by Food Trade News Team
Chicago- and Pittsburgh-based food and beverage giant Kraft Heinz Co. (NASDAQ:KHC) said Wednesday it is shelving plans to split into two separate companies. It will now pivot to concentrate resources on rebuilding profitable growth.
CEO Steve Cahillane, who took the helm Jan. 1 after previously leading the 2023 breakup at Kellogg Co. said early assessments suggest the company’s challenges are more manageable than initially believed.
“I’ve seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control,” Cahillane said.
The decision marks a pivot from a September announcement that called for separating the company into two entities; one would house faster-growing brands such as Heinz, Philadelphia and Kraft Mac & Cheese, and another containing slower-moving names including Maxwell House, Oscar Mayer, Kraft Singles and Lunchables. At the time, the company expected the transaction to close in the second half of this year.
Kraft Heinz to Make Big Investments
Instead of pursuing the split, Kraft Heinz will invest $600 million in marketing, sales and product development initiatives aimed at reigniting momentum.
Fourth-quarter results underscored the urgency. Net sales fell 3% to $6.35 billion in the October–December period, slightly below analyst expectations. North American sales declined 5%, though international markets posted gains.
Net income dropped nearly 70% to $651 million, though adjusted earnings of $0.67 per share topped Wall Street forecasts of $0.61.
Shares were largely unchanged in trading, suggesting investors remain cautious about whether the portfolio can deliver stronger standalone performance without structural changes.
The company’s strategic crossroads comes more than a decade after the 2015 merger that created Kraft Heinz, itself the product of a 2013 acquisition of H.J. Heinz by Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) and 3G Capital in what was then a record $23 billion food-industry deal.
The then-new company initially leaned into scale and cost discipline. But shifting consumer preferences toward less-processed foods and private-label alternatives eroded momentum. Kraft Heinz divested businesses such as Planters and its natural cheese unit in 2021 in an effort to refocus on higher-growth segments, but revenue has declined each year since the pandemic-driven sales spike of 2020.
In April, the company trimmed its full-year outlook, citing softer U.S. consumer spending and tariff-related pressures.
CEO Cahillane’s strategy now hinges on whether targeted reinvestment can restore growth without the financial and operational reset that a breakup might have provided.
