Kraft Heinz Considers Splitting Food Business Worth Up to $20bn

Kraft Heinz is considering a major overhaul of its food business, including the Kraft brand, in a move that could create a new entity valued at up to $20 billion. The potential division would leave the company with products such as Heinz ketchup and Grey Poupon mustard. The move comes as the company struggles with declining demand for its processed food products and inflationary pressures.

Kraft Heinz Co. (NASDAQ: KHC), the global food giant, is reportedly planning to break up its business by spinning off a significant portion of its grocery operations, according to a report from The Wall Street Journal [1]. The move comes as the company grapples with declining demand for its processed food products and faces inflationary pressures.

The potential breakup involves separating many Kraft products into a new standalone entity, which could be valued at up to $20 billion [1]. Following the split, Kraft Heinz would retain its sauce and spread products, including the company’s flagship Heinz ketchup and Grey Poupon Dijon mustard [1]. The company has been evaluating strategic transactions to unlock shareholder value since May [2].

The decision to split the business is driven by Kraft Heinz's recent struggles with competition and a broader shift toward health-conscious diets [4]. The company has seen its share price fall 58% from its peak in May 2017, with shares closing at $26.47 on July 10, 2025, before rising 2.5% on July 11, 2025, following the WSJ report [1].

Analysts have been calling for Kraft Heinz to slim down its portfolio for some time. TD Cowen analyst Robert Moskow wrote in a research note that the company should divest certain businesses [2]. The company has already sold portions of its cheese business to the Lactalis Group and Emmit Roth USA Inc. in November 2021 [2].

The potential breakup of Kraft Heinz's grocery business follows a trend of conglomerates splitting up to focus on more profitable segments. Earlier this year, Honeywell International Inc. (HON) split into three companies to boost shareholder returns, and entertainment giant Comcast Corp. (CMCSA) considered spinning off its cable networks [4].

Kraft Heinz's grocery brands include Mac & Cheese, Ore-Ida, Philadelphia cream cheese, Oscar Mayer, Capri Sun, Velveeta, Lunchables, and Jell-O [2]. The company has faced challenges with these brands, including higher-end competition and health concerns raised by Consumer Reports about Lunchables [4].

The company is still working out which brands would be part of the spun-out entity and has discussed other scenarios with its advisers. A split could be finalized in the coming weeks, but no decision has been finalized [1].

References:
[1] https://finance.yahoo.com/news/kraft-heinz-reportedly-plans-split-183334538.html
[2] https://www.foodbusinessnews.net/articles/28616-journal-says-kraft-heinz-may-break-up-business
[3] https://finance.yahoo.com/news/kraft-heinz-stock-rises-report-182210566.html
[4] https://www.morningstar.com/news/marketwatch/20250711234/kraft-heinz-is-reportedly-weighing-a-breakup-some-analysts-have-already-said-it-should-slim-down
[5] https://www.thetimes.com/business-money/companies/article/kraft-heinz-considers-spinning-off-groceries-unit-in-20bn-move-9wfchgkl7