A POPULAR canned food manufacturer has faced increasing pressure over the years, culminating in a Chapter 11 bankruptcy filing earlier this week.
The nearly 140-year-old company, which has been a staple on the shelves of retailers including Walmart and Target, officially filed for bankruptcy protection on Tuesday.
Del Monte Foods is one of the largest producers, distributors, and marketers of branded processed food in the country.
The iconic brand, known for its canned fruits and vegetables, is working to restructure its operations and seek a buyer following years of struggles.
Shifting consumer behavior, supply chain troubles, and increasing operational costs, among other factors, have hit Del Monte Foods hard.
These struggles pushed the company to begin voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of New Jersey earlier this week, Del Monte Foods shared in a Tuesday press release.
“This is a strategic step forward for Del Monte Foods,” said company CEO Greg Longstreet.
“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.
“With an improved capital structure, enhanced financial position and new ownership, we will be better positioned for long-term success.”
As part of the bankruptcy process, Del Monte Foods will secure $912.5 million from its lenders to help fund the brand and keep it operational throughout its sale process.
The Company also filed several customary “first day” motions that will allow Del Monte Foods to continue to deliver high-quality, healthy, and convenient food products to shoppers.
“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,” said the CEO.
GROCERY GIANT
Del Monte Foods was established in 1886 in California, growing to become one of the largest packaged fruit and vegetable sellers in the country.
The company, however, has struggled over the years under mounting challenges.
Del Monte has accumulated excessive debt – estimated at between $1 billion and $10 billion – while also struggling with a declining private label business and rising costs from inflation, per a court filing.
The company also faced especially tough sales years in 2023 and 2024 that have driven up its debt.
As sales failed to meet expectations, Del Monte Foods was left with “outsized production commitments” as well as greater costs and higher promotional spending, according to Jonathan Goulding, chief restructuring officer of the company.
The trade war has also taken a toll on Del Monte Foods, as retailers focus their efforts on their store brands to increase their sales and retain low prices in the face of tariffs.
At the same time, the tariff turmoil has weighed down on the canned good industry in particular.
President Donald Trump signed an executive order early last month that doubled tariffs to 50% on steel and aluminum imports.
Del Monte Foods has previously made efforts to turn around its business outlook, including layoffs, shutting down certain production facilities, and beginning a debt overhaul last year.
However, its troubles have outweighed its efforts, with Del Monte Foods becoming the fourth company in the food and beverage sector to file for bankruptcy this year, according to data analytics firm Debtwire.
Outside of the consumables sector, other companies have resorted to Chapter 11 bankruptcy.
Source : https://www.the-sun.com/money/14611562/del-monte-canned-food-company-walmart-target-bankruptcy/