Del Monte Foods files for bankruptcy protection to restructure its finances.

Del Monte Foods, a company with a storied history spanning 139 years and known primarily for its canned fruits and vegetables, has announced its decision to file for bankruptcy protection. This move is largely attributed to changing consumer preferences, as an increasing number of shoppers are opting for healthier or more budget-friendly food options.

In conjunction with its bankruptcy filing, Del Monte has secured 2.5 million in debtor-in-possession financing, which will enable the company to maintain operations during this critical phase and continue its day-to-day activities as a sale process unfolds. CEO Greg Longstreet emphasized that after a comprehensive evaluation of available options, pursuing a court-supervised sale appears to be the most effective strategy for accelerating the company’s turnaround and establishing a more resilient Del Monte Foods.

Headquartered in Walnut Creek, California, Del Monte Foods also owns several notable brands, including Contadina tomatoes, College Inn and Kitchen Basics broths, and Joyba bubble tea. Despite experiencing sales growth in the Joyba and broth categories during fiscal year 2024, these gains have not been sufficient to compensate for declining sales of its iconic canned goods.

Industry experts, such as Sarah Foss, global head of legal and restructuring at financial consultancy Debtwire, point to a significant shift in consumer behavior, with many people moving away from canned foods laden with preservatives in search of healthier alternatives. The effects of grocery inflation have further exacerbated this trend, pushing consumers towards cheaper store-brand products in a more competitive marketplace.

Additionally, the economic landscape has shifted due to external factors. A 50% tariff on imported steel, enacted by the previous administration, has begun to affect the costs associated with producing canned products, further straining Del Monte’s financial position.

Del Monte Foods, which is owned by Singapore’s Del Monte Pacific, had previously faced challenges in the form of a lawsuit from a group of lenders who opposed the company’s debt restructuring plan. This case was resolved in May, resulting in an annual increase of million in Del Monte’s interest expenses.

The recent bankruptcy filing marks a pivotal point for the company as it embarks on a planned sale of its assets, demonstrating an urgent response to adapt to the evolving food market and stabilize its financial future. As Del Monte seeks a path forward, the unfolding situation will be closely monitored by industry analysts and consumers alike, reflecting broader trends in food consumption and retail behavior.