Kraft Heinz to split into two companies

Kraft Heinz (KHC.O), the company behind staples like Heinz ketchup, Philadelphia cream cheese and Jell-O, will split into two independent publicly traded firms — one focused on grocery essentials and the other on sauces, spreads and non-perishable meals. The move effectively unwinds the $45 billion merger of Kraft Foods and H.J. Heinz in 2015, a deal that promised scale and efficiency but ultimately failed to deliver.

The separation, expected in the second half of 2026, reflects a broader retreat from the conglomerate model as packaged goods companies confront sluggish sales, weak valuations, and tariff pressures. Shares of Kraft Heinz fell about 7% after the announcement, underscoring investor caution despite earlier signals in May that a breakup was under review to boost shareholder value.

From blockbuster merger to market decline

The 2015 deal — backed by Warren Buffett’s Berkshire Hathaway and private equity group 3G Capital — created North America’s third-largest food company. But shifting consumer tastes toward fresher, healthier foods, along with the rise of private labels, eroded the business. Today, Kraft Heinz is worth around $33 billion, down more than 60% since the merger.

Buffett, still the company’s largest shareholder through Berkshire, recently acknowledged his disappointment, saying the merger “did not turn out to be a brilliant idea,” and warning that simply splitting up “will not fix its problems.”

Financial strain and restructuring

Executive chair Miguel Patricio said the company’s existing structure makes it difficult to allocate capital and set priorities effectively. He argued that the breakup will allow both new entities to pursue growth with sharper focus. The company also reported more than $9 billion in impairment charges in Q2, highlighting the scale of its ongoing financial pressures.

Investor outlook

Analysts remain divided. Some see the restructuring as a chance to unlock short-term value, but others caution that unless the two businesses invest heavily in innovation and shore up defenses against private-label rivals, the long-term impact may be limited.

A wider industry shift

Kraft Heinz’s decision mirrors a broader trend of consumer goods giants dismantling sprawling portfolios in favor of leaner, more targeted businesses. Kraft itself spun off its snack unit in 2012, creating Mondelez International. For Kraft Heinz, this breakup closes a chapter on a decade-long bet on scale  and opens a new one for some of America’s most iconic kitchen brands.