Del Monte Foods, a 139-year-old entity renowned for its canned fruits and vegetables, has initiated the process of filing for bankruptcy protection. This move reflects the increasing trend among American consumers to opt for healthier or more affordable food options.
Del Monte has secured $912.5 million in debtor-in-possession financing. This will enable the company to maintain its usual operations as it undertakes the sales process.
CEO Greg Longstreet remarked that after thoroughly considering all possible options, they concluded that a court-supervised sale would be the most efficient method to expedite the company’s turnaround and strengthen Del Monte Foods for the future.
Based in Walnut Creek, California, Del Monte Foods owns several prominent brands, including Contadina tomatoes, College Inn, Kitchen Basics broths, and Joyba bubble tea. While there has been a sales increase in their broth and Joyba products during fiscal 2024, it has not been sufficient to compensate for the decline in sales of Del Monte’s iconic canned goods.
According to Sarah Foss, Global Head of Legal and Restructuring at Debtwire, a financial advisory firm, consumer preferences have notably shifted, moving away from canned goods high in preservatives in favor of healthier alternatives.
Moreover, the spike in grocery inflation has compelled consumers to favor lower-cost store brands. Compounding the issue, the 50% tariff on imported steel imposed by President Donald Trump in June has led to an increase in the costs for cans, affecting companies like Del Monte.
Additionally, Del Monte Foods, under the ownership of Singapore’s Del Monte Pacific, faced a lawsuit from a group of lenders last year. The lenders were opposed to the company’s debt restructuring plan. The dispute concluded in May with a loan agreement that resulted in an increase in Del Monte’s annual interest expenses by $4 million, as stated by the company.
On Tuesday, Del Monte announced that the bankruptcy filing is a strategic component of their plan to sell the company’s assets.