Kraft Heinz Announces Major Split Into Two Companies
In a major strategic pivot, Kraft Heinz will split into two public companies. Long regarded as one of the most familiar names in American packaged foods, the company sees the move as a way to reposition its brands for growth in a market defined by changing tastes and tougher competition.
The transition, targeted for completion in the second half of 2026, comes after slowing sales and shifting consumer tastes placed pressure on its once-dominant position as North America’s third-largest food company.
What the Split Means for Kraft Brands
Under the plan, its portfolio will be divided into two standalone businesses.
One business will manage faster-growing product categories. This includes sauces, spreads, and convenient shelf-stable meals, with well-known names such as Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese.
The other business will oversee brands that have struggled to keep pace with consumer preferences. This side of the company will handle grocery staples and foodservice items like Oscar Mayer, Kraft Singles, and Lunchables.
Executives believe this structure will allow each business to operate with more focus. By separating, Kraft Heinz expects to improve decision-making, invest strategically, and strengthen individual brands without the weight of competing priorities.
Why the Breakup Is Happening
Instagram | baystreetoracle | Despite promises of growth after its 2015 merger, Kraft Heinz experienced years of declining sales.
Kraft Heinz was formed in 2015 through a merger backed by Berkshire Hathaway and 3G Capital. At the time, it promised efficiency and global reach. Instead, the company faced years of declining sales and brand stagnation.
Since the merger:
1. Sales have fallen for seven straight quarters.
2. Shares of Kraft Heinz have lost more than 60% of their value since 2015.
3. The company has struggled to connect with consumers moving toward healthier, fresher options.
Even Warren Buffett, whose Berkshire Hathaway remains the largest shareholder, has admitted the merger was overpriced and disappointing.
Consumer Shifts and Industry Pressure
Kraft is not alone in its struggles. The entire packaged food industry has seen reduced demand since the pandemic. Shoppers are now more selective, influenced by both inflation and rising interest in fresh or organic products. Generic alternatives are often cheaper, while GLP-1 weight-loss drugs are also reducing consumption of snacks and processed foods.
Regulatory pressure is rising as well. Kraft Heinz has pledged to strip artificial coloring from its lineup after facing questions from advocacy groups and federal agencies. It’s a sign of the balancing act the company faces in a market that increasingly rewards clean-label products and penalizes anything that feels outdated.
Lessons from Past Decisions
The merger-driven strategy once looked promising, especially with iconic brands like Velveeta and Kraft Mac & Cheese under one roof. But cost-cutting became the priority rather than product reinvestment. That short-term focus weakened brand strength over time.
Analysts point out that the lack of consistent investment in marketing, product development, and consumer research left Kraft Heinz behind competitors. When consumer tastes shifted, the company was not ready to adapt quickly.
The new split suggests a recognition of those missteps. Instead of operating as a single large company with competing priorities, the businesses can now redirect resources into targeted strategies.
Following the Kellogg Playbook
Instagram | idpopau | The Kellogg company separated its snack and cereal businesses into two distinct companies in 2023.
Kraft’s decision echoes a familiar play in the food industry. Back in 2023, Kellogg split itself into two—Kellanova, which housed snack powerhouses like Pringles and Cheez-It, and WK Kellogg Co, which stuck with cereals. That move quickly led to high-profile deals, with Ferrero and Mars snapping up parts of the business.
Analysts believe Kraft Heinz may be eyeing a similar trajectory, aiming to create streamlined companies that look more appealing to investors—or to future buyers.
What Lies Ahead
For Kraft Heinz, the breakup represents both an ending and a beginning. While it closes the chapter on the company as it once was, it also opens the door for each new business to pursue growth strategies tailored to its own strengths. For consumers, this may mean fresh innovation for iconic brands, while investors will watch closely to see if the move restores long-term value.
Kraft Heinz may not be the food industry giant it once was, but the split could provide the clarity and focus needed to compete in a market where consumer expectations are rapidly changing.