Tastykake Will Take On Little Debbie

PHILADELPHIA - The new Georgia-based owners of Taskykake released internal memos on Monday that show their plans for the iconic Philadelphia bakery – and if Tasty Baking will stay here.

So far, it looks like the plan is to use Tastykake to declare a national snack-cake war against Little Debbie and Hostess.

Flowers Foods stunned market watchers by buying Tasty Baking for about $34 million in cash, and the assumption of a lot of debt.

In an SEC filing, internal memos sent to Flowers employees show that Tastykake’s new owners fully intended to keep Tasty Baking as a wholly- owned subsidiary, with both Philadelphia area bakeries going at full blast.

The goal: Use Tastykake as a national brand to bite a chunk out of the market share for rival products like Little Debbie, Hostess, and products offered by megabaker Groupo Bimbo.

“Our plan is for Tasty Baking to operate as a subsidiary within our DSD segment. Tasty has two bakeries—one in Philadelphia and one in Oxford, Pa.—and we intend to operate both facilities,” said Flowers CEO George Deese in a company memo.

A second memo talks about how Flowers employees should talk about the deal with Tasty Baking employees.

“We plan to expand distribution of Tastykakes to Flowers’ 4,000 routes located in the Southeast, Mid-Atlantic, Southwest, and in select markets in Nevada and California. Flowers’ DSD system reaches 53% of the U.S. population. That means that with Tasty’s existing markets and Flowers’ markets, Tastykakes will eventually be available to about 61% of the US population.”

But the key message that Flowers wants to communicate here is that Tastykake is still a Philadelphia product.

“This agreement ensures that Tastykakes will continue to be made by Philadelphians in Philadelphia,” Flowers said.

The company also made it clear it will use Tasty Baking’s current delivery system to bring its Nature’s Own products in the greater Philadelphia region.

But it is clear from the SEC filing that Little Debbie is in the cross-hairs of Flowers.

“[The deal] will also extend the distribution of Tastykakes into many new markets by leveraging Flowers’ direct-store-delivery network, which reaches more than 50% of the U.S. population in the South, Southwest and parts of the West,” the company said.

Little Debbie is owned by McKee Foods in Tennessee.

Flowers’ main business is the bread business, and the bigger benefit, some experts think, is that Flowers can compete with Bimbo’s bread products in the Northeast.

By The Numbers is a regular MyFoxPhilly feature that looks at key Philadelphia issues behind publicly available numbers and research.
If you have a suggestion for a story idea, e-mail Scott Bomboy at scott.bomboy@foxtv.com for consideration.