Kraft Heinz to Split Into Two Independent Public Companies to Enhance Strategic Focus
Shares Decline as Investors React to Major Corporate Restructuring
Kraft Heinz Company (NASDAQ: KHC) today announced plans to separate into two distinct, publicly traded companies through a tax-free spin-off expected to be completed by the second half of 2026. This strategic move is designed to create more focused businesses, accelerate growth, and unlock shareholder value.
The split marks a significant shift for Kraft Heinz, formed in 2015 through the merger of Kraft Foods Group and H.J. Heinz Company. Since the merger, the combined company has faced challenges, including shifting consumer preferences, increased competition, and multiple brand impairments totaling billions in write-downs.
The planned separation will create two public companies.
Global Taste Elevation Co.: This company will manage Kraft Heinz’s international and premium portfolio, including flagship brands like Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese. It generated approximately $15.4 billion in revenue in 2024. The business will focus on expanding its global presence and growing high-margin categories such as sauces and shelf-stable meals.
North America Grocery Co.: This will be centered on regional grocery staples such as Oscar Mayer, Lunchables, Velveeta, and Kraft Singles. This unit reported $10.4 billion in 2024 sales. Current Kraft Heinz CEO Carlos Abrams-Rivera will lead this company, which will focus on the North American market.
Executive Chair Miguel Patricio emphasized the separation aims to simplify operations and sharpen strategic focus, stating, “By creating two independent companies, we can better allocate capital and resources to meet the unique needs of each business.”
Following the announcement, Kraft Heinz shares dropped between 5% and 7%, reflecting investor caution. Warren Buffett’s Berkshire Hathaway, holding about 27.5% of Kraft Heinz, reportedly expressed disappointment, suggesting the split may not fully address the company’s underlying challenges.
The spin-off is expected to be tax-free to shareholders and incur one-time separation costs of up to $300 million. Both companies plan to maintain investment-grade credit ratings and operate independently with separate leadership teams. The appointment of a CEO for Global Taste Elevation Co. will be announced ahead of the split.
This split aligns Kraft Heinz with recent industry trends where large food conglomerates are breaking into focused entities to improve agility and growth potential.