The Kraft Heinz Company announced on Tuesday it will split into two independent publicly-traded companies, marking the official conclusion of the $46 billion merger orchestrated by Buffett a decade ago.
This split aims to streamline business operations, enhance brand resource allocation and profitability, responding to persistent performance pressures and industry transformation. The Kraft Heinz Company's stock showed limited volatility following the announcement, but has declined 21% cumulatively over the past year, reflecting market concerns about its growth prospects.
The restructuring will divide The Kraft Heinz Company into a "Global Flavor Enhancement Company" focused on sauces, condiments and ready meals, and a North American grocery company centered on brands like Oscar Mayer and Lunchables. The transaction is expected to complete in the second half of 2026, subject to regulatory approval.
This decision not only ends the 2015 merger between Kraft and Heinz, but also highlights the transformation challenges facing traditional food giants amid changing consumer trends, rising health consciousness and inflationary pressures. Buffett himself has admitted his investment in The Kraft Heinz Company was "misjudged in multiple ways," while another major shareholder, 3G Capital, has exited its holdings in 2023.
Split Plan Details: Two Major Business Segments to List Independently
According to company announcements, The Kraft Heinz Company will create two independent publicly-traded companies through a tax-free spinoff.
The first company will focus on sauces, condiments and ready meals, encompassing core brands including Heinz ketchup and Kraft macaroni and cheese, with annual sales of approximately $15.4 billion.
The second company will concentrate on North American grocery business, covering brands like Oscar Mayer hot dogs and Lunchables, with annual sales of approximately $10.4 billion.
Company CEO Carlos Abrams-Rivera will serve as chief executive of the new grocery company, while the CEO for the other company is being sought globally. The names of both new companies will be announced subsequently.
The Kraft Heinz Company stated the split will help each entity focus on core markets and brands, improving operational efficiency. The company expects the split to generate approximately $300 million in additional operating costs, but commits to maintaining current dividend levels and striving to preserve investment-grade credit ratings.
Markets are broadly focused on the independent performance of both companies post-split and potential acquisition opportunities. Analysts note that as industry consolidation accelerates, The Kraft Heinz Company's two new entities may become acquisition targets in the future.
After Ten Years of Merger, Everything Returns to Square One?
In 2015, Buffett's Berkshire Hathaway and 3G Capital drove the merger between Kraft and Heinz, creating one of the world's largest packaged food companies. At that time, aggressive cost-cutting and economies of scale were highly anticipated.
However, as consumer demand for healthy, natural foods increased, and new weight-loss medications and inflationary pressures affected consumption habits, The Kraft Heinz Company's traditional product lines gradually lost appeal.
The Kraft Heinz Company's market value has shrunk approximately 70% since its 2017 peak. In 2019, Buffett publicly acknowledged his investment in The Kraft Heinz Company was "misjudged in multiple ways," with Berkshire Hathaway taking a $3 billion impairment charge on the investment that year. 3G Capital has completely exited The Kraft Heinz Company in 2023.
Rising Health Consciousness Drives Food Giants' Accelerated Restructuring
The Kraft Heinz Company's split is not an isolated case, as the global packaged food industry has been undergoing deep restructuring in recent years.
In 2023, Kellogg separated its cereal business and snack business into WK Kellogg Co. and Kellanova respectively.
In 2024, Mars announced the acquisition of Kellanova for nearly $36 billion, while Italian confectionery giant Ferrero acquired WK Kellogg for $3.1 billion.
Industry analysts believe that with rising health consciousness and consumption upgrades, traditional food giants must undergo asset restructuring and focus on high-growth categories to address market pressures. U.S. Health and Human Services Secretary Robert F. Kennedy Jr. has also called for reducing ultra-processed food consumption, driving companies to adjust their product portfolios.