Kraft Heinz Set to Split into Two Publicly Traded Companies

Kraft Heinz has announced plans to split into two independent, publicly traded companies, effectively reversing the 2015 merger that created the conglomerate. The separation aims to streamline operations and better allocate resources to each brand's potential.

Details of the Split

The first entity, tentatively named Global Taste Elevation Co., will focus on global brands such as Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese. In 2024, it reported net sales of approximately $15.4 billion and an adjusted EBITDA of $4.0 billion. Approximately 75% of its sales come from sauces, spreads, and seasonings, with emerging markets and away-from-home channels each contributing about 20% of net sales.

The second entity, North American Grocery Co., will concentrate on brands like Oscar Mayer, Kraft Singles, and Lunchables. In 2024, it reported net sales of around $10.4 billion and an adjusted EBITDA of $2.3 billion. Approximately 75% of its net sales come from brands that are ranked #1 or #2 in their respective categories.

The separation is expected to be completed in the second half of 2026. Carlos Abrams-Rivera, the current CEO of Kraft Heinz, will lead the North American Grocery Co., while a new CEO is being sought for the Global Taste Elevation Co.

Background and Rationale

The 2015 merger between Kraft Foods Group and H.J. Heinz Co., orchestrated by Berkshire Hathaway and 3G Capital, aimed to create a $45 billion food conglomerate. However, the combined company faced challenges adapting to shifting consumer preferences toward healthier and less processed foods. This trend, coupled with increased competition from store brands and premium health-focused rivals, led to declining sales and market share.

In recent years, Kraft Heinz has struggled with organic sales declining for seven consecutive quarters and share prices dropping over 25% in a year. The company has also faced challenges in distinguishing its products from cheaper store brands.

The decision to split is seen as a strategy to create more specialization and better capital allocation. 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."

Financial Implications

Kraft Heinz expects up to $300 million in dis-synergies tied to the transaction but has identified opportunities to offset much of this impact. Both companies are targeting capital structures consistent with investment-grade credit ratings, and the current aggregate dividend level is expected to be maintained.

As of September 4, 2025, Kraft Heinz Co. (KHC) stock is trading at $27.11, with a slight increase from the previous close.

Industry Context

The split aligns with broader industry trends where major food companies are restructuring to adapt to changing consumer habits. For instance, Kellogg spun off its snacks business into Kellanova in 2023, and Keurig Dr Pepper announced plans to separate its coffee operations from other beverage businesses in 2025.

Potential Themes for Further Exploration

1. Impact on Consumers: How will the split affect product offerings, pricing, and consumer choices?

2. Investor Perspective: Analyzing the potential benefits and risks for shareholders in light of the company's restructuring.

3. Industry Trends: Examining the broader trend of major food companies splitting to focus on core competencies and adapt to market changes.

4. Leadership and Strategy: Evaluating the leadership changes and strategic decisions leading to the split and their potential effectiveness.

This comprehensive overview provides the necessary factual information to craft a detailed news article on Kraft Heinz's decision to split into two independent companies.