Del Monte CEO Says Banana Prices Are Unsustainable — 'We Will Not Sell Bananas At A Loss'
The chairman says 2027 will be a turning point as the company cuts its 2026 banana gross margin outlook to 2% to 3%.
Del Monte Chairman and CEO Mohammad Abu-Ghazaleh said on the company's third-quarter earnings call Wednesday that banana prices are unsustainable for every marketer, and that "we will not sell bananas at a loss." The company, which grows and distributes fresh and prepared fruit and vegetables mostly under the Del Monte brand, also cut its 2026 banana gross margin outlook to 2% to 3%.
A warning to the whole banana trade
Asked by an analyst from Sturtevant whether 2027 normalizes or a 2% to 3% banana margin is the new normal, Abu-Ghazaleh said 2027 "is going to be kind of a turning point." He said bananas "cannot be sustainable at these prices."
He pointed to a letter Chiquita sent customers and retailers, which he said argued that cost structure and market conditions mean the business cannot be sustained. Every marketer trading bananas, he said, faces a choice "whether they want to survive or go under."
Costs are rising at the source, he said: prices for third-party growers have increased by 50 cents, 60 cents, even $1 more for the coming year. Retail pricing for next year has not yet materialized, he said, because negotiations are ongoing. The company will do no business at prices that fail to earn a decent return.
Guidance cut and farm closures
CFO Monica Vicente said full-year banana gross margins are now expected at 2% to 3%, down from 3% to 4%, on weather-related volume hits, production costs, distribution and currency pressure. Full-year inflationary pressure is now about $55 million to $65 million, with more than half hitting bananas, driven by fuel and energy, currency including the Costa Rica colon, and fertilizer.
Abu-Ghazaleh said the four Costa Rica banana farms being closed had lost money year after year, and closing them would "stop the bleeding." Vicente said pricing is one of the most important levers beyond that. The company is repurposing much of the land for premium pineapples.
The company kept its 2026 outlook for adjusted net sales growth of 13% to 15% and adjusted EBITDA of about $230 million to $240 million.
A consumer goods company, not a banana company
Abu-Ghazaleh said he now sees Del Monte as a consumer goods company with fresh and food divisions, and expects bananas to become "a very small portion" of the total over the years. The company bought Del Monte Foods earlier this year; Vicente raised the unit's outlook to about $650 million in net sales and $45 million in adjusted EBITDA, from $625 million and $35 million.
Third-quarter net sales were $1.1 billion, up 7% from a year earlier, and adjusted EPS was 50 cents. The board declared a quarterly dividend of 30 cents a share, payable December 4, 2026, to holders of record November 11, 2026.
Retailer pricing talks for next year, still unresolved by Abu-Ghazaleh's account, will test how firmly the no-loss stance holds.
Sources
- Del Monte Meets Q3 Earnings Estimates as Revenue Misses Forecasts Despite 7.2% Growth — Yahoo Finance
- Del Monte Non-GAAP EPS of $0.50 beats by $0.04, revenue of $1.1B misses by $60M — seekingalpha.com
- DMC Global Reports Third Quarter Financial Results — globenewswire.com
