Kraft Heinz said on Tuesday that it will divide into two separate companies, breaking up a 2015 megamerger that never achieved the growth its supporters hoped for.
One company will be a grocery and prepared meal business, and the other will contain sauces and spreads like household brands Heinz ketchup, Kraft Mac & Cheese, and Philadelphia cream cheese.
The breakup, due to be finished in the second half of 2026, is the newest instance of international consumer titans unwinding their former popular conglomerate models amid anemic sales, diminished valuations, and changing consumer habits. Kraft Heinz shares dropped 7.2% in afternoon trading despite rumors that a break-up was imminent.
The 2015 merger masterminded by Warren Buffett’s Berkshire Hathaway and Brazilian private equity group 3G Capital formed a $45 billion packaged-food giant. But about nine years on, the company’s market value has reduced to only $33 billion. In August, Berkshire registered a $3.76 billion write-down on its 27.4% holding in the company.
Buffett conceded disappointment at the result, saying in an interview with CNBC, “The merger was not a great idea, but disassembling the company won’t solve its issues.” Kraft Heinz stock has declined about 60% since the merger, a fall compounded by shifting consumer tastes and the economic fallout of the COVID-19 pandemic.
Executive board chair Miguel Patricio stated the separation would make Kraft Heinz’s structure simpler, making it simpler to invest in growth opportunities and deploy resources better. But analysts are being cautious. “Unless both companies invest in innovation and protect against private-label encroachment, the breakup will not do more than provide a short-term financial boost,” said Emarketer analyst Suzy Davidkhanian.
In the plan, the grocery business – which encompasses brands such as Oscar Mayer and Lunchables and generated around $10.4 billion in 2024 sales – will be headed by incumbent CEO Carlos Abrams-Rivera. The sauces and spreads division with $15.4 billion in yearly revenue will have a new top executive. Kraft Heinz anticipates the reorganization to cost between $300 million but claims most costs will be recouped within a short period.
The action follows a wider spate of upheavals in the food and drink sector. Last week, Keurig Dr Pepper secured a $18 billion acquisition of JDE Peet’s, which will also divide the merged group into distinct listed businesses.
Although Kraft Heinz is optimistic that the split will release value, doubts are high. “The issues underlying the poor performance would take many years of investment to reverse,” BNP’s Max Gumport wrote.
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