Kraft Heinz to Split into Two Companies by Late 2026: A Strategic Restructuring

On September 2, 2025, Kraft Heinz announced plans to split into two publicly traded companies by the second half of 2026, reversing the $46 billion merger of Kraft Foods Group and H.J. Heinz Co. in 2015, orchestrated by Warren Buffett’s Berkshire Hathaway and 3G Capital. The decision aims to address sluggish sales, declining consumer demand for processed foods, and a complex corporate structure that has hindered growth. One company, tentatively named Global Taste Elevation Co., will focus on sauces, spreads, and shelf-stable meals, including brands like Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese, with $15.4 billion in 2024 net sales. The other, North American Grocery Co., will manage grocery and food-away-from-home brands like Oscar Mayer, Kraft Singles, and Lunchables, with $10.4 billion in sales. This article explores the drivers behind the split, its historical context, future projections, and potential impacts, with a brief note on any relevance to India’s market dynamics.

Why This Split Matters

The Kraft Heinz merger aimed for cost synergies and global scale but struggled with a 68% share price drop since 2015, a $15.4 billion writedown in 2019, and a $9.3 billion impairment in Q2 2025. The split seeks to unlock value by allowing each entity to focus on distinct strategies: global growth for sauces and cost efficiency for groceries. For India, a growing market for packaged foods, the restructuring could influence Kraft Heinz’s limited but expanding presence, particularly in urban centers like Tamil Nadu, where demand for sauces and convenience foods is rising.

Latest Developments Driving the Split

Announced on September 2, 2025, the tax-free spinoff responds to years of underperformance and shifting consumer preferences. Key developments include:

• Financial Struggles: Kraft Heinz’s sales dropped 1.9% in Q2 2025, marking seven consecutive quarters of decline. Shares lost 21% over the past year and 68% since the 2015 merger, with a $9.3 billion impairment loss in Q2 2025 reflecting a declining market cap.
• Strategic Review: In May 2025, Kraft Heinz signaled a potential split after Berkshire Hathaway’s directors stepped down, ending its board representation. The Wall Street Journal reported in late August 2025 that a breakup was imminent.
• Consumer Trends: Inflation-weary consumers shifting to cheaper private-label brands (e.g., Walmart’s 98-cent ketchup vs. Heinz’s $2.98) and healthier options, coupled with GLP-1 drug impacts on snack demand, have hurt brands like Lunchables and Velveeta.
• Leadership and Structure: CEO Carlos Abrams-Rivera will lead North American Grocery Co., while a CEO search is underway for Global Taste Elevation Co. The split aims to reduce complexity, with $300 million in anticipated “dis-synergies.”
• Industry Trend: The move follows similar restructurings, like Kellogg’s 2023 split into Kellanova (Pringles, Cheez-It) and WK Kellogg Co. (cereals), with the latter acquired by Ferrero for $3.1 billion in 2025.

India’s Context

Kraft Heinz has a limited presence in India, primarily through Heinz ketchup and sauces sold in urban markets like Chennai, Tamil Nadu. The split could enhance focus on sauces, potentially boosting exports to India, where the packaged food market is projected to reach $20 billion by 2030. Tamil Nadu’s food processing hubs may see increased sourcing opportunities, though direct impacts remain minimal due to low brand penetration.

Historical Context of Kraft Heinz’s Challenges

The 2015 merger aimed to create the world’s fifth-largest food company, combining Kraft’s grocery staples with Heinz’s global condiments. Backed by Berkshire Hathaway and 3G Capital, it focused on cost-cutting via zero-based budgeting, laying off thousands. However, the strategy faltered:

• 2013-2015: Buffett and 3G acquired Heinz for $23 billion in 2013, followed by the $46 billion Kraft merger in 2015, creating a $28 billion revenue giant.
• 2019: A $15.4 billion writedown on Kraft and Oscar Mayer brands, a 36% dividend cut, and an SEC subpoena over accounting practices led to a share price drop to $35. Buffett admitted overpaying for Kraft.
• 2020-2024: Kraft Heinz divested assets like Planters to Hormel and its cheese unit to Lactalis, aiming to simplify operations. Sales stagnated at $26 billion annually, with a $3.76 billion Berkshire writedown in 2025.
• 2025: The split announcement follows a $9.3 billion impairment and pressure from US regulators, including Robert F. Kennedy Jr.’s push to remove artificial additives, prompting Kraft Heinz to eliminate artificial colors in June 2025.

