Following weeks of rumours, global food giant Kraft Heinz has confirmed that it plans to split its business into two in a bid to improve its long-term growth prospects.
A decade after it was created via the megamerger of Kraft and Heinz, the group announced today that it had agreed on a plan to break up the company into two independent, publicly traded companies.
One of the new companies, whose permanent names will be determined at a later date, is labelled the Global Taste Elevation Co. It will include products such as sauces, spreads and seasonings, including global brands like Heinz, Philadelphia and Kraft Mac & Cheese. These products generated $15.4bn in sales last year and approximately $4.0bn in adjusted EBITDA.
The other company – at present referred to as North American Grocery Co. – will focus on grocery staples in the US, with brands including Oscar Mayer, Kraft Singles and Lunchables. They generated $10.4bn in sales during 2024 with an adjusted EBITDA of $2.3bn.
The group stated the split was designed to “maximize Kraft Heinz’s capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities. This focus will enable stronger performance while preserving the scale to compete and win in today’s environment”.
The move was mooted back in July as one of several options to reverse Kraft Heinz’s flagging fortunes. Its share price has fallen by one-fifth in the past 12 months after price hikes aimed at offsetting higher costs impacted growth as consumers switched to cheaper own-label alternatives. A consumer shift towards fresher, less processed food has also hurt demand for some of Kraft Heinz’s products.
However, last month, the company beat estimates for its quarterly results, thanks to demand for its meal staples and condiments as cash-strapped consumers prepared more affordable dishes at home instead of eating out.
Kraft Heinz was formed in 2015 after Warren Buffett’s Berkshire Hathaway and private equity firm 3G Capital combined the former Kraft Foods with H.J. Heinz, which they bought in 2013. Buffett admitted in 2019 that he overpaid in the merger, an admission that came four days after the packaged food giant took a $15.4bn writedown on its brands and assets.
“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 Miguel Patricio, Executive Chair of the Board for Kraft Heinz today.
“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.”
Carlos Abrams-Rivera, the Kraft Heinz CEO, who will lead the new North American Grocery Co. business, added: “This move will unleash the power of our brands and unlock the potential of our business”.
The transaction is expected to close in the second half of 2026, subject to regulatory approval.
Kraft Heinz stated that the current dividend level would be maintained and the new entities would target investment-grade ratings. The group expects up to $300m of “dis-synergies” – or additional running costs – as a result of the split, but noted that there would be opportunities to mitigate a substantial portion of these.
