The global company Kraft Heinz, one of the most recognized names in the packaged food industry, has officially announced its decision to split into two independent, publicly traded companies. This strategic division, unanimously approved by its board of directors, is expected to be completed in the second half of 2026.

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Why did Kraft Heinz split?

The decision by Kraft Heinz responds to an internal need for reorganization to address operational complexity and difficulties in allocating resources effectively. Miguel Patricio, executive chairman of the board, explained that the current corporate structure limits the company’s ability to scale key initiatives and focus on high-performing areas. The solution, he said, is clear: separate the businesses to maximize the value of each one.

The announcement marks a reversal of the company’s narrative from a decade ago, when the merger between Kraft and Heinz, backed by 3G Capital and Berkshire Hathaway, was celebrated as a move promising synergies and sustained growth. However, the results failed to meet expectations, and the company now seeks to redefine its strategy to adapt to a more fragmented and challenging consumer environment.

Kraft Heinz: Who got which brands?

Following the spin-off, Kraft Heinz will give way to two companies with distinct profiles:

• Global Taste Elevation Co. will be the international arm focused on high-growth products such as sauces, spreads, and shelf-stable meals. With flagship brands like Heinz, Philadelphia, and Kraft Mac & Cheese, this unit generated approximately $15.4 billion in net sales in 2024. Its international presence will be key, with 20% of sales coming from emerging markets and another 20% from the away-from-home channel.
• North American Grocery Co., meanwhile, will manage the staple foods portfolio for the North American market. It will be led by Carlos Abrams-Rivera, current CEO of Kraft Heinz, and will include brands such as Oscar Mayer, Kraft Singles, and Lunchables. This business reached around $10.4 billion in net sales in 2024 and will focus on operational efficiency and sustainable growth.

What is the economic context behind this decision?

The announcement comes amid a difficult outlook for major food brands. After years of food price inflation, consumers have reduced their consumption of packaged products and turned to fresher or private-label options. This trend has impacted Kraft Heinz’s financial performance, with global net sales falling by nearly 2% in the second quarter of 2024.

Additionally, pressure to reinvent itself has led the company to sell non-core divisions in recent years, such as its nuts business and part of its cheese line, in search of greater profitability.

The separation, therefore, responds not only to internal strategic needs but also to the demands of a more volatile commercial environment, with consumers increasingly conscious of what they buy and why.

How does this split compare to other moves in the industry?

The Kraft Heinz plan is part of a wave of structural transformations across the sector. In 2023, Kellogg Company spun off its cereal business to create Kellanova, while retaining its snack line. Mars went on to acquire Kellanova in a deal worth more than $35 billion, and Ferrero also expanded its U.S. footprint by acquiring WK Kellogg’s cereal business.

What impact will this split have on Kraft Heinz investors?

One of the main objectives of the separation is to create sustained value for shareholders. Both companies will be structured to maintain investment-grade credit ratings and preserve the current level of dividends. Free cash flow and capital allocation are expected to be managed independently, aligned with the strategic goals of each unit.

The transaction will be tax-efficient, as it is planned as a tax-free spin-off for both Kraft Heinz and its shareholders. While up to \$300 million in dis-synergies are anticipated, the company is confident that these can be mitigated in the short term.

Who will lead each of the new companies?

Carlos Abrams-Rivera, current CEO of Kraft Heinz, will remain at the helm during the separation process and will officially assume the role of CEO of North American Grocery Co. upon completion of the split.

Meanwhile, the board of directors, chaired by Miguel Patricio as executive chairman, is working with a global executive search firm to identify the future CEO of Global Taste Elevation Co. Additionally, a special committee led by John Cahill has been formed to oversee the execution of the process.

No changes are expected in the company’s current headquarters, which will allow for operational continuity during the transition.

When will the Kraft Heinz separation be completed?

The company estimates that the transaction will be formalized in the second half of 2026, after fulfilling all regulatory conditions and receiving the necessary approvals, including a favorable tax opinion and filings with the U.S. Securities and Exchange Commission (SEC).

Until then, Kraft Heinz will continue to operate as a single entity, focused on preparing its divisions to function independently and compete in their respective markets with greater efficiency and flexibility.

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