- Kraft Heinz will split into two companies, one focusing on sauces, spreads and shelf-stable meals, and the other on grocery items.
- Since a megamerger in 2015, Kraft Heinz has struggled with sales and decreasing shares.
- The split is meant to help reduce complexity and improve focus among the company's 56 product categories.
A decade after its megamerger, Kraft Heinz announced on Tuesday that it will be splitting into two companies.
The two new publicly traded businesses haven’t yet been named, per CNN. One will focus on sauces, spreads and shelf-stable meals, which are the faster growing businesses, including Philadelphia cream cheese, Heinz ketchup and Kraft Mac & Cheese. The other will focus on grocery items and food away from home businesses such as the Oscar Mayer, Kraft Singles and Lunchables brands.
The two new companies are expected to start operating separately in the second half of 2026.
Why the company is splitting
The company said that the split aims to create businesses with more focus and less complexity, per The Wall Street Journal. Kraft Heinz encompasses 56 different product categories.
“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,” Kraft Heinz executive chair Miguel Patricio said in a statement, per CNN.
The company’s Chief Executive Officer Carlos Abrams-Rivera echoed the same sentiment in an interview with NPR.
“The complexity of our business has impacted that ability to realize the full strength of our brands and operations,” Abrams-Rivera said.
The move reflects a reversal of the food industry’s yearslong strategy of creating deals to build scale.
“Scale by itself is not the answer, but having scale along with focus creates opportunities,” Abrams-Rivera said in an interview with The Wall Street Journal.
Kraft Heinz’s struggles after its 2015 merger
This split reverses a massive merger in 2015 that was largely unsuccessful and was arranged by Warren Buffett’s Berkshire Hathaway and the investment firm 3G Capital, per The Wall Street Journal.
The merger created the third-largest food company in North America by bringing together dozens of iconic packaged food brands.
After a few years, the company began to quickly lose value. In the most recent quarter, Kraft Heinz’s sales dropped 1.9%, the seventh-straight quarter of decline, per CNN. Since the merger was completed in 2015, shares of the company have fallen more than 68%.
According to NPR, while its rivals were investing in new ideas to keep up with changes in consumer tastes, Kraft Heinz spent years cutting its costs.
The Kraft Heinz division follows other companies in the food and beverage industry who have had major splits, per NPR. In 2023, Kellogg split into two companies: a snack company called Kellanova and a cereal business named WK Kellogg. Keurig Dr. Pepper is also working on undoing a merger from 2018.