Kraft Heinz Split: Strategic Restructuring to Form Two New Publicly Traded Companies by 2026

Kraft Heinz, a leading entity in the global packaged foods industry, has announced its strategic plan to divide into two distinct publicly traded companies, marking the unwinding of its ambitious 2015 merger. This significant restructuring aims to refine their business focus and enhance operational efficiency after years of grappling with market shifts and internal complexities.

The merger, which originally aimed to create a formidable force in the food industry by bringing together the iconic brands of Kraft Foods and H.J. Heinz, was orchestrated by Warren Buffett’s Berkshire Hathaway and Brazilian private equity firm 3G Capital. Despite reducing costs aggressively, the combined entity struggled to sustain growth. The complexities of managing vast and varied product lines over the years have overshadowed the potential strengths of individual brands, leading to a continuous drop in value.

Under the new restructuring plan, one company will prioritize high-growth segments, capitalizing on the popularity of sauces, spreads, and shelf-stable meals. This company will manage renowned brands such as Heinz, Philadelphia, and Kraft Mac & Cheese, which collectively generated approximately $15.4 billion in net sales in 2024, primarily from spreads, seasonings, and sauces.

The other entity, labeled temporarily as “North American Grocery Co.,” will encompass well-established brands like Oscar Mayer, Kraft Singles, and Lunchables, brands that have faced a slower growth trajectory. This segment reported around $10.4 billion in net sales in 2024. This company will continue under the leadership of current CEO Carlos Abrams-Rivera, focusing on stabilizing growth in the grocery sector.

Miguel Patricio, Executive Chair of Kraft Heinz, emphasized the critical need for separating the businesses to allow more targeted resource allocation and sharpened strategic focus. He noted, “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.”

The separation, expected to finalize by the latter half of 2026, seeks to address the decline following the prior merger, where overly aggressive cost-cutting overshadowed innovation and investment in adapting to changing consumer preferences. Increasingly, consumers have shifted toward fresh and organic options, challenging traditional brands reliant on processed foods.

This split is set against a backdrop of significant industry challenges. Kraft Heinz has faced seven consecutive quarters of declining sales, as consumers lean towards purchasing private-label packaged foods amidst high inflation. The broader food market's landscape is simultaneously evolving, with smaller companies offering innovative alternatives that resonate with health-conscious consumers.

Recognition of these market dynamics and a need to embrace changing consumer expectations have been pivotal in driving this transformation. Moreover, Kraft Heinz's plan draws on parallels with the successful restructuring seen in other industry giants like Kellogg, which recently segmented its business into specialized units catering to different market segments.

While the comprehensive decision to dismantle the once-mighty Kraft Heinz conglomerate reflects acknowledgment of past operational missteps, it also signifies a forward-looking strategy intended to release significant brand equity and realign with evolving market conditions. The decision underscores a renewed commitment to innovation, consumer responsiveness, and sustainable growth, positioning both new entities to better fulfill their inherent market prospects and meet shareholder expectations.

This restructuring also opens pathways for focused investment in brand development, operational efficiencies, and enhanced marketing efforts, setting the stage for Kraft Heinz’s iconic brands to return to their historical prominence in the consumer packaged goods sector.