Kraft Heinz splits itself in bid to revive growth
A sign outside of the Aon Center marks the location for the headquarters of Kraft Heinz on May 14, 2025 in Chicago, Illinois. (File photo: Getty Images via AFP/Scott Olson)
Kraft Heinz will split into two listed companies, one focused on groceries and the other on sauces and spreads, the US packaged foods maker said on Tuesday (Sep 2), seeking to jump-start growth after years of sluggish sales.
The move dismantles the decade-old merger between H.J. Heinz Co and Kraft Foods Group, which was backed by Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital, that created a US$45 billion packaged food giant.
Tuesday's announcement is also the latest in a series of corporate break-ups as price-conscious shoppers shifting to cheaper alternatives such as private-labels force companies to pursue focused strategies.
Kraft Heinz's decision creates one firm focused on sauces and spreads such as Heinz, Philadelphia and Kraft Mac & Cheese, which had sales of about US$15.4 billion in 2024, while the other would consist of processed foods and ready meal brands including Oscar Mayer and Lunchables that had about US$10.4 billion in annual sales.
The grocery unit will be headed by Kraft Heinz's current CEO Carlos Abrams-Rivera and the company said it was looking for potential CEO candidates for the sauces unit.
"Kraft Heinz's brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritise initiatives and drive scale in our most promising areas," said Miguel Patricio, executive chair of the Kraft Heinz board.
Kraft Heinz said in May it was looking at opportunities for mergers and acquisitions to shore up shareholder value.
The company expects the tax-free spinoff to close in the second half of 2026.
The Wall Street Journal reported last week that Kraft Heinz was nearing a plan to break itself up.
The company's shares were largely unchanged in premarket trading. The stock has lost about 21 per cent of its value over the past twelve months.
Last week, US soft drinks giant Keurig Dr Pepper announced an US$18 billion takeover of JDE Peet's that would result in the splitting of the merged entity's coffee operations and other beverage businesses into two separate publicly listed companies.
The deal also partly reverses a 2018 merger that created Keurig Dr Pepper by combining Keurig Green Mountain and Dr Pepper Snapple.
