Kraft Heinz (NASDAQ:KHC) revealed on Tuesday plans to divide into two publicly traded companies—one focused on sauces and the other on grocery products—in a bid to jumpstart growth following several years of sluggish performance.
Shares in the company inched higher during premarket trading but are still down roughly 21% over the past 12 months and 9% year-to-date.
The sauces business, to be named Global Taste Elevation, will encompass brands including Heinz, Philadelphia, and Kraft Mac & Cheese. The grocery division, North American Grocery, will house Oscar Mayer, Kraft Singles, and Lunchables.
In 2024, the sauces unit generated around $15.4 billion in revenue, compared with approximately $10.4 billion for the grocery segment.
“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 the company’s board.
The tax-free spinoff is anticipated to conclude in the second half of 2026.
This announcement comes after Kraft Heinz disclosed in May that it was considering acquisitions to enhance shareholder returns. Like many packaged food companies, it has faced headwinds as consumers gravitate toward healthier and more affordable snacks and condiments.
The planned separation effectively reverses much of the 2015 Kraft-Heinz merger, orchestrated by Warren Buffett and 3G Capital, which has since faced criticism.
The move also mirrors a broader trend of breakups in the food and beverage industry. Last year, Kellogg split into the snack-focused Kellanova and cereal maker WK Kellogg, while Keurig Dr Pepper is in the process of unwinding its 2018 merger.
Kraft Heinz has contended with waning demand for products like Lunchables, Capri Sun, macaroni and cheese, and mayonnaise. The company has been restructuring its portfolio and investing in healthier options to align with shifting consumer preferences.
In July, it reported a second-quarter loss tied to a $9.3 billion impairment charge, primarily driven by the decline in its stock price and overall market value.
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