?

Jello's popularity began to decline in the 1970s as its association with wartime rations and its image as a cheap, sugary snack made it less appealing. By the '80s, Jello struggled to maintain its status, with its image shifting from a wholesome family food to a diet food, contributing to its decline.

Why did Jello try to rebrand in the early 2000s, and what was the result?

Jello tried to rebrand in the early 2000s by promoting its sugar-free options to align with the growing low-carb and diet trends. However, this move was not enough to revive sales, as Jello's artificial ingredients and added sugars were seen as less desirable by health-conscious consumers.

What factors contributed to the decline of Twinkies in the 1990s?

Twinkies faced a decline in the 1990s due to changing consumer preferences for healthier foods, with the rise of low-carb diets and growing concerns about sugar and preservatives. The brand also struggled with inefficiencies in manufacturing and high delivery costs, which negatively affected profitability.

What were the major challenges Hostess faced leading to its bankruptcy filings?

Hostess faced major challenges, including increasing debt, outdated manufacturing processes, high labor costs, and a shift in consumer tastes towards healthier snacks. These issues culminated in two bankruptcy filings—one in 2004 and another in 2012—before the company was finally restructured.

How did the public react to the potential end of Twinkies in 2012?

The public's reaction to the potential end of Twinkies in 2012 was one of nostalgia and panic, with many scrambling to purchase the iconic snack before it disappeared from shelves. This led to a temporary surge in demand, highlighting the strong emotional attachment to the brand.

What was the key to Twinkies' survival after Hostess' second bankruptcy?

The key to Twinkies' survival after Hostess' second bankruptcy was its strong brand recognition and nostalgic value. Investors saw the potential in the brand's iconic status and were able to successfully rebrand and relaunch Twinkies, ensuring its continued presence in the market.