For a few dark months America's store shelves were empty of Twinkies, DingDongs, Suzy Q's, HoHos, SnoBalls, and the rest of Hostess' iconic lineup.
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That changed in July 2013 when the beloved snack-cakes made a triumphant return, having been gone since November when their parent company went out of business. Under new owners -- private equity firms Apollo Global Management and C. Dean Metropoulos & Co -- Hostess made what it billed as "the sweetest comeback in the history of ever."
The new owners paid $410 million to bring the brand out of Chapter 11 bankruptcy, leading to the reintroduction of the tasty treats. Now Apollo and Metropoulos & Co have flipped their purchase to Gores Holdings(NASDAQ: GRSH), which Reuters described as a special purpose acquisition company (SPAC) -- an investment structure that allows public stock market investors to invest in private equity transaction.
The deal, which includes debt, has a total value of $2.3 billion, according to Hostess. When the deal closes Gores plans to change its name to Hostess Brands Inc.
In advance of that transaction closing Hostess has a new surprise for consumers. It plans to move its product line from your cabinets into your freezer by bringing a state fair favorite to its lineup.
Hostess has a number of recognizable products. Image source: Hostess.
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What is Hostess doing?
Twinkies essentially started the trend of state fairs frying things which were not traditionally fried. The snack treat was perfect for frying because it has a cake outside along with a creamy filling in the middle. That allows it to stand up to the frying process which has since been applied to candy bars, cookies, and even butter.
Now, Hostess has worked with Wal-Mart (NYSE: WMT) to introduce Deep Fried Twinkies, its first attempt at frozen food, The Chicago Tribune reported. The cream-filled snack, which took a year to create, will come in both chocolate and vanilla flavors.
The deep-fried treat comes battered and partially fried with consumers needing to finish the product in an oven or frying pan. A box of seven costs $4.76, The Tribune reported, and for three months they will be exclusive to Wal-Mart.
And while both Hostess and Wal-Mart have recently made efforts to offer healthier products, this will not be one of those. Each Deep Fried Twinkie comes in at nine grams of fat and 220 calories, compared to 4 grams and 130 calories for the regular version.
Why is this a good idea?
The current trend in fast food has been to go outlandish. Mixing two popular products like Taco Bell has done with its Doritos Locos Taco or Burger King with its Mac n' Cheetos, brings publicity and immediate consumer interest. When people know the brand and have a sense of how it will taste, they are willing to sample which can help a new product standout.
In this case, Wal-Mart and Hostess are taking a familiar product and serving it in a way people have heard about and maybe even tried, but have never been able to eat at home. The curiosity factor should be very high and people are likely to view this as an indulgence, not a regular food item, so they should be willing to overlook the calorie and fat count.
The smartest piece of this may be opening up a new part of the grocery store to Hostess. Many candy brands have ice cream spin-offs and moving into freezers with a novel product could just be the beginning for the company. Deep Fried Twinkies are a good idea -- a novelty which should drive at least short-term sales. In the long-term, this could lead customers to look for variants on brands they know in other parts of the grocery store.
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Daniel Kline has no position in any stocks mentioned. He once had a deep-fried Oreo. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.