So Long to the Oreo Cookie

A piece of Americana has taken the route south, Mexico. May we suggest the Hydrox cookie of yester-year?

Maybe at issue is the corporate tax structure. Maybe it is the increase in the misguided minimum wage. Maybe it is the diving work ethic. Maybe it is Michelle Obama’s attack on food. Maybe those liberal mayors like New York’s former mayor Bloomberg all regulating free choice of food. Maybe it is all that re-tooling of nutritional food labels. Maybe it is all of those.

How US Sugar Policies Just Helped America Lose 600 Jobs

The manufacturer of Oreo cookies recently announced plans to move production of Oreos from Chicago to Mexico, resulting in a loss of 600 U.S. jobs.

This should be a wake-up call to defenders of the U.S. sugar program and other job-destroying trade barriers.

The leading ingredient in Oreos is sugar, and U.S. trade barriers currently require Americans to pay twice the average world prices for sugar.

Sugar-using industries now have a big incentive to relocate from the United States to countries where access to their primary ingredient is not restricted.

If the government wants people making Oreo cookies and similar products to keep their jobs, a logical starting point would be to eliminate the U.S. sugar program, including barriers to imported sugar.

This obvious connection between the lost jobs and sugar quotas was missed by many observers. According to one online commenter: “This is why tariff[s] on products coming to U.S must be raised.”

That’s backwards. When protectionist policies like the U.S. sugar program lead to offshoring, the response shouldn’t be to pass new laws to discourage such offshoring or to raise tariffs even higher. The response should be to eliminate government policies that encourage offshoring in the first place.

The loss of Oreo cookie jobs should reinforce a lesson on the job-destroying aspect of protectionist trade policies.

According to a 2006 report from the government’s International Trade Administration: “Chicago, one of the largest U.S. cities for confectionery manufacturing, has lost nearly one-third of its SCP manufacturing jobs over the last 13 years. These losses are attributed, in part, to high U.S. sugar prices.”

That lesson appears to be lost on unions that are supposed to represent the workers losing their jobs in Chicago.

For example, The Bakery, Confectionery, Tobacco Workers and Grain Millers Union consistently has opposed free trade agreements with sugar-producing countries like Australia, Brazil, and Mexico—the kind of trade deals that just might protect their members’ jobs.

So that’s how the cookie crumbles.

2014….the Comeback

The Oreo-buster is back.

Hydrox cookies, those Oreo-like chocolate sandwich cookies, could reappear on store shelves as early as September, says Ellia Kassoff, CEO of Leaf Brands, which recently acquired the rights to the unused Hydrox trademark.

“The cosmic difference between Hydrox and Oreo is that Hydrox is a little more crispy; a little less sugary and stands up better in milk,” says Kassoff, who will make the official announcement later this month at the Sweets & Snacks Expo in Chicago on May 20.

Even in a new world of nutritional consciousness, there is little evidence that America’s sweet tooth is fading. Sales of packaged cookies and baked goods are expected to top $17 billion by 2017 — up from $13 billion in 2012, reports Packaged Facts. While the return of Hydrox is expected to be a hit with Baby Boomers who may fondly remember the brand — formerly owned by Kellogg’s, Keebler and Millennials who are not very familiar with the cookie brand, which hasn’t been regularly sold on store shelves in almost a decade.

“We’ll use social media to reach out to Millennials,” says Kassoff. The 46-year-old CEO says that he likes to acquire old brands or trademarks that still have fans. “We recycle brands that get left on the side of the road.”

But the Hydrox brand has special meaning to him. As a young kid raised by parents who were Orthodox Jews, he was only permitted to eat Hydrox — not Oreos — because, he says, at the time, Oreos were not kosher but Hydrox were. Today, both are kosher.

The move by Leaf Brands — which also owns trademarks to Astro Pops, Wacky Wafers and Farts Candy — comes just two years after giant Oreo celebrated its 100th birthday. Little-known, however, is that Hydrox was the original creme-filled chocolate sandwich cookie when it debuted in 1908 — followed four years later by Oreo.

But executives at Mondelez, which owns the Oreo brand, are hardly showing any signs of concern. “Oreo is America’s favorite cookie,” says Laurie Guzzinati, a company spokeswoman. She declined to comment specifically on the return of Hydrox. Oreo sales, which exceed $2 billion globally and $1 billion in North America, have grown double-digits in the U.S. for the past two years.

Its been years since Oreo had a genuine rival on the shelf. Kellogg stopped making Hydrox in 2002. Then, in 2008, when Hydrox turned 100, Kellogg briefly resumed distribution, but only for a limited time.

Hydrox still has an online fan page, and a few months ago, Bill Burnett, of Salina, Okla., posted this wishful note about Hydrox: “My brother and I loved them. I never got a taste for the inferior “Oreo,” which was far less tasty as the wonderful Hydrox. I think I’ve only bought one package of them in 50 years! Bring Hydrox back again!”

In fact, says Kassoff, it’s fans like Burnett who convinced him to bring back the brand. “I hear from all of them,” he says. “I know millions of people are waiting for the product.”

But unlike the cookies giants, which typically must sell at least $100 million worth of a brand for it to be an even modest success, Burnett says he can sell a fraction of that and do just fine.

The pricing will be roughly where Hydrox was for years: less expensive than Oreos but more expensive than store brands. If a 14-ounce package of Oreos retails for about $4; Hydrox will be $3 and store brand sandwich cremes often cost about $2, he says.

But success won’t come simply. At least one brand guru says Hydrox has lots of work to do. “Oreo conveys round and is fun to say and hear. Hydrox sounds scientific and medicinal … not appetizing at all,” says Steven Addis, CEO of Addis. “Oreo has become part of the fabric of America. Like Coke. This makes it somewhat unassailable, even from a superior product.”