Kraft Heinz Pauses Spin-Off to Reinvest $600M in Brand Growth

Date of Call: Feb 11, 2026

Business Commentary:

Investment in Brands and Growth Strategy:

• The company plans to increase its investment by $600 million to address underinvestment in its brands.
• This decision is based on an exploration of opportunities to return to organic growth, focusing on brand responsiveness to investment.

Spin-off Pause and Focus on Growth:

• Kraft Heinz announced a pause on its spin-off plan to redirect all focus and resources to returning the company to growth.
• The pause is due to the discovery of significant short-term opportunities to fix the business and improve competitiveness.

Phasing of Investments and Expected Outcomes:

• The investment will ramp up in Q2, with half allocated to price, product, and packaging improvements, and the remainder to SG&A and commercial capabilities.
• The company expects to see meaningful results in the back half of the year, including market share gains and improved trends.

Commodity Management and Portfolio Optimization:

• The company remains disciplined in following commodity curves and will continue to be selective in its investments.
• There is a focus on improving the overall portfolio, with specific attention to underperforming areas while maintaining strengths in other segments.

SNAP Impact and Mitigation Strategy:

• SNAP represents a 13% headwind for the U.S. retail business compared to an industry average of 11%.
• Mitigation strategies include investing in opening price points and small pack sizes to compete effectively in this segment.

Sentiment Analysis:

Overall Tone: Positive

• "I have a lot of confidence that we're going to be able to return this company to solid, profitable organic margin enhancing growth." "We would aim to be in a position where we return the company to growth." "We should continue to... see emerging markets continue to deliver strong results."

Q&A:

• Question from Andrew Lazar (Barclays Bank PLC): Maybe to start off, Steve. In the prepared remarks, you mentioned a bunch of times how Kraft Heinz is sort of underinvested in its brands. And the incremental $600 million is an effort to sort of correct that. I guess, how much of this is simply the company catching up to where investment levels should have been, so more company specific versus maybe acknowledging the currently more challenging industry environment in which other food names have also raised investment levels, including making price investments. And then following on that, how do you see this level of investment? Or do you see this level of investment as sort of the right base of spending to be able to grow from or will you have to reassess that as you go?
  Response: The $600M investment is about returning to a sufficient level to drive organic growth, not a reaction to competitors, and is seen as an appropriate base going forward.

• Question from Peter Galbo (BofA Securities): I guess, Steve, just going back on your comments in regarding to Andrew's question just now, when we all met a number of weeks ago with you I think your commentary was, 'Hey, I had to sign off on the spin before coming on board.' And obviously, today, you're announcing a pause. So just maybe help us understand a little bit more even what's happened in the last 4 weeks to kind of caused that change in terms of the thinking. And then as a secondary kind of follow-up to that, just how should we be framing a temporary pause versus maybe a more indefinite pause, would be helpful?
  Response: The spin was paused to focus 100% on returning the company to organic growth; no end date is set, preserving future optionality.

• Question from David Palmer (Evercore ISI Institutional Equities): Thanks. Good morning, Steve, and welcome. I wanted to ask you about the investment and maybe what we're going to see in the market in the scanner data. How -- first of all, how did you arrive at $600 million being the right number. But but also perhaps discuss the phasing of that spending and maybe even categories and brands we could expect to see results earlier versus maybe later.
  Response: Spend ramps up in Q2, with meaningful results expected in the back half; half is for price/product/packaging, with a focus on the North American Grocery portfolio and iconic brands like Heinz and Philadelphia.

• Question from Stephen Robert Powers (Deutsche Bank AG): Great. Steve, so I wanted to just follow up on Peter's earlier question. You talked about how this decision to postpone the separation was kind of premised by or premised on the opportunities you've uncovered to turn around the business in the short term. And I guess the natural follow-on question to that for me, my perspective is what -- how do we define short term? Is that -- do we need to see results in the next couple of quarters in the course of 2025? And therefore, the separation has postponed sort of until '26? Or is there a different time line associated with sort of the short-term response that you're expecting? And then if I could, then the second question would be, you talked about where these investments will be focused kind of by brand. I'm assuming that these are disproportionately focused on the U.S., but maybe just a little bit of elaboration if there's investment, whether brand or commercial investments that you see overseas as well?
  Response: Short term means aiming to exit 2026 with positive trends and target growth in 2027; investments are disproportionately U.S.-focused, with international markets already performing well.

