Kraft Heinz to Split into Two Independent Companies to Enhance Brand Focus

Kraft Heinz announced on September 2, 2025, its plan to split into two independent, publicly traded companies, aiming to streamline operations and enhance brand focus. The separation is expected to be completed in the second half of 2026.

The first entity, tentatively named "Global Taste Elevation Co.," will encompass brands such as Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese, focusing on sauces, spreads, and shelf-stable meals. In 2024, this division reported approximately $15.4 billion in net sales and around $4.0 billion in adjusted EBITDA. Approximately 75% of its net sales come from sauces, spreads, and seasonings, with about 20% from emerging markets and another 20% from away-from-home channels.

The second entity, referred to as "North American Grocery Co.," will include brands like Oscar Mayer, Kraft Singles, and Lunchables, concentrating on grocery items and foodservice products. In 2024, it generated approximately $10.4 billion in net sales and about $2.3 billion in adjusted EBITDA. Approximately 75% of its net sales come from brands that are number one or two in their respective categories.

Carlos Abrams-Rivera, the current CEO of Kraft Heinz, will lead the North American Grocery Co. upon completion of the separation. The company is collaborating with an executive search firm to identify a CEO for the Global Taste Elevation Co. Both companies will maintain their headquarters in Chicago and Pittsburgh.

The decision to separate follows a decade-long merger between Kraft and Heinz, which faced challenges adapting to shifting consumer preferences toward healthier options and increased competition from store brands. By splitting, Kraft Heinz aims to reduce complexity and allocate resources more effectively to unlock the potential of each brand. Executive Chair Miguel Patricio stated, "By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value."

This restructuring reflects a broader trend in the food and beverage industry, where companies like Kellogg and Keurig Dr Pepper have also pursued similar breakups to adapt to changing market dynamics. For instance, Kellogg split into two companies in 2023, with Mars acquiring Kellanova, the snack division, and Ferrero planning to buy WK Kellogg, the cereal company.

Kraft Heinz expects the tax-free spinoff to close in the second half of 2026. The company anticipates incurring up to $300 million in separation-related costs but plans to reduce much of that expense quickly. Both companies aim to maintain investment-grade credit ratings and retain financial flexibility.

Following the announcement, Kraft Heinz shares declined by approximately 4.8%. Over the past year, the stock has lost about 21% of its value, reflecting investor concerns about the company's performance and the effectiveness of the proposed split.

The 2015 merger that Warren Buffett’s Berkshire Hathaway helped engineer alongside Brazilian private equity firm 3G Capital created a $45 billion company, with a goal of cutting costs and boosting growth in iconic brands such as Heinz Beanz, Jell-O, and Philadelphia cream cheese. Instead, shares have lost about 60% of their value in that time as consumers reined in spending, particularly in the wake of the COVID-19 pandemic.

The planned separation of Kraft Heinz into two focused entities represents a significant shift in the company's strategy, aiming to better align with consumer trends and improve operational efficiency. As the food industry continues to evolve, the success of this move will depend on effective execution and the ability of each new company to innovate and meet market demands.