The struggling but (at least to older Americans) iconic canned fruit and veg maker Del Monte Foods filed for Chapter 11 bankruptcy on July 1. Its CEO cited the Trump tariffs as the factor forcing it to seek a court restructuring of its obligations. Note that Del Monte had already negotiated a debt restructuring a year ago, but that became untenable due to the impact of tariffs on steel and aluminum costs, and perhaps also to litigation woes.
First from AI Circle in Del Monte files for bankruptcy amid soaring aluminum tariffs:
Heritage canned‑food maker Del Monte Foods has filed for Chapter 11 protection, citing credit pressures and “stunning increases” in packaging costs, driven in large part by President Donald Trump’s decision in early June to double U.S. tariffs on imported steel and aluminium to a whopping 50 per cent….
Industry sources highlight that aluminium foil and can suppliers already faced a roughly 6% jump in material costs following the tariff increase, with projections of a 24% hike in can pricing by spring 2026. The Can Manufacturers Institute warned these tariffs distort domestic packaging supply and could push U.S. food prices higher.
Del Monte CEO Greg Longstreet acknowledged the “dynamic macroeconomic environment”, emphasising that elevated aluminium costs, on top of steel duties, have forced the company to consider an expedited sale process. …Other packaging options such as cartons or glass are being considered throughout the industry, yet Del Monte continues to be bound by its aluminium-canned legacy.
The bankruptcy filing highlights the ways in which dramatic trade policy changes, ostensibly aimed at strengthening home country metal sectors, can instead wash through food supply chains. Del Monte’s search for a buyer comes as analysts indicate that the crisis bodes ill for established can-dependent brands.
For those not familiar with Del Monte, in addition to its canned fruits, such as fruit cocktail, peaches, and pineapple, and veg like canned peas and corn, the company owns other brands:
Contadina (Roma tomato products; my mother used Contadina tomato paste in her pizzas)
College Inn (broths and stocks)
Kitchen Basics
Joyba (fruity bubble teas)
Take Root Organics
S&W Premium (another canned fruit and veg lines; as a consumer, I perceived this to be lower quality than Del Monte, but that may be a function of label design)
While I am not a cook, and the Del Monte target customer is one, I still spent enough time wandering around grocery stores to see plenty of brands. I must confess to never encountering Kitchen Basics, Joyba or Take Root Organics in any of the stores I patronized in New York City or Alabama. Publix has a Greenwise mini-chain which focuses on organic and healthy foods, and I would have expected to see Take Root there (I did buy the Greenwise house brand for things like organic canned beans, stocks, and even organic olive oil spray). So I wonder if this product families suffered from limited distribution.
Admittedly, the earlier debt renegotiation is proof that Del Monte was under duress. But even if the impact of the tariff-induced can cost increase was arguably only at the margin, you can drown just as fully in 6 inches of water as 6 feet. So even if the tariffs were far from the sole cause of Del Monte’s tsuris, the CEO cited them as the proximate cause for the bankruptcy filing.
Although a business-savvy colleague quipped, “How do you go out of business in canned goods”? Del Monte was in product categories that were in long-term decline. Despite increased budget stress among lower and middle-income consumers, Del Monte attempted to maintain a high quality/high price position, which among other things was undercut by store brands. And as the recap below shows, they wrong-footed the Covid-lockdown and food shortages spike in demand, incorrectly anticipating it would persist. From Sherwood:
The bankruptcy follows Del Monte’s miscalculated bet on the Covid boom, when it ramped up production to meet record-high demand for shelf-stable goods. But as that buying frenzy tapered off, the company was left with excess inventory it had to store, write off, or sell at “substantial losses,” per its court filing. That, combined with rising interest rates that nearly doubled its annual interest expense since 2020, drove the company’s liquidity to historic lows….
But, even if the company had weathered the postpandemic period more prudently, it’s hard to escape the reality that’s been eating away at its core business: canned food just isn’t what America wants.
According to the USDA, canned vegetables accounted for just 23% of total US vegetables available for consumption in 2019 — down from 30% five decades earlier. The decline is even steeper for canned fruit, whose share more than halved, from 11% to 5% by 2023.
Consumers are increasingly opting for fresher, healthier options — and with inflation still biting, many are also trading down to cheaper store-brand alternatives, leaving legacy packaged goods companies like Del Monte struggling to keep up.
Meanwhile, newly imposed 50% tariffs on imported steel and aluminum — the key materials used to make cans — could put pressure on margins, especially since ~80% of US can-grade steel is sourced from abroad.
The New York Times provided additional backstory:
The company also said it had carried a large amount of debt since it was acquired in 2014 by Del Monte Pacific Limited, which borrowed to finance the acquisition. Interest rates continued to increase, and the company’s annual cash interest expense has nearly doubled since 2020.
S&P Global analysts downgraded Del Monte’s credit rating last year to B– from B because of poor operating performance. The pressures were compounded by increasingly price-conscious consumers, who are choosing store brands, or private labels, rather than national names like Del Monte.