This timeline highlights the merger’s failure to adapt to healthier consumer trends and competitive pressures from private labels.

Future Scopes and Projections

The split, expected to conclude in late 2026, aims to create two agile companies:

• Global Taste Elevation Co.: With $15.4 billion in 2024 sales and $4 billion in EBITDA, it will target emerging markets (20% of sales) and foodservice (20%), leveraging brands like Heinz for global growth. Analysts predict 3-5% annual sales growth by 2030.
• North American Grocery Co.: With $10.4 billion in sales, it will focus on cost efficiencies and brand revitalization for struggling brands like Lunchables, facing private-label competition. Growth is projected at 1-2% annually.

The split could unlock $5-10 billion in shareholder value, with the sauces unit potentially valued at $20 billion. Kraft Heinz’s stock rose 1% in premarket trading on September 2, 2025, reflecting cautious optimism.

Long-Term Strategic Outlook

By 2030, the sauces company could expand in India and other emerging markets, capitalizing on demand for convenience foods. The grocery unit may pursue mergers (e.g., with Hormel) or invest in healthier offerings to counter private-label threats. However, challenges include:

• Execution Risks: $300 million in dis-synergies could strain margins if costs rise.
• Innovation Lag: Failure to develop healthier products risks further market share loss, as seen with Velveeta’s decline.
• Regulatory Pressures: US demands for cleaner labels and India’s FSSAI standards could increase compliance costs.
• Private-Label Competition: Walmart’s 98-cent ketchup continues to erode Heinz’s share.

Impacts on Stakeholders and India’s Market

The split aims to enhance focus, but its global and India-specific impacts vary.

Sector-Wise Impacts

Packaged Foods (Global)

• Impact: The sauces unit (Heinz, Kraft Mac & Cheese) could see 3-5% growth by targeting emerging markets, while the grocery unit (Oscar Mayer, Lunchables) faces slower growth due to processed food declines.
• Economic Contribution: The split could add $5 billion in global market cap, with the sauces unit driving exports to India’s $20 billion packaged food market.
• Business Opportunities: Indian importers and retailers in Tamil Nadu may see increased Heinz product availability.

Investors and Financial Markets

• Impact: The split may boost Kraft Heinz’s stock, which lost 21% in 2024-25, by creating focused investment options. The grocery unit appeals to dividend-seekers, while the sauces unit targets growth investors.
• Economic Contribution: Potential $5-10 billion in unlocked value, with India’s mutual funds marginally exposed to Kraft Heinz via global ETFs.
• Business Opportunities: Indian brokers may promote the sauces unit as a growth stock.

Consumers

• Impact: No immediate product changes, but long-term innovation in sauces could enhance offerings in India’s urban markets like Chennai. Grocery brands may struggle with healthier competition.
• Economic Contribution: Lower prices or new products could boost India’s packaged food spending by 1-2%.
• Business Opportunities: Tamil Nadu’s food retail chains may stock more Heinz products.

India-Specific Context

• Impact: Kraft Heinz’s limited India presence (Heinz ketchup, sauces) could grow via the sauces unit’s focus on emerging markets. Tamil Nadu’s food processing hubs in Coimbatore may benefit from sourcing deals.
• Economic Contribution: Marginal GDP impact (₹100 crore) via increased imports and local partnerships.
• Business Opportunities: Local firms may partner with Global Taste Elevation Co. for distribution.

Kraft Heinz Split Snapshot

This table outlines the split’s structure and India’s minor but growing role.

Frequently Asked Questions (FAQs)

Why is Kraft Heinz splitting into two companies?

The split addresses sluggish sales, a 68% share price drop since 2015, and a complex structure hindering growth. It separates faster-growing sauces (Heinz, Kraft Mac & Cheese) from struggling groceries (Oscar Mayer, Lunchables).

What are the new companies?

Global Taste Elevation Co. ($15.4B sales) focuses on sauces and shelf-stable meals, while North American Grocery Co. ($10.4B) handles groceries and food-away-from-home. Names are temporary.

How does this impact India?

The sauces unit may boost exports to India’s urban markets like Tamil Nadu, but overall impact is limited due to low brand penetration.

When will the split occur?

The tax-free spinoff is expected to close in the second half of 2026.

What challenges could arise?

Execution risks, $300 million in dis-synergies, regulatory pressures, and private-label competition could hinder success.