Del Monte Foods Inc. has filed for Chapter 11 bankruptcy protection. Best known for selling canned fruits and vegetables, Del Monte is a beloved brand in the US. Just last year, the privately held company was named one of America’s most trusted.
But the nearly-140-year-old business is in trouble and can’t repay its debts. Its best hope is to be sold under a court-supervised sale process, says Greg Longstreet, president and CEO of Del Monte Foods. “With an improved capital structure, enhanced financial position and new ownership, we will be better positioned for long-term success.”
What went wrong for Del Monte Foods?
Del Monte Foods has faced headwinds in recent times. CEO Longstreet cites challenges “intensified” by a “dynamic macroeconomic environment”.
As to which macroeconomic factors were responsible for the food company’s demise, everyone seems to have an opinion. On social media, some cite shifting consumer preferences away from shelf-stable “heavily processed” goods, others have criticised private equity for “stripping and flipping” companies like Del Monte - a company with a history of private equity ownership.
Others still suspect Del Monte, as a 139-year-old legacy brand, was not agile enough in the current environment - a ‘sleeping giant’ if you will. Some believe it’s linked to the company’s lack of investment in marketing, and so the theories continue.
What is known is that Del Monte Foods is not shutting up shop today. The company has secured financing that along with cash from ongoing operations, is expected to fund business operations as usual until a buyer is found.
Not all ‘Del Monte’ brands implicated
While Del Monte Foods Inc., a privately held US company, files for Chapter 11 bankruptcy protection, another company using the ‘Del Monte’ name continues to operate with “stability”.
In the EU and UK, Fresh Del Monte Produce is continuing operations, explains a company spokesperson. Fresh Del Monte Produce is an independent, publicly traded company with no legal, operational or financial affiliation with Del Monte Foods Inc.
Both businesses share rights to the Del Monte name through historical licensing arrangements, but Fresh Del Monte Produce stresses it operates under distinct ownership and serves different geographic markets.
Fresh Del Monte Produce, which describes itself as the “global leader in pineapple innovation”, sells prepared food products in Europe, Africa and the Middle East.
Del Monte Foods Inc., on the other hand, holds the rights to the Del Monte brand for prepared food products in the US, but does not have the rights to sell fresh or fresh-cut fruit.
