Lead: Major food manufacturers are shedding brands and splitting businesses as shoppers shift away from ultra-processed snacks and regulators and health trends increase scrutiny. In recent months Kraft Heinz announced plans to separate into two publicly traded companies later this year, reversing much of the 2015 merger backed by Berkshire Hathaway and 3G Capital. Other moves include Unilever’s 2025 spin-off of its ice cream arm into The Magnum Ice Cream Company and Keurig Dr Pepper’s planned breakup once its JDE Peet’s deal closes. Consulting firm Bain reports that nearly half of 2024 consumer-products M&A activity was driven by divestitures, and 42% of sector M&A executives say they are preparing an asset for sale over the next three years.
Key Takeaways
- Kraft Heinz has announced a planned split into two separately traded companies, undoing much of the 2015 megamerger orchestrated by Berkshire Hathaway and 3G Capital.
- Bain found that nearly 50% of consumer-products M&A in 2024 came from divestitures, and 42% of M&A executives expect to ready assets for sale in the next three years.
- Unilever spun off its ice cream business into The Magnum Ice Cream Company in 2025; Keurig Dr Pepper is planning a similar separation after completing its acquisition of JDE Peet’s.
- Kellogg split into Kellanova and WK Kellogg in 2023; subsequent deals included Ferrero’s $3.1 billion purchase of WK Kellogg and Mars’s $36 billion acquisition of Kellanova.
- Kraft Heinz shares have fallen roughly 73% since the combined firm began trading; by contrast, Keurig Dr Pepper shares rose about 37% since its 2018 merger while the S&P 500 gained roughly 150% over the same span.
- Smaller “insurgent” brands are now more attractive targets: 38% of consumer-products acquisitions in the last five years were for deals under $2 billion, up from 16% in 2014–2019.
- Regulatory scrutiny, changing diets, and the rise of GLP-1 weight-loss drugs are cited as factors reducing demand for sweet and salty snacks.
Background
For more than a decade shoppers have gravitated away from the processed items found in grocery-store inner aisles toward fresh produce, proteins and other perimeter-category purchases. The pandemic briefly reversed that trend as consumers returned to familiar brands, but sticker shock, shrinkflation and evolving tastes have since pared back loyalty to legacy packaged products. Meanwhile, public-health campaigns and regulatory attention have spotlighted ultra-processed foods, prompting executives to reassess long-term portfolios.
Large food groups grew by acquisition in prior decades to gain scale and access new markets. But scale brought complexity: managing sprawling, diverse portfolios can slow decision-making and dilute investment in high-growth areas. Activist investors and analysts increasingly argue that breaking up conglomerates — or selling underperforming lines — can unlock shareholder value, especially when parts of a business sit in faster-growing categories than others.
Main Event
Kraft Heinz’s announced separation is the highest-profile example of this retrenchment. The split is intended to create two focused companies — one housing high-growth, branded consumer products such as Heinz and Philadelphia and the other concentrating on other legacy lines — and follows years of investor pressure after lagging U.S. sales, accounting scrutiny and brand write-downs.
Similar strategic moves are underway elsewhere. Unilever completed the spin-off of its ice cream operations in 2025; Keurig Dr Pepper has signaled a separation once it finalizes the JDE Peet’s transaction. General Mills recently sold its Muir Glen organic tomatoes brand as it narrows focus toward core categories. Reports also suggest Nestlé is weighing sales of its water unit and other non-core assets.
Corporate leaders say the objective is to simplify portfolios, reinvest in higher-growth brands and present clearer investment stories to shareholders. Some splits — like Kellogg’s 2023 separation into snack- and cereal-focused companies — have already led to sizable takeovers by strategic buyers, validating the playbook in select cases.
Analysis & Implications
The strategic logic for divestitures is straightforward: concentrate capital and management attention on businesses with the best growth prospects or most attractive margins. When parts of a conglomerate sit in high-growth categories, separating them can make those units easier to acquire, invest in or operate independently. That rationale underpinned the Kellogg split, which preceded two large acquisitions from strategic, privately held buyers.
But divestitures are not a guaranteed fix. Analysts caution that selling assets without improving underlying commercial capabilities — marketing, product innovation, supply-chain responsiveness — may only provide a temporary lift in market sentiment. Firms that merely repackage existing problems can leave new standalone companies still struggling to grow.
Regulatory and antitrust dynamics also shape dealmaking. Bigger, transformative acquisitions face greater scrutiny, nudging acquirers toward smaller, targeted add-ons and private-equity buyers. Bain’s data showing a rise in sub-$2 billion purchases reflects that shift, and it helps explain why food giants often opt to buy insurgent brands rather than a fellow large conglomerate.
Finally, secular demand trends — notably the impact of GLP-1 drugs on caloric intake and snack consumption — change the addressable market and can accelerate portfolio pruning. Boards and executives will need to align capital allocation, R&D and go-to-market strategies to respond to structural, not transient, changes in consumer behavior.
Comparison & Data
| Measure | 2014–2019 | Last 5 Years |
|---|---|---|
| Share of deals under $2B | 16% | 38% |
| Share of 2024 consumer M&A from divestitures | – | ~50% |
These figures illustrate a clear tilt toward smaller transactions and sell-offs. The jump from 16% to 38% in sub-$2 billion deals shows buyers favoring bolt-on or insurgent-brand acquisitions. Meanwhile, roughly half of 2024’s consumer M&A activity being divestiture-driven signals a distinct shift in how companies are reshaping portfolios.
Reactions & Quotes
“Many of these sectors face fierce competitive pressures that make it harder to operate at scale,”
Emilie Feldman, The Wharton School (academic)
Feldman framed the trend as a response to intensified competition and complexity rather than a short-lived market fad.
“One way to reset expectations is to focus on core offerings and divest slower or non-core businesses,”
Raj Konanahalli, AlixPartners (consulting)
Konanahalli emphasized portfolio simplification as a tool to restore investor confidence, while cautioning it is not the only lever leaders should pull.
“If you don’t fix underlying capability, selling brands won’t solve the root problem,”
Nik Modi, RBC Capital Markets (analyst)
Modi warned investors and managers that operational fixes — marketing, innovation and supply chains — must accompany any structural moves.
Unconfirmed
- Whether splitting Kraft Heinz will produce value comparable to Kellogg’s breakup is uncertain and depends on future buyers and operational improvements.
- Reports that Nestlé will divest specific units (water, Blue Bottle, vitamins) are based on Bloomberg reporting and may change as the company finalizes decisions.
- Berkshire Hathaway’s timing and ultimate plans regarding its reported 27.5% stake in Kraft Heinz remain subject to confirmation from official filings or statements.
Bottom Line
Big Food’s recent wave of divestitures and breakups reflects a structural recalibration: companies are responding to shifting consumer tastes, regulatory focus and competitive pressure from nimble challengers. For corporate leaders, the critical test will be whether they pair portfolio pruning with investments in brand building, innovation and capabilities that drive repeatable growth.
Investors should expect more targeted sales, smaller strategic acquisitions of insurgent brands and continued scrutiny from regulators. The split-or-sell playbook can create value in select cases — as with Kellogg — but outcomes will vary. Stakeholders watching the sector should prioritize evidence of sustained commercial improvement over headline transactions when assessing the likely long-term winners.
Sources
- CNBC — News reporting on recent breakups and divestitures (media)
- Bain & Company — Consulting firm cited for M&A and survey data (consulting)
- Kraft Heinz Company — Company site for investor materials and announcements (official)
- AlixPartners — Consulting firm referenced for analysis (consulting)