Lauren Hirsch and Julie Creswell | Sept. 2, 2025
A planned split of the mega company that makes products from Velveeta to Kool-Aid comes as consumers shift away from processed foods.
Kraft Heinz plans to spin off its grocery business into a new entity. The remaining company would house sauces, condiments and products, like Heinz ketchup. Credit…Brandon Bell/Getty Images
A decade after their merger created a global food giant, Kraft Heinz said early Tuesday that it planned to split into two separate companies.
It plans to spin off its slower-growing grocery business, which includes well-known brands like Oscar Mayer, Kraft Singles and Lunchables, into a new entity. The remaining company would house sauces, condiments and products with faster-growing sales, like Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese.
Most large food companies are struggling as consumers purchase less of what they sell. In some cases, the slowdown is from consumers who, after two years of food inflation, are making tougher choices about where they spend their dollars in the grocery store. But many consumers also are veering away from so-called highly processed foods.
That shift has put pressure on food companies’ stock, and executives at Kraft Heinz are betting that the company will be worth more to investors split into two separate entities. They said Tuesday morning that in splitting the companies, they can give each business dedicated attention and resources.
“This move will unleash the power of our brands and unlock the potential of our business,” Carlos Abrams-Rivera, the chief executive of Kraft Heinz, said in a statement.
Still, that is a reversal of the argument made a decade ago, when Kraft and Heinz combined in a merger that created one of the largest food companies in the world, with more than $28 billion in annual revenues and a plethora of household staples, from Kool-Aid to Velveeta.
That 2015 deal, which was put together by the Brazilian investment firm 3G Capital and Warren E. Buffett’s Berkshire Hathaway, was, in many ways, a gamble. The idea was that its Brazilian backers could run the brands more efficiently than traditional food industry executives. But aggressive cost-cutting contributed to the fading of many of the company’s offerings, at the same time as grocery stores were expanding their own brands.
In the past several years, Kraft Heinz has sought to remake its food empire and shift its focus to stronger performing products like Heinz ketchup and Grey Poupon. That effort has involved the sale of a number of its businesses, including part of its cheese business for $3.3 billion in 2020 and its nuts business to Hormel for $3.4 billion a year later.
But the company, like many of its peers, continues to face pressure as consumers veer away from packaged foods in favor of fresher options. Inflation has added to the pressure on shoppers, who have turned to cheaper, private label foods.
The food giant reported in late July that global net sales fell nearly 2 percent in the second quarter of the year from the levels a year earlier. As the company bumped pricing up in several categories, particularly coffee, consumer demand for cold cuts, coffee, frozen snacks and powdered beverages fell, the company said.
Kraft Heinz said in May it was looking at deals that might increase its performance. Executives said Tuesday they expected the deal to close in the second half of 2026, subject to customary approvals. It has yet to finalize the names or board members of each company.
The board has been working with a global executive search firm to find a chief executive to lead its faster growing business, which last year brought in roughly $15.4 billion in net sales. Three-quarters of that came from sauces, spreads and seasoning. Kraft Heinz expects that business to have broad international appeal, with roughly 20 percent of its net sales last year coming from emerging markets.
Its grocery business, which brought in roughly $10 billion in sales last year, will be led by Mr. Abrams-Rivera.
The move would be the latest shuffle in the food industry as giants look for ways to bolster their underlying businesses and keep investors happy. The Kellogg Company spun out its cereal brands, including Frosted Flakes, Froot Loops and Rice Krispies, in 2023, while holding on to its faster growing snacks business, renaming the company Kellanova.
Mars, the company behind M&M’s and Snickers, agreed last year to acquire Kellanova, in a deal valued at $35.9 billion.
In July, Ferrero, the Italian candy maker that sells Nutella and Tic Tacs, announced plans to buy the cereal business WK Kellogg as part of its efforts to grow its U.S. presence.
Lauren Hirsch and Julie Creswell | Sept. 2, 2025
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