Kraft Heinz to Split into Two Focused Entities

In a strategic move aimed at revitalizing growth and sharpening its market focus, Kraft Heinz Co. has announced plans to separate into two distinct, publicly traded companies. This decision, unanimously approved by the company’s Board, is set to unfold through a tax-free spin-off, with the transaction expected to close in the second half of 2026.

The split will create Global Taste Elevation Co. and North American Grocery Co., each poised to leverage its unique portfolio of brands to drive growth and enhance consumer engagement. Global Taste Elevation Co. will encompass iconic brands such as Heinz, Philadelphia, and Kraft Mac & Cheese, with approximately 75% of its net sales derived from sauces, spreads, and seasonings. This entity is expected to capitalize on its strong global presence and diverse product range to elevate taste experiences worldwide.

On the other hand, North American Grocery Co. will focus on a portfolio that includes beloved brands like Oscar Mayer, Kraft Singles, and Lunchables. This division aims to strengthen its foothold in the North American grocery market by delivering value and convenience to consumers.

Carlos Abrams-Rivera, the current CEO of Kraft Heinz, will continue to lead the company through this transition and is set to become the CEO of the newly formed Global Taste Elevation Co. This leadership continuity is anticipated to provide stability and strategic direction during the spin-off process.

The decision to split comes after years of muted sales growth, with Kraft Heinz seeking to unlock value and enhance operational focus. The move is also seen as a reversal of the 2015 merger between Kraft Foods Group and H.J. Heinz Co., a deal that was heavily backed by Warren Buffett and 3G Capital. Analysts suggest that the separation could potentially increase the valuation of the newly independent entities, with the food products division alone estimated to be worth around $20 billion, compared to Kraft Heinz’s current market capitalization of approximately $33 billion.

In response to the announcement, shares of Kraft Heinz were up about 1% in premarket trading, reflecting investor optimism about the potential for improved performance and growth prospects of the two separate companies.

This strategic realignment underscores Kraft Heinz’s commitment to adapting its business model to better serve its customers and stakeholders, aiming to enhance shareholder value through focused growth strategies and operational efficiencies. As the company moves forward with its plans, the market watches closely, anticipating the impact of this significant transformation on the consumer staples sector.