• Question from Robert Moskow (TD Cowen): Thanks for the question. Steve, you mentioned that you want to put the resources against brands that respond to investment. And I was wondering in the work you did internally. Did you find brands that have not responded well to investment as well? Because I think the nagging concern among many investors is that the portfolio has a lot of antiquated brands, the quality gap with competition has widened too far and that they just are -- just won't respond. And then secondly, I wanted a follow-up on comments on the last earnings call from Carlos about investing in better coordination for your commodity exposure like I think he said that he thought the company had fallen behind vertically integrated players and meat, coffee and cheese. And I just wanted to know if -- I didn't see that in the comments, do you feel like you have to invest in that, too? They're kind of related.
  Response: Focus is on brands showing best response; some portfolio will always be challenged, but winners should outpace. Commodity coordination remains unchanged; discipline on pricing will continue.

• Question from Michael Lavery (Piper Sandler & Co.): Just wondering if you could give us any sense of where you land long term? Do you think the long-term algo changes? Is this plan set to put you on algo and if so, with what timing? And then maybe just a follow-up on this year, would you have any repurchases considered in the guidance? And how should we think about that?
  Response: Too early for long-term algorithms; target return to growth in 2027. Capital allocation priority is deploying excess cash to the business, then maintaining ~3x net leverage; debt paydown is planned for 2026.

• Question from Leah Jordan (Goldman Sachs Group, Inc.): I wanted to ask about SNAP, given you added a headwind to your outlook this year. What is your SNAP exposure today? How much have the recent SNAP changes impacted your business so far? And I think, ultimately, how do you think about addressing the needs for this customer cohort versus balancing the broader needs we've talked about so far this morning across your portfolio? And I guess, ultimately, how does this impact your view on the need to invest in base prices versus promotions as well?
  Response: SNAP is a headwind but presents an opportunity via opening price points and small packs; exposure is ~13% of U.S. retail, over-indexing slightly. The $600M includes investment in opening price points for ~40% of categories to mitigate the SNAP headwind.

• Question from Christopher Carey (Wells Fargo Securities, LLC): Hi. Good morning, everyone. I want to ask about the investment into the concept of value pricing. In the prepared remarks today, you talked about leaning in on promotional activity. You talked about opening price points. You talked about revisiting base prices where necessary, those all kind of have different lead times associated with them. I was just curious how this -- how you envision this playing out? Will you lead with more promotional activity early starting in Q2? Should we expect price rollbacks beginning in Q2 and the fields with the packaging investments, it certainly feels like there's going to be some revenue growth management associated with this, which tend to have longer lead times. So maybe price pack is a bit later in the curve, right? So obviously, I'm just trying to understand how the implementation of the concept of value is going to happen as you phase through this between promotions, price rollbacks and some of the price pack architecture initiatives you might have? Any clarity there would be helpful.
  Response: Promotional and price adjustments can be quick; price-pack architecture takes longer. Majority of $600M is for marketing/R&D/headcount; price-related investments will ramp in Q2, with most impact in the second half.

• Question from John Baumgartner (Mizuho Securities USA LLC): Thanks for the question. Steve, I'd like to ask about the reinvestment. You're ramping the financial resources. But if we could focus on the softer skills, how you connect with consumers? How you stand out to retailers on merits other than just maybe scale and trade promotion? Are the soft skills, those consumer-facing skills, when you improve those, is it a matter of like technology and insight at this point? Is it a matter of augmenting personnel, changing the culture? Just where do you see the company needing to improve aside from financial support in the P&L? And how much of a heavy lift do you anticipate that to be?
  Response: Need to bolster commercial personnel and invest in technology/AI; focus is on consumer-first mindset and better in-store execution, which is welcome news to customers.

Contradiction Point 1

Purpose and Baseline for Brand Investment

Contradiction on whether new investment is a catch-up or a baseline reset.

