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The company had foreshadowed this move, and its shares were little changed in premarket trading. (Michael Nagle/Bloomberg)

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Kraft Heinz Co. said Sept. 2 it plans to split into two separate companies, undoing a mega-deal ushered in a decade ago that turned the maker of Kraft Mac & Cheese into one of the largest packaged food sellers in the world.

Following the breakup, one company will be made up of its Heinz Ketchup and other iconic condiments and boxed meals — a unit that currently generates $15.4 billion in sales. The second firm will include the slower-growing grocery products such as Oscar Mayer hot dogs and Lunchables, which currently generate revenue of $10.4 billion.

The company had foreshadowed this move, and its shares were little changed in premarket trading. The stock is down about 21% in the 12 months through market close Aug. 29.

The aim is to siphon off lagging grocery staples into a new entity, allowing its faster-moving products more room to run and management to better focus on growing each side of the business. The company said the split will occur through a tax-free spinoff, and the companies’ names will be determined later.

“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, Kraft’s current chairman. “By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand.”

Food Deals

The Kraft Heinz split follows similar breakups by other food and drink companies, including Kellogg, which broke into two firms in 2023, and Keurig Dr Pepper, which recently said it would undo a 2018 deal that brought together its coffee and beverage businesses.

The announcement unwinds a $46 billion merger a decade ago that united two iconic brands. That��deal, orchestrated by 3G Capital and Warren Buffett’s Berkshire Hathaway Inc., forged an industry behemoth shortly before new forces began to reshape Americans’ shopping, including greater demand for healthier, less-processed foods, new weight-loss drugs and rising inflation that’s caused consumers to cut back.

Splitting the companies will “unleash the power of our brands and unlock the potential of our business,” said CEO Carlos Abrams-Rivera, who will become the CEO of the grocery company following the spinoff.��

That entity will also house Kraft Singles cheese, while the condiments powerhouse will include Philadelphia cream cheese. Kraft Heinz said the full divvying up of its brands would be announced later.

Headquarters Remain��

Kraft Heinz said it didn’t plan to change the location of its headquarters in Pittsburgh and Chicago.

In May, Abrams-Rivera��said��Kraft Heinz was considering “potential strategic transactions,” without providing further details. He did make clear the company was prioritizing its best-performing brands, including Heinz Ketchup and Kraft Mac & Cheese, with aims of becoming a “sauces and meals powerhouse.”

Kraft Heinz is working with a recruiting firm to find a CEO for the second company, currently dubbed the “global taste elevation company.”��

The company said it expects the transaction to close by the second half of 2026, with the separation overseen by John Cahill, the board’s vice chair and previous CEO of Kraft Foods Group, Inc.��

Industry Changes

Kraft’s move extends the refashioning of the US food industry��at a time it’s under scrutiny from consumers and government regulators.��

In 2023, the Kellogg Company spun off its cereal business as WK Kellogg Co. and its snacking brands, including Pringles and Cheez-It, into Kellanova. Both are now on track to be acquired by closely held companies, leading analysts to predict a similar fate for Kraft Heinz’s new units.

Mars Inc. announced it would buy Kellanova for nearly $36 billion in August 2024, and in July Italian candymaker Ferrero International SA agreed to purchase WK Kellogg for an enterprise value of $3.1 billion.

Food companies��are also in the crosshairs of��Health and Human Services Secretary Robert F. Kennedy Jr., who has urged Americans to consume less ultra-processed food and has pressed producers to stop using artificial dyes.

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