Twinkies: A brand-value case study in the oven

We are about to learn what an intangible is worth.

Hostess Brands, now in bankruptcy, is liquidating its assets. Twinkies, along with Hostess’s other snack-cake brands, is on the block.

Competitive food companies will likely scarf up the snacks, including Ding Dongs, Ho Ho’s, Sno Balls and Donettes. As Twinkies has generated $68 million in revenue so far this year, it’s a mouth-watering prospect.

A potential buyer of Twinkies will want the recipe, of course. They may or may not want the bakeries, the equipment or the outlet stores.

Mostly, they will want the brand. More than a name, a logo or a package, the Twinkie brand is a collection of intangible attributes that will likely prove more sustainable than Hostess’s hard assets.

After all, any bakery with a recipe can make a sponge cake that looks like a Twinkie and tastes like a Twinkie. But consumers will not perceive it to be as good as a Twinkie.

” … Twinkies aren’t merely a snack cake, nor just junk food,” a post at the Associated Press says. “They are iconic in ways that transcend how Americans typically fetishize food.”

Despite being ridiculed for their shelf life and derided for their unhealthiness, Twinkies have staying power. Following the announcement of Hostess’s liquidation, fans mobbed stores to buy the remaining products. Unopened cartons are for sale on eBay and Craigslist.

“There’s a huge amount of goodwill with the commercial brand name,” John Pottow, a University of Michigan Law School professor told the Associated Press.

So how will the worth of the Twinkies brand be determined?

A number of methods exist for valuation. They consider everything from how much the brand has spent on marketing in the past to how much revenue it might generate in the future. Companies such as Interbrand and CoreBrand have developed their own proprietary formulas. However, there is no universally accepted method for figuring brand value.

Regardless of the method used, the price paid for the “goodwill” of the “Golden Sponge Cake with Creamy Filling” will demonstrate once again that brands compete based upon intangibles.

It may turn out Twinkies the brand has a longer shelf life than Twinkies the snack cake.

This entry was posted in authenticity, brand essence, retail.

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