Del Monte seeks bankruptcy protection as consumers turn away
Del Monte announced the bankruptcy filing late Tuesday.
Del Monte, which also owns the Contadina tomato brand, College Inn and Kitchen Basics broth brands and the Joyba bubble tea brand, has secured $912.5m in debtor-in-possession financing that will allow it to operate normally as the sale progresses.
The Walnut Creek, California-based brand has assets and liabilities ranging from $1bn to $10bn, according to a filing in a New Jersey bankruptcy court.
'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.
The company has seen sales growth of Joyba and broth in the 2024 fiscal year, but not enough to offset weaker sales of Del Monte's signature canned products.
'Consumer preferences have shifted away from preservative-laden canned food in favour of healthier alternatives,' Sarah Foss, global head of legal and restructuring at Debtwire, a financial consultancy, told the news agency The Associated Press.
Grocery inflation also caused consumers to seek out cheaper store brands. Last month, the consumer price index report showed a 0.3 percent increase in the price of food and 2.2 percent compared with this time last year.
Another blow is expected from US President Donald Trump's 50 percent tariff on imported steel. This went into effect in June and will also push up the price that Del Monte and others pay for cans.
Del Monte Foods, which is owned by Singapore's Del Monte Pacific, was also hit with a lawsuit last year by a group of lenders that objected to the company's debt restructuring plan. The case was settled in May with a loan that increased Del Monte's interest expenses by $4m annually, according to a company statement.
Del Monte's stock is about even from the market open, and it is up 4.62 percent over the last five days.
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