Kraft Heinz is splitting into two companies a decade after a merger of the brands created one of the biggest food manufacturers on the planet.
One of the entities, presently referred to as Global Taste Elevation Co, will feature brands like Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese, as announced by Kraft Heinz on Tuesday.
The other, currently named North American Grocery Co, will encompass legacy brands such as Maxwell House, Oscar Mayer, Kraft Singles, and Lunchables. The final names of these two companies will be disclosed later.
In 2015, Buffett and 3G joined forces to merge Heinz with Kraft. This merger resulted in the creation of the world’s 5th largest food and beverage company, boasting annual revenue of $US28 billion. Both Buffett and 3G invested $US5 billion each towards a special dividend for Kraft shareholders.
Despite their efforts, the combined company encountered challenges, even with the implementation of layoffs affecting thousands of employees and other cost-reduction strategies. At the merger’s time, a significant number of consumers began moving away from the kinds of heavily processed packaged foods that Kraft offers.
Since experiencing a pandemic-induced surge in sales in 2020, the company’s net revenue has consistently declined each year. In April, Kraft Heinz revised its full-year sales and earnings forecasts downward, attributing this to diminished consumer spending in the US and the repercussions of US President Donald Trump’s tariffs.
Carlos Abrams-Rivera will continue as CEO of Kraft Heinz and will take on the CEO role at North American Grocery Co after the separation. The Kraft Heinz board is collaborating with an executive search firm to identify suitable CEO candidates for Global Taste Elevation Co.
The announcement follows the recent breakups of other big food companies. Late last month, Keurig Dr Pepper said it would buy the owner of Peet’s Coffee and then split itself in two, with one company selling coffee and the other selling cold beverages like Snapple, Dr Pepper, 7UP and energy drinks. Keurig and Dr Pepper merged in 2018.
In 2023, Kellogg Co also split into two companies. Mars bought one of the companies, dubbed Kellanova, which owned snack brands like Pringles. Italian confectioner Ferrero announced in July that it planned to buy WK Kellogg, the cereal company.
Kraft Heinz shares fell 3 per cent on Tuesday.
