Dive Brief:
- Del Monte Foods filed for bankruptcy and is seeking a buyer for its 139-year-old business.
- The storied canned fruit and vegetable maker has “faced challenges intensified by a dynamic macroeconomic environment,” CEO Greg Longstreet said in a statement.
- A sale of the California-based company is “the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods,” Longstreet added.
Dive Insight:
Few brands are as recognizable on grocery store shelves as Del Monte Foods. The notoriety, however, wasn’t enough to save the vulnerable company from outside forces weighing on its business.
Shoppers have increasingly cut back on spending, boosted their purchases of private label products and shifted toward fresher, healthier alternatives, putting pressure on Del Monte Foods. Tariffs on steel and aluminum also have weighed heavily on canned food businesses.
Del Monte not only has faced a drop in demand for its products, but the seasonality of its business also likely means the company is paying more to store its products in warehouses. Del Monte has spent the last two years closing plants and warehouses, including a fruit processing plant in Washington state last month.
Del Monte’s portfolio includes its iconic canned fruits and vegetables, Joyba Bubble Tea, Contadina tomato products and College Inn broths.
Even with the closures, the company saw the need to take more drastic steps to improve its financial picture.
“With an improved capital structure, enhanced financial position and new ownership, we will be better positioned for long-term success,” Longstreet said.
Del Monte said it secured $912.5 million in new financing. The money, along with cash from ongoing operations, should provide sufficient liquidity during the sale process to fund the company’s operations. The company estimated liabilities between $1 billion and $10 billion, and it has as many as 25,000 creditors, according to a court document.
Del Monte said the bankruptcy should not impact its ability to deliver products to stores.
The canned food maker is not the only company facing challenges as consumers more closely watch their spending. Several large CPG companies this year have announced job cuts and plant closures, including PepsiCo, Post Holdings, Conagra Brands and J.M. Smucker.
