They say a Twinkie can last for 1,000 years before it goes bad, and slowly disappears into the proverbial circle of life. Unfortunately, the company that makes them cannot. Last week, one of America’s most recognizable food brands, Hostess, announced that it would be closing its doors for good. On the heels of bankruptcy, debt, private equity buyouts, and a workers’ strike, the Texas baked goods maker decided that it could no longer sustain itself as a profitable business. But while scorns of Devil Dog, Ho Ho, and Wonder Bread lovers lament the end of an era, there may still be hope to save their sugary snacks. Hope, in this case, that comes from one of Mexico’s biggest businesses, Grupo Bimbo.
Who is Bimbo, and where did they come from?
Grupo Bimbo, S.A.B. de C.V. (BIMBO) is a publicly traded bakery concern that has a $10 billion value, as well as holding the title of being the world’s largest bread maker. The company is listed on the Latin Target 500 and Latin Target 100 MultiLatina Rankings, and has seen significant growth in the last 10 years. Sliding under the radar of many in the US, Grupo Bimbo has more than doubled its profit since 2002, bringing in roughly $400 million annually. With this recent news coming out of the states, the Mexican bread maker could potentially expand its reach even further by buying rights to Hostess’ already strong brands. The power of Hostess’ brand recognition, partnered by Bimbo’s efficient corporate structure and massive production capabilities, may be the key to dominating the US market; something the Mexican juggernaut has had in the works for years.
Why the timing is perfect
While some could call this premature speculation, there are many signs that indicate that a Bimbo purchase may be imminent. For starters, they’ve already made public interest in Hostess more than once. They tested the waters on a purchase in the early 2000’s, eventually passing on the Texas-based baker, opting instead to purchase a company called Earthgrains. And in 2007 they made an unsuccessful bid for the company during the first round of bankruptcy, and shelved the buyout indefinitely.
So what’s changed now?
Well, for starters, the company’s relative positioning in the current economy. Little by little, as Hostess shrunk, Bimbo grew, and this gives them significantly more leverage. With Grupo Bimbo’s profit margins at a steady gain, it lowers the risk of taking on Hostess’ baggage. And while the Mexican company hasn’t publicly made interest in a purchase yet, many signs point in that direction. While Bimbo does sell its products in the US, its branding is mostly geared towards Latin Americans already familiar with Bimbo products from home. Adding Hostess has the potential to break the market wide open for Bimbo, and solidify their brand recognition with millions of customers across the US. Our prediction is, it’s only a matter of time.
A strong MultiLatina like Grupo Bimbo can’t afford to be ignored. And with ELEVATE’s Market Access Tool, we give you inside access to the top players in both this company, as well as hundreds of key businesses throughout the region. Don’t miss out on one of the strongest tools available for doing business in Latin America. To find out more, visit our website www.latintarget.com, or call us at (312) 265 6538.