Del Monte Foods, the nearly 140-year-old company whose canned fruits and vegetables have long been grocery store staples, has filed for bankruptcy and is looking for a buyer as it grapples with mounting debt, post-pandemic headwinds and shifts in consumer spending.
The company announced on Tuesday (July 1) that it had voluntarily initiated Chapter 11 proceedings and reached an agreement with its lenders to sell most or all of its assets.
“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,” Greg Longstreet, the president and CEO of Del Monte Foods, said in a statement.
Outlining its recent business challenges, the company said in court documents that it had ramped up production to meet high demand during the coronavirus pandemic, but got saddled with surplus inventory when consumer spending declined after the pandemic subsided, resulting in significant write-offs or sale at substantial losses.
In 2023, Del Monte scaled back production, it said, given softening demand, but lower volume led to higher per-unit costs.
“Altogether, this perfect storm of reduced margins, excess inventory and decreased customer demand created an unprecedented liquidity crisis for the Company,” according to court filings.
The California-based company, which employs about 2,780 people, said it has secured $912.5 million in debtor-in-possession financing to continue operations during the Chapter 11 process.
Among its portfolio of branded products are Contadina packaged tomatoes, Kitchen Basics broths and stocks, and Joyba bubble teas and beverages.
Del Monte debuted in 1886 and built its cannery, a San Francisco landmark, in 1907. In court filings, the company said that it partners with hundreds of farming families in the United States and Mexico, and that most of its products are sourced from within 100 miles of its production facilities.
“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,” Longstreet said.