Kraft Heinz is making a big change. After ten years of merging Kraft and Heinz into one giant, the company is splitting into two. This move comes as consumer preferences shift toward healthier eating.
The split will create two distinct companies. One, called Global Taste Elevation Co., will feature popular brands like Heinz and Philadelphia cream cheese. The other, North American Grocery Co., will include legacy brands like Maxwell House and Oscar Mayer. Official names will be shared later. Kraft Heinz plans to finalize this separation in the second half of 2026.
Back in 2015, the merger aimed to leverage the companies’ size. However, changing consumer habits have complicated this goal. More families now want healthier options, and Kraft Heinz has struggled to keep up. In 2021, it sold its Planters nut business and natural cheese division, focusing instead on brands like P3 protein snacks. Yet, Kraft Heinz’s net sales fell by 3% in 2024, showcasing ongoing challenges.
Executive Chair Miguel Patricio noted that while Kraft Heinz has beloved brands, its complex structure hampers effective investment and innovation.
The journey to the merger began in 2013 when billionaire Warren Buffett and Brazilian investment firm 3G Capital bought Heinz for $23 billion. At that time, this purchase was a landmark deal in the food industry. The goal was to boost Heinz’s condiment sales while cutting costs, leading to significant layoffs shortly after the acquisition.
When Kraft merged with Heinz in 2015, it became the fifth-largest food and beverage company globally, generating $28 billion in annual revenue. However, the merger faced challenges as many consumers moved away from highly processed foods. Competing with cheaper store brands added to the struggle, where a bottle of Heinz ketchup costs around $2.98, while Walmart’s brand is just 98 cents.
In 2019, Kraft Heinz had to write down the value of its Oscar Mayer and Kraft brands by $15.4 billion. Investors blamed the company’s leadership, suggesting that its focus on cost-cutting was harming brand innovation.
In recent years, sales have been declining. Kraft Heinz lowered its sales forecast for the year, citing weaker customer spending and the fallout from tariffs imposed during the Trump administration.
Buffett expressed disappointment about the split, mentioning the potential cost of $300 million and a timeline of about a year for completion. He also noted that Berkshire Hathaway, which owns a significant stake in Kraft Heinz, disagreed with this decision. Their stock price has dropped roughly 70% since the merger.
Despite these challenges, Buffett believes that separating the companies won’t solve their issues. Both companies will keep their headquarters in Chicago and Pittsburgh.
This trend of large food companies splitting is not isolated. Recently, Keurig Dr Pepper announced a similar move. In 2023, Kellogg Co. also divided into two entities, and Mars acquired one of the resulting companies.
As Kraft Heinz embarks on this new chapter, it aims to adapt to the evolving food landscape and align better with consumer preferences.
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Warren Buffett, Mergers and acquisitions, General news, Illinois, IL State Wire, PA State Wire, AP Top News, Pennsylvania, Miguel Patricio, Business, WK Kellogg Co., Pittsburgh, Oscar Mayer, Food and beverage manufacturing, Kellanova, U.S. news, Anheuser-Busch InBev SANV, Carlos Abrams-Rivera, Donald Trump, Keurig Dr Pepper, Inc., Philadelphia, Mondelez International, Inc., Greg Abel, Chicago, U.S. News
