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Del Monte Seeks Split with Charlie the Tuna

May 16th, 2008 @ 2:20 pm

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Tags: Private Equity, Change, Chief Marketing Officer, Del Monte, StarKist, Transportation, Food & Beverage, Marketing Research, Investment, Financial Services

Big changes are afoot at Del Monte. The maker of pet foods, canned produce, Contadina sauces, and College Inn soups is looking to unload its StarKist seafood business, home of Charlie the Tuna, and is reorganizing its marketing department under a chief marketing officer, a newly created position.

Last November, Bear Stearns analyst Ken Goldman said that the “fading of the private equity market” made a sale of StarKist unlikely. That may still be the case, especially given that the private equity market has only faded more since then. charliethetunaBut in response to media reports, Del Monte on Friday confirmed that it is studying “strategic alternatives” for StarKist, though no sale is imminent.

StarKist is a big part of Del Monte’s consumer-foods unit. But skyrocketing tuna costs, as well as ever-rising transportation expenses, are slicing value from the unit. In recent years, Del Monte has increasingly concentrated on its pet-food businesses. In 2006, it bought Milk-Bone and other pet-food brands from Kraft for $580 million.

In a conference call with analysts last January, Chairman and CEO Rick Wolford declined to talk about the possibility of selling StarKist, but he did note that it was “a business model distinct from the rest of our portfolio.”

What makes it distinct is mainly its supply chain. Farming and packing fish is a wholly different – and currently, much more problematic – enterprise than farming and packing fruits and vegetables or making soup.

Still, selling cat food is even more distinct, and Del Monte isn’t thinking about letting that business go, what with its much higher margins and much more stable demand curve.

Meanwhile, Del Monte announced this week that it has hired William Pearce as chief marketing officer, a newly created position. He previously held the same job at Taco Bell. The company said it would centralize all of its marketing functions at its San Francisco headquarters, relocating about 100 positions from its Pittsburgh office.

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Dan Mitchell

Dan Mitchell has spent the past 20 years writing and editing for newspapers, magazines, and Web publications. Currently, he writes the What's Online column for the Saturday business section of the New York Times. He has also written for the Chicago Tribune, the Minneapolis Star-Tribune, National Public Radio, Business 2.0, and Wired. more »

AboutFood Industry

BNET Food provides daily industry news coverage and insights for managers and executives, focusing on the major companies in the food and beverage sector, from manufacturers to retailers. In addition to detailed company profiles, we bring you critical analysis on new alliances and partnerships, new products, mergers and acquisitions, labor and cost management, investments and deal flow, and a host of other important business issues.

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