“About 40 to 45 percent of the total market is serviced by private label players, which are typically at lower prices compared to the branded offerings,” said Arpi Gupta, an analyst at S&P Global.
“We do think that the consumer is stretched right now,” Ms. Gupta said. “Due to all the inflation that these companies have been facing, average retail prices are anywhere between 25 to 30 percent higher compared to about three years ago.”
Del Monte secured $912.5 million in debtor-in-possession financing and will (as is typical) keep operating during the bankruptcy process. Bloomberg gave an overview of the earlier restructuring that went pear-shaped:
The development ends a challenging year for the borrower that saw its parent company Del Monte Pacific Ltd. in June elect to skip a payment to the unit’s lenders as part of a lawsuit settlement tied to a controversial debt restructuring…
Del Monte Foods executed a debt overhaul last year, which became the subject of a lawsuit by left-behind lenders who said the company defaulted on a $725 million financing agreement when it shifted the assets away from the reach of lenders.
The strategy — known in industry parlance as a drop-down transaction — allowed Del Monte Foods to raise fresh liquidity by borrowing against the transferred assets. The deal also prioritized participating lenders via debt swaps and created different payment priorities, Bloomberg reported.
Even though Chapter 11 is designed to help enterprises survive debt excesses and economic shocks, there’s no guarantee of successful long-term result. Some like Body Shop or many years ago, Interco, enter Chapter 11 and have their restructuring fail. The Interco collapse is the reason the US has not had much of a shoe industry in recent decades. Others emerge from Chapter 11 only to become serial bankrupts before an eventual winding down.
So wish Del Monte Foods well, if nothing else for the sake of its employees and suppliers.
And let’s hope an enterprising journalist keeps track of Trump-tariff-induced bankruptcies, since more are sure to come.
I always felt the quality difference between canned food brands was barely noticeable- and most of the canned vegetables on offer were terrible. Outside of tomatoes and beans, I could not figure out how to make canned vegetables taste good after 15 years of trying.
Canned shelled beans are great: black beans, pinto beans, garbanzos, even lentils. If you are busy, much easier than soaking and cooking. Good for chilis and salads. Canned mushrooms are OK but you can get them in glass jars.
Glass is generally the way to go. Another way to have shelf-stable foods is pickled items: beets, red cabbage, sauerkraut, onions, green beans, carrots, you name it. Pickles are supposed to be good for your gut flora! To your point, does anyone make a canned salsa? I can’t imagine…
I’ve seen cans of imported Mexican salsa: Herdez, La Costena. I can’t speak to the quality: I can’t imagine reaching for a can when the same salsa is available in a jar two shelves up. (No, I can’t imagine reaching for the can, period.)
Kitchen Basics is a line of stocks and broths, of better quality than College Inn. It’s carried by Kroger (and presumably its affiliates) which ought to give it plenty of market reach, and it comes in a box so it should be able to survive the tariffs.
Reading about the history of canned goods (many years ago), it seems that for a long time, the type of container used depended very much on the technical tradition being followed: the French preferred glass jars, the British metallic cans.
Rotel canned tomatoes w chilies is better than any of the awful, thickly sweet bottled “salsa.”
Just open the can, pour into a bowl and break out the tortilla chips.
I recently learned that one of the good salsas served in many Mexican restaurants is a canned variety widely available here in Phoenix – El Pato Salsa de Chile Fresco. It’s a thin tomato and pepper salsa.
I doubt it does much for your gut flora or blood pressure, but it’s tasty and cheap. Better than most of the vinegar-pickled American brands sold in the Dorito aisle.
I love El Pato but it is super spicy and not for everyone. Herdez is fine if you are out in the middle of nowhere without a decent grocery store. It makes good nacho sauce when mixed with velveeta – kids love it. I would assume the stuff in the jars is basically the same.
If you are in PHX, Ranch Market on Roosevelt/16th has really good salsas, guac, ceviches, prepared foods, tortillas and nice produce. It is much nicer than Food City and they have a food court. It is my go-to for easy parties for a big group and the picky people can choose what they like. Very good prices.
Maybe it’s just living in Arizona and California, but most grocery stories have decent salsa in the refrigerator cases.
I’ve steered away from all foods in metal containers due to concerns about the chemicals in the linings. Not just heritage brands like Del Monte, but all others for fruits, vegetables, soups and more. Given the availability of more fresh foods, and more cooking skills, that has been an easy choice.
Back in the day, our family put up fruits in jars, along with jams and jellies. Some items were better suited for the freezer, in appropriate containers. They all tasted great, no doubt influenced by the sweat equity, lol.
Yes. The other commenter mentions the brands. If by “salsa” you mean a condiment for dipping, they are not good, but not as bad as the old jars of Old El Paso. But as ingredients (not sole ingredients) of chilis or enchilada sauces and the like, they are fine. I frequently use the salsa ranchera and salsa verde in these contexts.
For all the Brits older than a certain age:
I got it :-) You beat me to making that joke!
