Del Monte, a 139-year-old canned fruit and vegetable company, is filing for bankruptcy protection. The company has just secured $912.5 million in debtor-in-possession financing that will allow it to operate normally as the sale progresses.
“After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods,” CEO Greg Longstreet said in a statement. He added that this was a “strategic move” for the company, which would enter into a “restructuring agreement” with hopes of shedding its debts and securing a buyer for its remaining assets.
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“While we have faced challenges intensified by a dynamic macroeconomic environment, Del Monte Foods has nourished families for nearly 140 years, and we remain committed to our mission of expanding access to nutritious, great-tasting food for all,” Longstreet added.
Del Monte Foods also owns the Contadina tomato brand, College Inn and Kitchen Basics broth brands and the Joyba bubble tea brand. While the broth and bubble tea brands have seen sales growth in fiscal 2024, this hasn’t been enough to offset losses.
One reason for this might be that U.S. consumers have been moving towards healthier and cheaper options. “Generally, Del Monte says that consumer demand has declined, causing it to incur increased costs related to surplus inventory that it has had to warehouse and attempt to move off shelves with increased promotional spending. Consumer preferences have shifted away from preservative-laden canned food in favor of healthier alternatives,” said Sarah Foss, global head of legal and restructuring at Debtwire, a financial consultancy.
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Grocery price inflation has also led to people seeking cheaper alternatives. With President Donald Trump’s 50% tariff on imported steel, which went into effect in June, the prices of cans are also likely to go up.
Del Monte Foods, which is owned by Singapore’s Del Monte Pacific, also faced a lawsuit last year by a group of lenders that objected to the company’s debt restructuring plan. This case was settled in May with a loan that increased Del Monte’s interest expenses by $4 million annually.