- Del Monte Pacific Limited is closing three facilities that produce peas, corn, carrots, spinach, lima beans and mixed vegetables. Facilities in Sleepy Eye, Minnesota and Mendota, Illinois will shut on or around June 2020, the company told Food Dive. A facility in Crystal City, Texas closed Tuesday. The company plans to sell another in Cambria, Wisconsin.
- Production at these locations will be transitioned to the other six Del Monte production facilities in the U.S. A total of about 188 full-time employees and 656 seasonal employees will be laid off as a result of the closures, a company spokesperson said. Del Monte would not disclose how much money the plant closures will save. Del Monte currently has more than 10,000 employees.
- "This decision is difficult and has come after careful consideration," the company said in a statement to Food Dive. "This restructuring is a necessary step for us to remain competitive in a rapidly changing marketplace. Our asset-light strategy will lead to more efficient and lower cost operations."
For several years, Del Monte has looked outside of the can for growth opportunities. Executives at the 133-year-old business, under the leadership of CEO Greg Longstreet, had expressed concern that they were missing out on lucrative opportunities because they were so focused on maintaining their dominance in the canned area that was not growing.
In an effort to better position itself to tap into consumer trends such as snacking, convenience and healthy eating, the canned fruit and vegetable company — not to be confused with Florida-based Fresh Del Monte Produce, which sells fresh fruits and vegetables and was spun off in 1989 — is expanding its offerings as it introduces frozen and refrigerated products for the first time and moves into other parts of the grocery store, such as the deli.
The closings announced this week was brought on by Del Monte’s parent company, Singapore-based Del Monte Pacific Limited. The consolidation at Del Monte was done to "fully utilize the capacity of its existing production facilities and increase its focus on branded growth and innovation," the company said in a press release.
Other companies have cut jobs and shuttered plants as they search for savings. Last year, General Mills announced plans to cut 625 jobs to trim costs and improve performance in its yogurt and baking brands. TreeHouse Foods has cut hundreds of jobs in the last few years by closing plants, as well as offices in Omaha, Nebraska and St. Louis. Nestlé is taking a more aggressive approach, closing one of its global factories every month in order to streamline its operations.
Although currently a popular approach for cost savings, there is little proof that this strategy is as effective as companies hope. Kraft Heinz cut more than 1,200 jobs in 2016 and 2017 as part of its goal to trim 5,150 jobs. The company continues to face sagging demand for many products in its portfolio as consumers flock toward healthier, fresher and natural brands. In addition, General Mills weathered several quarters of disappointing sales even after it made deep cuts to its workforce.
Canned vegetables and fruit found in the center aisle have been losing popularity to fresh alternatives — a trend not lost on executives at Del Monte.
It's also facing financial hardship from lower margins that are partly being squeezed by the Trump administration’s tariffs on steel and aluminum imports. The canned produce manufacturer is working to offset these increases by improving operational efficiencies, reducing costs and increasing margins, according to a recent earnings report. The plant closures and sale will go a long way toward streamlining its operations and helping improve its bottom line. Del Monte told Food Dive there are no other sales or divestitures planned beyond those being announced this week.
Despite its out-of-favor product mix for the modern consumer, the Del Monte brand has one fundamental advantage. Thanks to its household recognition as a produce purveyor, the brand is synonymous with healthy, wholesome food, which it can use in its advantage as it pivots into other, more popular categories. Since cans are unlikely to come back into favor with consumers anytime soon, the company is focusing on generating demand with its innovative new product lines. The Del Monte portfolio will go a long way toward stoking that interest among consumers.
Its Contadina brand has pizza bites while Del Monte has its own bites stuffed with ingredients such as spinach and feta and broccoli and cheddar. Both brands are embracing cauliflower crust in their offerings. Del Monte also will be selling a non-dairy refrigerated probiotic parfait in the produce department, veggie-based dips that could be a lower-calorie alternative to hummus and veggie bowls featuring ancient grains.
Even though there are signs of improvement, it's going to take more than workforce cuts to help Del Monte regain momentum in the U.S. It is making strides by investing in new categories, but it will take time to determine if these products have staying power and can compete with other big-name players introducing similar items to the market place.