Kraft Heinz said Tuesday it will split into two separate companies, dismantling much of the $46 billion merger engineered a decade ago by Warren Buffett's Berkshire Hathaway and 3G Capital. The deal once created one of the world's largest food conglomerates but has since become a symbol of overreach in the packaged-food industry.
The separation, expected to close in the second half of 2026, will divide Kraft Heinz into two businesses. One will be built around sauces, spreads and meals, anchored by Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese, with $15.4 billion in 2024 net sales. The other will hold what the company described as a "scaled portfolio of North America staples," including Oscar Mayer, Kraft Singles and Lunchables, generating $10.4 billion in 2024 sales.
"Kraft Heinz's brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas," said Miguel Patricio, executive chair of Kraft Heinz. "By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value."
The split comes after years of disappointing results. Shares have fallen roughly 60% since the 2015 merger, even as rivals invested in fresher products and private-label brands gained ground with cost-conscious shoppers. Current CEO Carlos Abrams-Rivera will head the grocery staples company, while an executive search is underway for a chief executive of the sauces-and-meals business.
The merger, once hailed as a cost-cutting triumph, quickly soured. In 2019, Kraft Heinz disclosed a Securities and Exchange Commission subpoena over accounting practices, cut its dividend by 36%, and wrote down Kraft and Oscar Mayer by $15.4 billion. Buffett later told CNBC that Berkshire had overpaid for Kraft. "I was wrong in a couple of ways on Kraft Heinz," he said, though he praised the brand equity.
Subsequent years brought further write-downs of brands such as Maxwell House and Velveeta, a leadership shake-up, and asset sales including the Planters nuts business to Hormel and a large portion of its cheese division to Lactalis. In July, Kraft Heinz posted a nearly $8 billion net loss driven by a $9.3 billion impairment, while Berkshire Hathaway recorded a $3.8 billion charge on its stake.
Executives acknowledged Tuesday that managing 56 product categories spread focus too thin. "The complexity of our business has impacted that ability to realize the full strength of our brands and operations," Abrams-Rivera said. The move echoes other food giants' breakups, including Kellogg's 2022 spin-off of its snack business and Keurig Dr Pepper's recent plan to separate its coffee and beverage units.
Kraft Heinz's storied brands trace their roots back more than a century. Heinz began in Pittsburgh in 1869 with horseradish before its ketchup became a global staple. Kraft started in Chicago in the early 1900s, expanded through Miracle Whip and Kraft Mac & Cheese during the Depression, and grew into a food empire spanning Jell-O, Maxwell House and Oscar Mayer.
