The food giant’s board of directors unanimously approved the plan, with the move designed to maximize Kraft Heinz’s capabilities and brands while reducing complexity.
The new publicly traded entities will be able to “more effectively deploy resources toward their distinct strategic priorities” while preserving scale.
The names of the two firms will be announced at a later date, but they are provisionally being referred to as Global Taste Elevation Co and North American Grocery Co.
Global Taste Elevation is a “global leader in shelf-stable meals” that reported approximately $15.4 billion in net sales during 2024. This company will include a roster of three billion-dollar brands in the shape of Heinz, Philadelphia and Kraft Mac & Cheese, with approximately 75% of net sales coming from sauces, spreads and seasonings.
Meanwhile, North American Grocery boasted approximately $10.4 billion in net sales during 2024 and will also include three billion-dollar brands – Oscar Mayer, Kraft Singles and Lunchables.
The move to split up Kraft Heinz has been rumoured since May of this year after CEO Carlos Abrams-Rivera confirmed that the firm was exploring potential “strategic transactions” as part of a wider effort to “drive profitable long-term growth and value creation”.
Abrams-Rivera will lead the grocery business, while the search for a leader of the sauces and spreads business in underway.
“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 Miguel Patricio, executive chair of the Kraft Heinz board.
“By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value. I look forward to working closely with Carlos and the Kraft Heinz team in the months ahead to prepare the organization for the separation.”
Abrams-Rivera added that the move will unleash the power of Kraft Heinz’s brands and unlock the potential of the business.
“This next step in our transformation is only possible because of the commitment of our 36,000 talented employees who deliver quality and value for consumers every day,” he added.
“We will continue to operate as ‘one Kraft Heinz’ throughout the separation process.”
The firm’s share price rose by 2.7% in pre-market trading in light of the announcement, bucking a trend that has seen Kraft Heinz lose more than a fifth of its value in the past 12 months.
Kraft Heinz was formed in 2015 after Berkshire Hathaway and Brazilian private equity firm 3G Capital combined Kraft Foods with H.J. Heinz.
