Bottles of Heinz ketchup sit on display in a Sarajevo supermarket on October 29, 2024. Reuters
Kraft Heinz announced it will split into two separate companies. The move comes ten years after the famous merger that created one of the world’s largest food businesses.
The split will create two new companies with different focuses. One, called Global Taste Elevation Co. for now, will handle shelf-stable meals. This includes Heinz ketchup, Kraft Mac & Cheese, and Philadelphia cream cheese. The second, called North American Grocery Co., will focus on food and drinks. It will include Kraft Singles, Lunchables, and Oscar Mayer products.
The company plans to complete the split in late 2026. Official names for the two companies will be revealed later.
Why the change?
Executives said the company’s current structure makes it difficult to grow. “Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas,” said executive chair Miguel Patricio.
The decision follows years of falling sales. Consumers have been shifting toward healthier and fresher food options, moving away from highly processed meals. Kraft Heinz has tried to adjust, but competition from store brands has also grown stronger.
History of the merger
The story began in 2013 when Warren Buffett and Brazilian investment firm 3G Capital bought Heinz. Two years later, Heinz merged with Kraft. The deal created the fifth-largest food and beverage company in the world, with $28 billion in yearly revenue.
The merger promised growth but also came with deep cost-cutting. Thousands of employees lost their jobs, and the company struggled to keep up with changing food trends.
In 2019, Kraft Heinz cut the value of its Oscar Mayer and Kraft brands by $15.4 billion. Leaders blamed costs and supply chain challenges. Critics said the company cut too much and failed to innovate.
In recent years, Kraft Heinz sold off parts of the business, including its Planters nuts and natural cheese divisions. Leaders promised to focus on faster-growing brands like Lunchables and protein snacks.
Impact on Canada
Kraft Heinz says Canadian operations will not change. The company makes many products in Canada, including ketchup at a factory in Montreal. About 70 per cent of items sold in Canada are also made in the country.
Experts believe the split won’t affect Canadian prices. “This is Kraft looking to focus companies on specific product categories with separate companies,” said Mike von Massow, professor at the University of Guelph. He added that more innovation in lower-cost products could come over time.
Next steps
Carlos Abrams-Rivera will remain CEO of Kraft Heinz and later lead North American Grocery Co. The board is searching for a new leader for Global Taste Elevation Co.
Kraft Heinz joins other big food companies making similar moves. Kellogg split into two firms in 2023, while Keurig Dr Pepper announced a split earlier this year.
