Hostess Brands is rolling out its newest product with Kazbars, a candy-bar-inspired innovation the company says will bring a unique product into the snacking category while helping the owner of iconic brands such as Twinkies and Donettes shed its reputation among some consumers as a tired old brand.
Hostess Introduces New Snack Brand to Modernize Category
Kazbars incorporates chocolate cake and cream — ingredients that already appear in many of the company’s iconic offerings — and repackages them into a new product.
The addition of crunch from candy crunch pieces along with a gooeyness from fudge and caramel, attributes Hostess borrowed from other snack brands already on the market, are new for the Kansas- based company and allow it to create a different eating experience. The product, which will hit shelves in mid-March, was first rolled out publicly to analysts this week attending the Consumer Analyst Group of New York conference in Florida.
When Andy Callahan took over as CEO in 2018, the storied maker of Twinkies, Ding Dongs and Donettes was rebounding from bankruptcy and the purchase out of liquidation by private equity firms. Callahan, a former Kraft executive, quickly went about streamlining Hostess’ portfolio, replenishing its innovation pipeline and positioning the company to compete in an increasingly crowded snacking space.
The innovations have shown signs of paying off.
Hostess is among the fastest-growing companies in the snacking space, with revenue and earnings growth significantly outpacing its competitors. It has posted 12 consecutive quarters with net revenue growth of at least 9% and the Hostess brand’s market share of sweet baked goods is up over 1.7 during the last two years, according to Nielsen data provided by the company.
To expand sales and compete against heavyweights such as Oreo owner Mondelēz International, Reese’s and Kisses manufacturer Hershey, and privately held Mars Wrigley, Hostess is targeting the fastest-growing snacking occasions — morning sweets, lunch, afternoon reward, immediate consumption and afternoon sharing — that the company values at more than $65 billion.
Lambert said Kazbars was initially developed as a heartier snack option for younger male consumers. The cake, crunchiness, cream and addition of the fudge or caramel, created multiple layers that, along with the product’s ability to be held in one hand while it’s consumed, would appeal to this demographic.
But as it turned out, the same day they were testing it out with younger males, millennial parents were in the same building and executives decided on a whim to let them try Kazbars. They enjoyed it too, but wanted it in a smaller size for families and their kids. As a result, Hostess is releasing a larger version of Kazbars in convenience stores and an 8-pack of minis in supermarkets and other locations.
To be sure, Hostess has widespread brand recognition, topping 90%, according to the company. But the problem for the brand is that when consumers are asked to name a sweet snack they enjoy, fewer than 40% name Hostess.
Kazbars and other recent innovations are aimed at changing that reputation while increasing revenue. Hostess also is pouring money into marketing campaigns to promote recent launches, including millions of dollars for Kazbars.
“We’re really trying to bring that modern feel and … products that meet the needs” of the consumer, Lambert said. “It’s all part of our objective to modernize the way consumers view Hostess.”
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In 2022, it rolled out Bouncers, tiny versions of Twinkies, Ding Dongs and Donettes, that give it a presence in convenient bite-size portions already populated by cookies, crackers and candy.
“We’ve really been trying to up our innovation game and we’re driving category growth because of that,” Lambert said. “We are really continuing to lean in on innovation even while a lot of other folks are taking a step back with all the market challenges.”
