Kraft Heinz Merger Folds: Company Splits Into Two After Falling Behind Rivals

After 10 years, the merger between Kraft and Heinz will come to an end. On September 2, it was announced that the Kraft Heinz Company would separate into two independent, publicly traded companies in an effort to reduce structural complexity and better focus on its respective brands.

Two companies will emerge from the split—“Global Taste Elevation Co.” and “North American Grocery Co.”—which are temporary names set to be updated at a later date. Global Taste Elevation Co. will house the brands Heinz, Philadelphia and Kraft Mac & Cheese. As of 2024, the company has $15.4 billion in net sales, with 75% made from sauces, spreads, and seasonings. 

North American Grocery Co., which made $10.4 billion in net sales in 2024, will be home to Oscar Mayer, Kraft Singles, and Lunchables. Each brand is either #1 or #2 in its respective categories, and collectively, they make up 75% of the company’s net sales. 

Miguel Patricio, Executive Chair of the Board for Kraft Heinz, commented on the de-merger: “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. By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value.”

Kraft Heinz merged in 2015 via a partnership between Investment firms 3G Capital and Berkshire Hathaway. The merger was expected to make Kraft Heinz the fifth-largest food company in the world and the third in the U.S. Fast forward, and the company has fallen to 8th globally and 5th in the U.S, showing that the merger has been unsuccessful. Here are the current top 3 food companies in the U.S. and worldwide:

While the de-merger spells good news for the two companies, not everyone is pleased with the split. Billionaire investor and founder of Berkshire Hathaway, Warren Buffett, has been vocal about his disappointment over the situation. Buffett, who was instrumental in making the original merger happen, expressed disappointment that shareholders were given no say in the matter on CNBC’s “Squawk Box.” 

Berkshire Hathaway owns a 27.5% stake in The Kraft Heinz Company that’s valued at $8.9 billion, making it the largest shareholder. 

Looking forward, the press release says that, “The companies are expected to have ample discretionary cash flow to invest in organic growth, return capital to shareholders and consider strategic transactions.” Time will tell whether this strategy puts the companies back in the running for the number one spot.