Kraft Heinz to split into two companies as financial struggles mount

Kraft Heinz is set to split into two different companies, one focused on groceries and the other on sauces and spreads.

The food manufacturing giant announced the breakup on Tuesday after it never achieved the growth expected when it was formed a decade ago.

The spinoff, which is expected to close in the second half of 2026, 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 tariffs.

One of the companies, currently called Global Taste Elevation Co, will include brands such as Heinz, Philadelphia cream cheese and Kraft Mac &amp, Cheese, the Kraft Heinz Company said.

The other, currently called North American Grocery Co, will include legacy brands like Maxwell House, Oscar Mayer, Kraft Singles and Lunchables. The official names of the two companies have not been released yet.

Wall Street had anticipated the breakup after the company said in May that it would look for opportunities to boost shareholder value. As of 11am in New York (15: 00 GMT), the stock is down more than 5 percent.

The 2015 merger that Warren Buffett’s Berkshire Hathaway helped engineer alongside Brazilian private equity firm 3G Capital created a $45bn company, with a goal of cutting costs and boosting growth in iconic brands such as Heinz Beanz, Jell-O and Philadelphia cream cheese. Instead, shares have lost about 60 percent of their value in that time as consumers reined in spending, particularly in the wake of the COVID-19 pandemic.

In 2021, Kraft Heinz sold both its Planters nut business and its natural cheese business, vowing to reinvest the money into higher-growth brands like P3 protein snacks and Lunchables. But the company continued to struggle, and Kraft Heinz’s net sales fell 3 percent in 2024.

“For investors, the move could unlock value in the near-term, but the execution risks are clear: unless both entities invest in innovation and defend against private-label encroachment, the breakup may not achieve more than a temporary financial lift”, eMarketer analyst Suzy Davidkhanian said.

The grocery unit will be headed by Kraft Heinz’s current top boss Carlos Abrams-Rivera, while the company seeks potential CEO candidates for the sauces unit.

The company expects the split to cost up to $300m, but anticipates reducing much of that expense quickly.