Kraft Heinz, the maker of iconic brands like Heinz ketchup, Philadelphia cream cheese, and Jell-O, has announced plans to split into two independent, publicly traded companies-one focused on grocery essentials, and the other on sauces, spreads, and shelf-stable meals.
The move effectively unravels the once-celebrated $45 billion merger of Kraft Foods and H.J. Heinz in 2015-a deal that aimed for scale and efficiency but ultimately struggled under changing consumer preferences and financial strain.
A sign of the times
The split, expected to complete in the second half of 2026, reflects a broader industry trend as packaged goods giants pivot away from the conglomerate model. With flat sales, mounting tariff pressures, and weakening valuations, the shift toward leaner, more focused companies is gaining momentum. Kraft Heinz shares fell 7% following the announcement, despite earlier indications in May that a breakup was on the table.
From mega-merger to missed expectations
Once North America’s third-largest food company, Kraft Heinz has seen its value drop over 60% since the merger, now hovering around $33 billion. Backers like Warren Buffett’s Berkshire Hathaway and 3G Capital had high hopes, but evolving tastes and rising competition from private labels dimmed the promise. Buffett himself has since admitted, “It did not turn out to be a brilliant idea.”
Financial strain and strategic reset
Executive Chair Miguel Patricio acknowledged the company’s existing structure hampers capital allocation and decision-making. He believes the split will enable both new companies to pursue targeted growth. The announcement follows $9 billion in impairment charges in Q2-further underlining the financial pressure.
Mixed investor sentiment
Analysts are split. Some see the breakup as a chance to unlock near-term value, while others argue that without meaningful innovation and stronger defenses against private-label competition, the long-term gains may be limited.
Industry context
The move mirrors a broader shift in the CPG space. Kraft previously spun off its snack division in 2012 to form Mondelez International. This latest restructuring marks the end of a decade-long pursuit of scale-and the start of a more focused chapter for some of America’s most enduring household brands.
