Del Monte, the Iconic Canned Food Brand, Files for Bankruptcy...Why Is Its Stock Unaffected? [Business & Issue]

The U.S.-Listed Company Is "Fresh Del Monte Produce"
No Connection to "Del Monte Foods," Which Filed for Bankruptcy Protection
Only the Brand Is Shared; Operations Are Separate

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Del Monte, a leading canned food brand in the United States, has filed for bankruptcy protection. However, the stock price of Del Monte listed on the U.S. stock market remains steady at around $30 per share. This is because 'Del Monte Foods,' which filed for bankruptcy protection, and 'Fresh Del Monte Produce' (hereafter Fresh Del Monte), which is listed on the U.S. stock market, share the same brand but are operated by different entities, so the bankruptcy filing did not affect the stock price. While Del Monte Foods, which enjoyed a brief boom in the canned food market during the COVID-19 pandemic, is now facing bankruptcy due to a sharp market contraction, Fresh Del Monte, which handles fresh fruit, continues to show steady growth.

Del Monte Files for Bankruptcy Protection in the U.S., But Stock Price Remains Stable

On July 17 (local time), Fresh Del Monte, which is listed on the Nasdaq in the United States, recorded a stock price of $33.75. This represents a 2.52% increase compared to $32.92 at the beginning of the year. Even after Del Monte Foods announced on July 2 that it had filed for bankruptcy protection with the U.S. Bankruptcy Court in New Jersey, the stock price has remained stable at around $30 per share.

The reason Fresh Del Monte's stock price has not been affected by Del Monte Foods' bankruptcy is that the two companies are operated by different entities. Fresh Del Monte was established in 1989 when the Del Monte Group spun off and sold its fresh fruit division. It is a separate company that only shares the Del Monte brand. Last year, its sales totaled $4.28 billion, a 1% decrease from the previous year, but operating profit increased by 2% to $358 million. Net profit was $142 million, turning a profit from a net loss of $11 million in the previous year.

In fact, Del Monte Foods, which filed for bankruptcy protection, is an unlisted company. It is a wholly owned subsidiary of Del Monte Pacific and is responsible for the U.S. canned food business. Del Monte Pacific is a multinational company headquartered in the Philippines, with operations in the United States, Japan, Peru, Colombia, and several other countries.

Canned Food Market Boomed During COVID-19, But Failed to Adapt Brand Image

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Del Monte Foods began experiencing difficulties after the COVID-19 pandemic. In 2020, as the pandemic spread and countries imposed lockdowns, demand for canned food surged, prompting Del Monte Foods to significantly increase production. However, after the pandemic ended in 2022, demand plummeted, leading to difficulties in managing excess inventory.

Del Monte Foods reported to the New Jersey Bankruptcy Court that its debts are estimated to be between $1 billion (about 1.39 trillion won) and $10 billion (about 13.9 trillion won), with the number of creditors estimated at between 10,000 and 25,000. So far, the company has secured $912.5 million (about 1.24 trillion won) through asset sales and additional loans to use as operating funds, and plans to continue business operations during the bankruptcy protection process.

Sarah Foss, head of legal and restructuring at the U.S. financial consulting firm Debtwire, told CNN, "After the pandemic ended, Del Monte Foods was unable to process excess inventory due to declining consumer demand, resulting in long-term storage in warehouses and a significant increase in selling and administrative expenses. In addition, considerable costs were incurred in closing stores. Consumer preferences have shifted away from canned foods with preservatives toward healthier alternatives, but the company failed to adapt its brand image, leading to a significant drop in sales."

The Canned Food Empire Founded 139 Years Ago...Disbanded Since the 1980s

Del Monte Foods Homepage

Del Monte was once known as the "canned food empire," reigning as the world's largest processed food company. However, since the 1980s, business divisions and sell-offs have led to the current situation where Del Monte Foods and Fresh Del Monte, which only share the brand, are now separate entities.

Del Monte Foods, the origin of the Del Monte brand, was established in 1886 in San Francisco as a food distribution company. In 1989, its fresh fruit division, Del Monte Tropical, was spun off and sold, becoming the foundation of today's Fresh Del Monte. In 2014, Del Monte Foods was sold to the Campos Group, which owns Unilab, the largest pharmaceutical company in the Philippines. The Campos Group established Del Monte Pacific as a holding company, which fully owns Del Monte Foods as a subsidiary.

Fresh Del Monte was acquired in 1996 by Jordanian businessman Mohammad Abu-Ghazaleh and was listed on the Nasdaq in 1997. Outside the United States, Fresh Del Monte holds the trademark rights for selling fresh fruit under the Del Monte brand. In 2018, the company acquired Mann Packing, a fresh vegetable supplier, expanding its business into the fresh vegetable sector alongside bananas, pineapples, and other fruits.