Kraft Heinz has revealed that it will split into two distinct entities, years after the 2015 merger of Kraft Foods and Heinz. The company's board unanimously approved the decision, citing the challenges of managing such a diverse portfolio of brands under one structure. Executives explained that the complexity of the current setup hinders efficient capital allocation, strategic focus, and scalability. The split will be executed as a tax-free spin-off. Operations are expected to be separated by the second half of 2026, pending regulatory approval.
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As per a Reuters report, this spin-off is "the latest in a series of rearrangements among major global consumer brands that once embraced the conglomerate model, but are now rethinking their business structure amid sluggish sales, depressed valuations, and high tariffs." Kraft Heinz expects to incur up to $300 million in separation-related costs, but anticipates reducing most of the expenses quickly. The company also plans to maintain its current dividend levels and keep an investment-grade credit rating for both new firms.
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By creating two focused businesses, the company aims to simplify operations and sharpen strategic direction. One will be centred on global sauces and condiments, the other on grocery staples. For instance, one business will house products like Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese. A CEO for the global company has not yet been announced. The other company will focus on brands such as Oscar Mayer, Kraft Singles, and Lunchables. The current Kraft Heinz CEO, Carlos Abrams-Rivera, will be at its helm.
Warren Buffett's Berkshire Hathaway, which has a sizable stake in the company, expressed disappointment with the decision, according to reports. He noted that splitting the company may not resolve underlying challenges.