Hostess CEO: Data analytics has been a good investment | 2021-07-05

KANSAS CITY — Improved data analytic ability was a priority for Andrew P. Callahan when he took the reins at Hostess Brands, Inc. back in 2018. A little more than three years later, that priority has proven critical in driving a number of improvements at the Kansas City-based snacks company.

“We’ve invested in just knowledge and data as an ability to be able to run our business more precisely and more effectively and more predictively, I guess, throughout our entire business system,” Mr. Callahan said during a June 23 presentation at the virtual Jefferies Consumer Conference.

“So, one of my investments was actually at the category and at the shelf in the convenience channel, because we want to create data to collapse the visibility of what’s happening at the shelf, given we were more of a warehouse business versus DSD (direct-store delivery),” he explained. “That’s proved very insightful and a very good investment. We’ve also invested in some of our finance and business capabilities.”

Mr. Callahan said Hostess has used data to better understand consumer behavior, including media purchases and consumption, which he described as the “path to purchase.”

“That knowledge base and insight … that’s proprietary to us,” he said. “That understands our competitive set of our product within the consumer choices frame of reference. That helps fuel our innovation pipeline. It helps fuel what attributes consumers are looking at so we can prioritize benefits we want to bring to consumers and make sure that’s integrated with our technology platforms investments to make sure they’re scalable. Those have improved our innovation, both as far as margins, because we are able to make changes to some of the products that are meaningful to consumers potentially, but leverage our assets. They have improved our incrementality of it because we’ve been able to reduce meaningfully the number of SKUs (stock-keeping units) we had but improve the productivity of what’s left and continue to grow. That drives efficiency throughout the whole supply chain. So, data drives a lot of what we do from a consumer all the way through into the business model.”

Mr. Callahan said Hostess also expects data analytics to help as it continues to increase its marketing spend.

“Hopefully we’ll be able to get a real-time ROI (return on investment) — or as close to real-time as we can — and be able to modify that going forward,” he said. “So, it’s a real big part of our intellectual and our capability. … It’s repeatable, it’s sustainable, and it continues to fuel the pipeline and grow.”