Kraft Heinz to split into two companies a decade after Buffett-backed merger

Kraft Heinz said it will break itself into two companies, a move intended to revive growth a decade after the 2015 merger that created one of the world’s largest packaged-food groups.

The company, owner of brands including Heinz ketchup and Philadelphia cream cheese, said the reorganisation will separate its operations into two publicly traded businesses. The announcement came as investors pushed the shares down more than 7 percent in New York trading on Tuesday.

The 2015 tie-up of Kraft and Heinz, arranged by Berkshire Hathaway and Brazilian private equity firm 3G Capital, was valued at about £47 billion and resulted in what was then the world’s fifth-largest food and drinks company. Berkshire Hathaway remains a major investor, holding roughly 27 percent of Kraft Heinz, and Berkshire chairman Warren Buffett said he was “disappointed” by the split. Notes accompanying the cluster of reports said Buffett recently announced his retirement.

Company executives framed the breakup as a strategic reset aimed at accelerating growth by allowing each new company to pursue more focused brand and category strategies. Analysts and investors have long criticised Kraft Heinz for failing to generate the revenue growth expected when the two firms were combined, particularly as consumer tastes shifted toward fresher and healthier options.

Market reaction was swift. Shares fell sharply on the New York Stock Exchange following the announcement, reflecting investor scepticism about whether the split will unlock value quickly enough to offset years of underperformance. The downturn wiped significant market value from the company in the immediate aftermath of the news.

The challenges that have dogged Kraft Heinz mirror wider pressures facing large packaged-food companies. Since the merger, the industry has contended with changing dietary preferences, increased demand for fresh and plant-based products, and heightened scrutiny over additives and sugar. Those trends have pushed some consumers away from legacy brands and created growth opportunities for smaller, more nimble competitors.

The 2015 merger was premised on realising efficiencies at scale and leveraging a broad portfolio of well-known consumer brands. While Kraft Heinz implemented cost reductions and portfolio adjustments over the past decade, growth in revenue and market share lagged behind investor expectations. The firm has also undertaken efforts to prioritise higher-growth brands and reformulate products, but those measures did not fully reverse the slowdown.

Berkshire Hathaway’s sizeable stake in Kraft Heinz has made the investor reaction to the company’s strategic moves especially scrutinised. Buffett’s comment of disappointment underscores the prominence of the investment within Berkshire’s portfolio and signals that the split falls short of his hopes for the combined firm. The company did not immediately provide a detailed timeline for the separation or the exact corporate structure of the two new entities.

Industry analysts said the practical work of splitting operations, brands, supply chains and management teams will be complex and could take months to finalise. The longer-term success of the strategy will depend on whether each new company can more effectively target consumer trends, streamline innovation and regain investor confidence.

Until the company issues fuller disclosures about the separation plan, investors and market watchers will assess whether the breakup can deliver the sustained growth and returns that the merged company struggled to achieve over the past decade. The move adds to a broader pattern of rethinking scale and structure among large consumer goods firms as they adapt to a rapidly changing market.

Kraft Heinz’s announcement came amid heightened attention on management accountability and strategic agility in the consumer sector. How quickly the firm can articulate operational details, name leadership for the two planned companies and set a credible path to improved performance will be central to restoring investor faith and stabilising its share price.