NEW YORK — Kraft Heinz, the food giant behind some of the world’s most recognizable pantry staples, announced Tuesday that it will split into two publicly traded companies, unwinding a merger that once promised to reshape the global packaged food business but instead became a cautionary tale.
The separation, expected to be completed in the second half of 2026, will divide the sprawling company into two distinct businesses. One, provisionally called Global Taste Elevation Co., will focus on faster-growing product categories like sauces, spreads and shelf-stable meals, anchored by brands such as Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese. The other, North American Grocery Co., will concentrate on the company’s slower-growing but still iconic grocery and foodservice portfolio, including Oscar Mayer hot dogs, Kraft Singles, Lunchables and Maxwell House coffee. Current CEO Carlos Abrams-Rivera will head the North American grocery business, while a search is underway for leadership of the global arm.
Unwinding a Mega-Merger
The split represents a sharp reversal of the 2015 Kraft–Heinz merger, engineered by Warren Buffett’s Berkshire Hathaway and Brazilian private equity firm 3G Capital. At the time, the deal created the third-largest food company in North America and the fifth-largest worldwide, with more than $28 billion in annual sales. The strategy was built on the promise of massive scale and cost-cutting, but it quickly unraveled.
Kraft Heinz slashed jobs, consolidated operations and pared back marketing to boost margins. Yet the savings failed to translate into sustainable growth. By 2019, the company stunned investors with a $15 billion write-down on its Kraft and Oscar Mayer brands, acknowledging that cost-cutting had come at the expense of innovation. Berkshire later conceded it had overpaid for the merger, while 3G gradually exited its stake.
Struggles in a Changing Market
In recent years, Kraft Heinz has struggled to keep pace with changing consumer tastes. Demand has weakened for heavily processed staples like Kraft Singles, Capri Sun and Lunchables, as shoppers increasingly seek healthier, fresher or private-label alternatives. Inflation and the rise of GLP-1 weight-loss drugs have also dented sales of snack foods.
The company’s net revenue has declined for seven straight quarters, and shares of Kraft Heinz have plunged nearly 70% since the merger. The business has also faced regulatory and reputational challenges. U.S. Health and Human Services Secretary Robert F. Kennedy Jr. has pressured food companies to phase out artificial additives; Kraft Heinz announced earlier this year that it would remove artificial colors from its products.
“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 Executive Chair Miguel Patricio in a statement.
Following the Industry Trend
The split reflects a broader shift in the packaged food industry, where conglomerates are increasingly abandoning the “everything for everyone” model. Kellogg executed a similar move in 2023, spinning off its snack brands such as Pringles and Cheez-It into Kellanova, while keeping its cereal business under WK Kellogg Co. Earlier this year, Nutella-maker Ferrero acquired WK Kellogg for $3.1 billion, and Mars struck a nearly $30 billion deal for Kellanova.
Analysts say Kraft Heinz is following that playbook in hopes that smaller, more focused companies can better respond to evolving consumer habits and reallocate resources more effectively.
“Food companies have found that their breadth of influence in the grocery store does not necessarily yield the advantages they expected,” said TD Cowen analyst Robert Moskow. “Narrower portfolios often perform better in the long run.”
Looking Ahead
Despite years of disappointing results, Kraft Heinz executives say the split could reset the company’s trajectory. Abrams-Rivera said Tuesday that Kraft Heinz’s nearly 200 brands across 55 categories had stretched management too thin. The breakup, he argued, will allow each new company to focus on its strengths — whether that’s expanding globally in fast-growing segments like condiments or doubling down on the North American staples business.
The company said headquarters will remain in Chicago and Pittsburgh, and that both businesses will continue investing in marketing, product reformulation and new distribution channels.
For consumers, the household names on supermarket shelves won’t change overnight. However, for investors, Tuesday’s announcement marks the end of an era — and perhaps the beginning of a long-awaited turnaround.
