Del Monte Foods files for bankruptcy, plans to pursue sale
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Del Monte Foods filed for Chapter 11 bankruptcy protection this week. Photo: Kevin Carter/Getty Images
Del Monte Foods has filed for Chapter 11 bankruptcy protection and announced it is pursuing a sale.
Why it matters: The nearly 140-year-old company — known for staples like canned vegetables and fruit cups — has faced mounting pressures from changing consumer habits, supply chain volatility and rising costs.
- The company said it has secured support from key creditors for a plan to sell its key assets and stay in business.
Zoom in: Del Monte has been suffering from excessive debt, a downturn in consumer demand, increased discounting, a declining private label business and higher costs from inflation, according to a court filing.
- The company, like other consumer packaged goods brands, has "experienced changing consumer purchase behavior and increased inflationary costs," chief restructuring officer Jonathan Goulding said in a court filing.
Context: Founded in 1886 in California, Del Monte eventually became one of the nation's leading packaged fruit sellers.
- Today, Del Monte has about 2,780 employees and four factories, with two in the U.S. and two in Mexico.
- The company's brands include its namesake lineup of canned fruit as well as Contadina, College Inn and Joyba. It also sells under private labels, but that business has been shrinking.
- The company, which is not affiliated with Fresh Del Monte Produce, said in a statement that non-U.S. subsidiaries are not included in the Chapter 11 proceedings.
Threat level: The company racked up extra debt in 2023 as it anticipated higher volume — but sales instead fell in the next fiscal year, leaving it with "outsized production commitments," greater costs and higher promotional spending, according to Goulding.
- The company said it recently closed certain production facilities to reduce its cost structure.
- But its annual interest expenses exceed projected earnings, leaving it with "historically low liquidity," Goulding said.
Zoom out: Retailers have been supercharging their store brands to boost sales and keep prices low in the face of rising tariff pressures.
- At the same time, there's been more pressure on canned goods after President Trump signed an order in early June that doubled tariffs to 50% on steel and aluminum imports.
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