Food giant halts proposed breakup as new CEO shifts focus to marketing, innovation and stabilising sales after weak results
Kraft Heinz on Wednesday said it was pausing its plan to split into two standalone companies, as the packaged food maker shifts focus toward reviving growth and improving performance across its portfolio.
Chief Executive Steve Cahillane, a former Kellogg executive who took over on 1 January, said the company would concentrate its resources on strengthening the existing business rather than pursuing a separation.
“I have seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control,” Cahillane said in a statement.
The announcement came as Kraft Heinz reported weaker quarterly and full-year results. Shares were flat in morning trading. TD Cowen analyst Robert Moskow said in a research note that investors may worry the decision suggests the company’s businesses are not yet strong enough to operate independently.
Kraft Heinz had announced plans in September to divide into two companies, nearly a decade after the merger that formed one of the world’s largest food manufacturers.
Under that proposal, one entity would have included faster-growing brands such as Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese. The other would have housed slower-growing names including Maxwell House coffee, Oscar Mayer meats, Kraft Singles and Lunchables.
At the time, the company said it expected to complete the split in the second half of this year. Cahillane, who oversaw a similar breakup at Kellogg’s in 2023, was hired in December to help lead the transition.
Instead, Kraft Heinz said on Wednesday it would invest USD 600 million in marketing, sales and product development to support its turnaround efforts.
“We are confident in the opportunity ahead and believe this investment will accelerate our return to profitable growth,” Cahillane said.
For the October–December quarter, Kraft Heinz posted net sales of USD 6.35 billion, down 3 per cent from a year earlier and slightly below analysts’ expectations of USD 6.37 billion, according to FactSet. Sales in North America fell 5 per cent, while international markets recorded growth.
Net income dropped 69.5 per cent to USD 651 million in the fourth quarter. On an adjusted basis, the company earned 67 cents per share, beating analysts’ forecast of 61 cents.
Kraft Heinz’s current structure traces back to 2013, when Warren Buffett partnered with Brazilian investment firm 3G Capital to acquire H.J. Heinz in a USD 23 billion deal, then the largest in the food industry. Heinz later merged with Kraft in a transaction designed to leverage the combined company’s scale.
However, shifting consumer preferences toward fresher and less processed foods, along with competition from cheaper private-label brands, complicated those ambitions.
In an effort to adapt, Kraft Heinz sold its Planters nuts and natural cheese businesses in 2021, saying it would reinvest in higher-growth areas such as P3 protein snacks. Despite those moves, the company has continued to struggle.
Net revenue has declined every year since 2020, when pandemic-related pantry stocking lifted sales. In April, Kraft Heinz cut its full-year sales and earnings outlook, citing weaker U.S. consumer spending and the impact of President Donald Trump’s tariffs.
Buffett has acknowledged in recent years that the company’s brand strength was not as durable as he once believed. Two representatives from his investment firm, Berkshire Hathaway, resigned from Kraft Heinz’s board last spring, and Berkshire later recorded a $3.76 billion write-down on its investment. Buffett also said he was disappointed in Kraft Heinz’s plan to split in two.
Buffett’s successor at Berkshire, Greg Abel, may now be reassessing the firm’s holding. In a regulatory filing late last month, Kraft Heinz said Berkshire Hathaway may be interested in selling its 325 million shares in the company.