Is the $600 million brand investment aimed at addressing past underinvestment or responding to a more challenging industry environment, and is this new spending level appropriate for future growth? - Andrew Lazar (Barclays Bank PLC)

2025Q4: The investment is mainly about returning the company to its appropriate baseline of sufficiency for brand investment... - Steven Cahillane(CEO)

How much of the 2025 profit revision is attributed to increased brand spending versus higher costs and volume deleverage, and why isn't more being spent now to accelerate volume growth next year? - Andrew Lazar (Barclays Bank PLC)

2025Q3: The profit revision is **not** linked to incremental investments beyond previously communicated plans. - Andre Maciel(CFO) and Carlos Abrams-Rivera(COO)

Contradiction Point 2

Spin-off Separation Timeline and Rationale

Contradiction on the strategic certainty and timeline for the separation.

What led to the decision to pause the spin-off despite prior comments about needing sign-off before joining, and is this pause temporary or indefinite? - Peter Galbo (BofA Securities)

2025Q4: The CEO fully endorses the strategic rationale for the separation... The pause preserves optionality for future portfolio optimization, and there is no set end date for re-evaluating the separation. - Steven Cahillane(CEO)

Have you considered adjusting the spin plan, such as leadership or brand allocation, based on investor feedback? - Peter Galbo (BofA Securities)

2025Q3: The decision to split is based on creating two stronger, focused companies to unlock shareholder value... Ongoing work: Evaluating the best way to structure... ahead of the second-half 2026 separation. - Carlos Abrams-Rivera(COO) and Andre Maciel(CFO)

Contradiction Point 3

Phasing and Impact of Promotional Investments

Contradiction on when promotional investments are concentrated and their expected impact.

How will the "value pricing" investment evolve over time, with promotions leading and price pack changes following? - Christopher Carey (Wells Fargo)

2025Q4: The majority of the $600 million is for marketing, R&D, and commercial capabilities. Price-related investments will be more concentrated in the second half of 2026... - Andre Maciel(CFO)

What portion of the 2025 profit revision stems from increased brand spending versus higher costs and volume deleverage, and why isn't more being spent now to boost next year's volume? - Andrew Lazar (Barclays Bank PLC)

2025Q3: Current investments provide opening price points; further marketing would not yield returns at this time as increases are concentrated in the second half. - Andre Maciel(CFO) and Carlos Abrams-Rivera(COO)

Contradiction Point 4

Timeline for Organic Growth Recovery

Contradiction on the near-term target for returning to organic growth.

What defines the "short term" for business turnaround results, has the separation been pushed to 2026, and are overseas investments being made? - Stephen Robert Powers (Deutsche Bank)

2025Q4: The goal is to see a change in trend by the back half of 2026 and to exit 2026 with momentum to aim for organic growth in 2027. - Steven Cahillane(CEO)

What is the timeline for stabilizing North America Retail organic sales growth and its impact on overall top-line trends? - Megan Christine Alexander (Morgan Stanley)

2025Q2: Confidence comes from the investment in the Brand Growth System... Combined with stepped-up marketing investment, this drives expected continued improvement. - Carlos A. Abrams-Rivera(CEO)

Contradiction Point 5

Capital Allocation Priority and Share Repurchases

Contradiction on the priority of using excess cash for debt reduction versus potential share repurchases.

What is the long-term algorithm target, and will there be share repurchases in 2026? - Michael Lavery (Piper Sandler)

2025Q4: Capital allocation priority #1 is deploying excess cash into the business... Repurchases could be considered only after debt is at the target level and the business is on a solid organic growth trajectory. - Andre Maciel(CFO)

Given lower reinvestment (e.g., 4.8% marketing) compared to peers' significant margin pressures and ongoing volume declines, what gives confidence in the appropriateness of your investment plans for the year? - Max Andrew Stephen Gumport (BNP Paribas Exane)

2025Q2: The company maintains disciplined, tested investments. The magnitude is appropriate... The focus is on growing the business healthily through product strength and marketing, not just price. - Andre Maciel(CFO)