Kraft Heinz to Split into Two Companies to Boost Growth

Kraft Heinz announced on September 2, 2025, its intention to split into two independent, publicly traded companies, aiming to revitalize growth after years of stagnant sales. The separation is expected to be completed by the second half of 2026.

The first entity, tentatively named "Global Taste Elevation Co.," will focus on sauces, spreads, and seasonings, encompassing brands such as Heinz, Philadelphia, and Kraft Mac & Cheese. In 2024, this segment reported net sales of approximately $15.4 billion. The second company, "North American Grocery Co.," will manage grocery staples, including brands like Oscar Mayer, Kraft Singles, and Lunchables, with 2024 net sales around $10.4 billion.

Carlos Abrams-Rivera, the current CEO of Kraft Heinz, will lead the North American Grocery Co. A search is underway for a CEO to head the Global Taste Elevation Co.

Following the announcement, Kraft Heinz's stock experienced a decline of nearly 7%, closing at $26.02 on September 2, 2025.

The decision to split comes a decade after the 2015 merger between Kraft Foods and H.J. Heinz, which aimed to create a food industry powerhouse. However, the combined entity has faced difficulties adapting to changing consumer preferences, particularly a shift towards healthier and less processed foods.

Analysts have mixed views on the potential success of the split. While some see it as an opportunity to streamline operations and focus on core brands, others question whether it will effectively address the underlying issues that have plagued the company since the merger.

The split reflects broader industry trends where major food companies are restructuring to better align with evolving consumer preferences. Consumers are increasingly favoring healthier, less processed foods, prompting companies like Kraft Heinz to reevaluate their product portfolios and operational structures.

Formed in 2015 through the merger of Kraft Foods and H.J. Heinz, the company became the fifth-largest food and beverage entity globally. The merger was orchestrated by Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital. Despite initial optimism, the company struggled with declining sales and adapting to market shifts.

"Kraft Heinz's brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives, and drive scale in our most promising areas," said Miguel Patricio, Executive Chair of Kraft Heinz. "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."

The separation is expected to be completed by the second half of 2026. Kraft Heinz anticipates 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, while the current aggregate dividend level is expected to be maintained.

This move is reminiscent of other major food companies restructuring in response to market challenges. For instance, Kellogg's recent breakup led to potential acquisitions, indicating a trend towards specialization within the industry.

Kraft Heinz's decision to split into two entities marks a significant shift in its corporate strategy, aiming to better align with current market trends and consumer preferences. The success of this move will depend on the company's ability to innovate and adapt in a rapidly changing food industry landscape.