• Kraft Heinz to split into two companies, one for groceries and the other for sauces.
• The split aims to improve financial performance after years of muted sales.
• Current CEO Carlos Abrams-Rivera will lead the grocery company post-split.
• The separation, expected to close in the second half of 2026, follows a decade of disappointing results since the merger.
• The company is facing challenges from shifting consumer preferences toward healthier options and private labels.

Kraft Heinz announced that it will split into two publicly traded companies as part of an effort to boost its financial performance, following years of muted sales and operational complexity. One entity, currently referred to as Global Taste Elevation Co., will house iconic brands such as Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese, while the other, North American Grocery Co., will focus on legacy brands like Oscar Mayer and Lunchables. The spinoff is expected to close in the second half of 2026, according to Reuters.

The announcement marks a significant restructuring of Kraft Heinz, reversing the mega-merger from 2015 that created a $46 billion packaged food giant backed by Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital. Originally intended to create efficiencies through scaled operations, the merger has seen shares plummet about 60% since, primarily due to changes in consumer preferences favoring healthier and less processed options. "Kraft Heinz's brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively," said Miguel Patricio, the executive chair of Kraft Heinz, as cited by CBS News and HuffPost.

The split comes amidst Kraft Heinz’s ongoing struggles with declining sales and a series of impairment charges reported recently, including a $9.3 billion loss attributed to its share value decline. Analysts express skepticism about the potential for improved performance, highlighting that both companies will need substantial investments to address existing challenges and compete effectively against private labels, as noted by Al Jazeera and Los Angeles Times.

As part of the transition, Carlos Abrams-Rivera will remain as CEO of North American Grocery Co., focusing on reinvigorating its traditional brands, while the search is on for a new CEO for the sauces and spreads division. The decision has not been without criticism; even Buffett expressed disappointment over the separation, indicating that merely splitting the companies may not resolve the underlying issues, as reported by Reuters and Le Monde.

Additionally, Kraft Heinz anticipates the split will incur costs of approximately $300 million but expects to mitigate many of these expenses quickly. Its current goal is to create streamlined entities that can more effectively address market demands, amidst a backdrop of increasing competition and changing consumer behaviors, according to HuffPost, Reuters, and CBS News.