Del Monte still has a gigantic fresh fruit operation in Costa Rica. I wonder how they fit in with the canned fruit business?
https://freshdelmonte.com/san-jose-costa-rica-office/
Del Monte Foods and Fresh Del Monte Produce are two completely separate companies with different ownership. One does canned/processed and the other does fresh and fresh-cut produce. They only share in the licensing of the Del Monte brand name.
Good point. Fresh Del Monte did pineapples here in Hawaii but shut down locally several years ago.
The point about the ongoing debt service costs sounds suspiciously like the standard “venture fund acquisition” debt loading strategy.
Also, this does seem to strike the poor more than the rest of the population. Most “poor” people I have known were heavily into canned goods for various reasons; price per unit being one of the big reasons. “Fresh” foods at the grocers are pricy compared to canned. Add to this the time cost in preparation, especially for those stuck in multi-job financial milieus, and we see a return to the “halcyon days” of one earner families, where one of the dyad stayed home and focused on domestic pursuits. I remember “Home Economics” as a major class offering in school.
Stay safe.
Sad to hear about Del Monte. As a student in 1977 I worked one summer in the quality control lab in its canned green beans plant about 45 minutes outside of Montreal. It was a good job: measuring the quantity of beans in a can and adjusting the equipment to keep it within range. You could get overtime hours shovelling green beans out of a dump truck onto the conveyor belt feeding the plant.
The problem with canned vegetables, beans in particular, is the salt content. (Bad for your health.) The problem with canned fruits is, of course, the added sugar content. (Also bad for your health.) Either Del Monte’s products became too expensive or the proletariat is leaning that diet is more important than exercise. (Both are important, but you cannot out-run or out-swim a bad diet.)
Juno Mas: An easy way to deal with salty canned foods is: (1) Pour off the liquid in the can after opening (2) add fresh water to the vegies still in the can (3) Pour off the added water. Repeat as needed to get rid of excessive salt.
Works for bottled olives too.
“The company also said it had carried a large amount of debt since it was acquired in 2014 by Del Monte Pacific Limited, which borrowed to finance the acquisition…” It would be fascinating to know how much of US industry suffers the same kind of debt problem. There is no way to ‘grow out of debt’ as interest is exponential and industry ranges from linear to cyclical. My sense is that US industry, like US citizens, is saddled with debt and being ridden hard by the creditors.
Sears went out of business in a very similar series of transactions. Once they separated the stores from the real estate, they sold off the real estate, signed long term leases with the new property owners. The stores were mismanaged in light of Walmart and Amazon business models. Of course those that sold & bought the Sears real estate made out like bandits while the ‘stores’ were laden with debt and long term unfriendly lease terms with the new real estate owners.
There it was! I was hoping to find the first non-PE-debt bankruptcy but, hey, there it was: the form different but the same substance. You would think that a Marcos crony should habe money enough to buy Del Monte in cash but apparently they also learn ”leveraged buy-out” when they stash their kleptomoney on London, Dubai etc.
Also, end of 70s-beg of 80s Del monte cans, especially pineapple and the fruit cocktail were popular in Sweden. Ate a lot. Downside: they are in Swedish kitchen very much associated with those times. I have since never seem any recipes based in the canned fruits.
I suppose this provides a definitive answer to the Presidential claim that the costs of the tariffs would be borne by the foreign exporters to US.
All aspects of the food biz are a bit dodgy now, with the food cost spiraling to the point where many restaurant chains are closing a good many locations, along with supermarkets. Kroger is planning on closing 60 locations in Cali in the next 18 months.
An awful lot of canned and bottled foods come from China now, Del Monte closing will only give us fewer USA sources.
Are glass and steel really interchangeable as food packaging? I would guess steel would be preferred by commercial and industrial buyers for its ruggedness and light weight. Maybe glass is preferred by consumer buyers since you can see what’s inside (cans always look unappetizing to me). Both materials recycle very well, so I don’t see an issue there.
I’m wondering if Del Monte is seizing on the “Trump made me do it” excuse since it makes them out to be victims rather than bad financial managers. Senior management will come out of it smelling a lot better to any future employers, at least.
You know cans are great for? Food banks. Mutual aid deliveries to victims of disasters.
And as noted above, a lot of restaurant food comes from giant cans.
(And for privileged people, folks who are off the grid for science projects can use a Sharpie to label cans and pack up for a month wherever – or they could before we stopped funding science in the US.)
I’m nostalgic to hear this, back in the day they always seemed like a known quality. But I always shop organic, even for the few cans I do keep just in case. I don’t know how far they got with that, if ever.
Canned fruit is a comfort food item for my spouse, and he’s always insisted I buy Dole or Del Monte brands rather than store brands. We’ve both noticed a decline in quality in both brands, with the decline being more pronounced in Del Monte. With the rise of prices, I might try to sneak in a store brand or two again, cross my fingers, and see what happens.
I thought my 50 years of recycling aluminum and steel and glass would have shown up as a benefit for the food processors as a domestic resource.