Insight Focus
Del Monte has filed bankruptcy amid rising metal can costs. Section 232 tariffs significantly raised production expenses, limiting pricing power and export opportunities. Food companies must adapt by focusing on high-margin products, innovating brands and improving efficiencies.
Del Monte Files Bankruptcy Amid Rising Can Costs
Del Monte Foods, the nearly 140-year-old company known for its wide range of canned fruits and vegetables, filed for Chapter 11 bankruptcy protection on July 1, 2025.
The California-based company, burdened by more than USD 1.2 billion in secured debt, cited rising borrowing costs, pandemic-related inventory challenges, and a shifting global economy as key factors behind its financial struggles. As part of a court-supervised restructuring, Del Monte has agreed to sell most of its assets while continuing operations during the bankruptcy process.
A significant contributor to Del Monte’s financial difficulties has been the rising cost of metal cans. The Producer Price Index (PPI) for metal cans showed a steady increase starting early in 2025, followed by a dramatic spike between April and May of this year.
Source: St. Louis Fed
Section 232 Tariffs Pressure Producers
This was due to the Section 232 tariffs on imported steel, which significantly increased the cost of production of metal cans. Given the heavily commoditized nature of Del Monte’s canned goods, its margins were unlikely to be high. Therefore, dramatically higher cost of metal cans presents significant financial pressure.
While, in theory, cost increases can be passed on to consumers, in this case, the CPI for processed fruits and vegetables rose only by a very moderate amount—nowhere near the spike in metal can costs.
This leaves the international market. First, US-produced canned fruits and vegetables have been mostly for domestic consumption. Second, the export price index (EPI) of preserved fruit and vegetables actually went down from April to May.
If you recall, the EU announced its countermeasures to section 232 tariffs that included preserved and processed fruits and vegetables. Although these measures were suspended, they still led EU importers to seek alternative suppliers, even for volumes they had previously sourced from US exporters.
This leaves the third option: reducing production of goods on which Del Monte is losing money. Unfortunately, the production of canned goods is very capital intensive, including the extensive use of automation. Reducing production doesn’t actually do a whole lot in terms of reducing cost pressure, as the industry’s cost structure relies on high production volumes to achieve economies of scale.
Companies Must Adapt Strategies
In other words, the Section 232 tariffs—which increased the cost of production for metal cans in the US—played a significant role in Del Monte’s bankruptcy. To cope, companies in the processed food industry must look to their product portfolios and identify SKUs with the strongest pricing power, while redirecting commoditized SKUs toward less price-sensitive market segments.
Whether through investing in brand transformations to boost pricing power, creating new ways to add value to existing products for higher margins, or entering new B2B sales channels, food processing and manufacturing companies must find ways to adapt to this new short-to-medium-term operational reality. Cost pressures driven by geopolitical forces are unlikely to ease any time soon.
In product categories where pennies on a product can make or break a company’s financial viability, it is imperative for these companies to identify efficiencies wherever possible—and to innovate where necessary.
