January 13, 2013
Wonder Bread lives!
The wonder of capitalism includes an ability to correct failures and preserve the useful parts of failed endeavors. Compared to government projects, whose failure usually leads to increased budgets, capitalism conserves resources, and builds on success. The bankruptcy of Hostess Brands, which generated tremendous publicity for the company's brands including Twinkies, Hostess Cupcakes, and Wonder Bread, is demonstrating the self-correcting nature of market mechanisms. Flower Foods is the leading candidate to purchase six brands from the Hostess bankruptcy trustees, through a "stalking horse" auction. That means that other bidders still have an opportunity to surpass Flowers' $390 million bid, but if not, Flowers will make and sell Wonder Bread, Nature's Pride, Butternut, Home Pride, Merita, and Beef Steak brand products. My guess is that Flowers will do an excellent job of reviving these products and will prosper. The company is a type that I have seen flourish in many industries:...(Read Full Post)