Kraft Heinz Plans to Break Up Into Two Companies

Sept. 2, 2025 — Kraft Heinz said it will separate into two publicly traded businesses, spinning off its slower‑growing grocery brands while keeping a faster‑growing portfolio centered on sauces and condiments. Investors balked: by midday, shares fell 6.4% to $26.20.

Key Takeaways

• The grocery unit (Oscar Mayer, Kraft Singles, Lunchables) will be spun off; the remaining company will focus on sauces and spreads, including Heinz ketchup, Philadelphia cream cheese, Kraft Mac & Cheese, and Grey Poupon.
• Target close: second half of 2026, pending customary approvals.
• Estimated separation costs: about $300 million.
• Stock reaction: Kraft Heinz down 6.4% to $26.20 midday Tuesday.
• Leadership: a search is underway for a CEO to lead the faster‑growth business; current CEO Carlos Abrams‑Rivera will run the grocery company.
• Scale: the faster‑growth unit generated roughly $15.4 billion in net sales last year (about 75% sauces/spreads/seasoning; ~20% from emerging markets); the grocery unit did about $10 billion.
• Sector pressure: volumes are under strain as shoppers trade down and shift away from processed foods; Elliott disclosed a roughly $4 billion stake in PepsiCo (market cap ~$148 billion), pressing for a structural review.
• Deal backdrop: Keurig Dr Pepper plans to buy JDE Peet’s for about $18 billion and later spin off the combined coffee business; Kellogg’s 2023 split led to Mars agreeing to acquire Kellanova for $35.9 billion, while Ferrero said in July it would buy WK Kellogg.

Verified Facts

The company will separate brands into two distinct profiles. The spin‑off will hold the slower‑growing grocery portfolio anchored by Oscar Mayer, Kraft Singles, and Lunchables. The remaining Kraft Heinz will emphasize faster‑growing categories such as sauces, condiments, cream cheese, and boxed meals, including marquee brands like Heinz ketchup, Philadelphia, and Kraft Mac & Cheese.

Kraft Heinz said the breakup is intended to sharpen focus and capital allocation for each business. Management projects roughly $300 million in one‑time expenses to complete the separation. The company expects the transaction to close in the second half of 2026, subject to regulatory and other customary approvals. Names and boards for the new entities have not been finalized.

Shareholders reacted negatively to the announcement on Tuesday, sending Kraft Heinz down 6.4% to $26.20 by midday. The move comes amid weak category volumes across U.S. center‑store foods and beverages as consumers face lingering inflation and increasingly opt for private‑label and fresher options.

Pressure across the packaged‑food sector has driven deal‑making. On the same day, activist Elliott Investment Management told PepsiCo’s board it holds about $4 billion of the company and urged a structural review, citing slowing growth and profitability. PepsiCo shares are down 16% over the past year. Recent portfolio reshaping includes Keurig Dr Pepper’s roughly $18 billion agreement to acquire JDE Peet’s and later spin off a combined coffee company, and Kellogg’s 2023 split that preceded Mars agreeing to buy Kellanova for $35.9 billion and Ferrero’s July announcement to acquire WK Kellogg.

Kraft Heinz’s portfolio has been reshaped in recent years, including the sale of part of its cheese business for $3.3 billion in 2020 and the divestiture of its nuts business to Hormel for $3.4 billion in 2021. In late July, Kraft Heinz reported that global net sales fell nearly 2% year over year in the second quarter as higher prices, particularly in coffee, weighed on demand for cold cuts, coffee, frozen snacks, and powdered beverages.

Context & Impact

The split reverses the logic of the 2015 merger that created the modern Kraft Heinz under 3G Capital and Berkshire Hathaway, a deal that prioritized aggressive cost cuts. Over time, that approach coincided with brand erosion and the rise of private‑label rivals. 3G fully exited by the end of 2023, while Berkshire remains the largest shareholder, holding about 27.4% of outstanding shares per its latest filing.

Proponents argue two companies will unlock value by clarifying strategies: a global, brand‑led condiments-and-spreads company with international upside, and a scaled North American grocery platform focused on cash generation and category renovation. Skeptics counter that both entities remain exposed to U.S. demand softness and margin pressures.

Analysts at Jefferies said the separation could simplify the portfolio and enable targeted execution, but cautioned that sustained growth and margin expansion remain open questions—especially for the grocery business given category headwinds.

What Each Company Looks Like

Official Statements

This separation is meant to give each portfolio the focus and resources to reach its potential.

Carlos Abrams‑Rivera, Kraft Heinz CEO

The costs and time required make this an unattractive move.

Warren E. Buffett, via CNBC, on the announced split

Simplifying the portfolio helps, but growth and margin durability for both companies remain uncertain.

Jefferies, analyst note

Unconfirmed

• Names, ticker symbols, and full board composition of the two future companies.
• Tax treatment and detailed mechanics of the spin‑off.
• Whether Elliott’s push at PepsiCo will lead to portfolio changes there.
• Post‑separation capital structures, dividend policies, and targeted leverage for each business.

Bottom Line

Kraft Heinz is betting that two focused companies—one built around global sauces and spreads, the other centered on North American grocery staples—will be worth more apart than together. Execution risk is real: both businesses face soft volumes and fierce private‑label competition, and the separation will cost time and money. Clear strategy, disciplined pricing, and brand investment will determine whether the breakup ultimately creates shareholder value.

Sources

• The New York Times