In a time of economic uncertainty, some companies have no choice but to take steps to stay afloat, and that can include filing for bankruptcy.
Filing for bankruptcy doesn’t mean it’s the end for a business. For some, they’re able to re-emerge stronger. Just look at General Motors and Marvel Entertainment – both have filed for bankruptcy in the past.
One brand that has been going since 1886 is looking at doing just that…
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Del Monte Foods filed for Chapter 11 bankruptcy last week, with its CEO saying, “This is a strategic step forward for Del Monte Foods. 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.”
Chances are you’ve had a Del Monte product before, whether it was canned green beans or canned fruit in a to-go plastic cup. Speaking of which, let’s look at some of their products…
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Del Monte specializes in canned or otherwise packaged fruits and vegetables.
For vegetables, it offers several canned options such as:
- Green beans
- Mixed vegetables
- Spinach
- Peas
- Corn
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For canned fruit, some of the most popular products are:
- Peaches
- Pears
- Mandarin oranges
- Pineapple
Besides its canned varieties, Del Monte also has fruit snack cups for more on-the-go options.
Newer products like its “Bubble Fruit”, which includes boba pearls, might have been attempts at piggybacking on popular trends like Boba tea to help boost demand (but that’s just speculation on my part)…
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Without poring over all of the company’s financial ups and downs over its long history, it’s impossible to know ALL of the factors leading to the decision to file for bankruptcy. There was one major event a few years ago that certainly didn’t help anything…
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During the pandemic, people were stocking up on canned foods to stockpile and prepare for the worst. With more people stocking up and eating more meals at home, Del Monte experienced a surge in demand.
In response, Del Monte increased its production significantly during that time, which, of course, costs money.
When the stay-at-home orders were lifted and people started venturing outside their homes more, the demand for canned fruits and veggies went back down from its high.
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This one involves more speculation, but another possible reason behind Del Monte’s struggles could have to do with consumer preferences.
Fresh and frozen vegetables may be more popular among some consumers, especially as there is more of a focus on eating fresh, unprocessed foods. Many brands also offer steamable bags of veggies, which might be adding some competition to canned versions.
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In addition to reduced consumer demands, other factors fueled the fire for Del Monte’s financial issues.
Increasing labor costs and tariffs further strained Del Monte’s profits. President Trump imposed a 50% tariff on steel and aluminum, which went into effect just last month. Considering that’s what Del Monte’s cans are made of, that’s adding insult to injury.
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Unlike Chapter 7 bankruptcy, which involves an immediate liquidation of all assets, the type of bankruptcy that Del Monte filed (Chapter 11) is different.
According to United States Courts, Chapter 11 “generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time”.
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It’s hard to say who might acquire Del Monte. Some sources say it could be an opportunity for international buyers, while others point to US-based food brands like Hormel or B&G Foods taking on Del Monte.
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The average length of a Chapter 11 bankruptcy proceeding can take years (even up to 5!), so it’ll take some time to see what ends up happening with Del Monte.
Given that Del Monte is one of America’s oldest food brands, there might be some nostalgia and big emotions among its loyal customers…
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What do you think of the news of all the different companies filing for bankruptcy or closing lately, including Del Monte? Do you still use canned fruits and vegetables – why or why not?
I’m curious to hear all of your thoughts on this one, so drop them in the comments!
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