monticello/Depositphotos.com
September 2, 2025
Is the Kraft Heinz Breakup Good or Bad News For the Companies?
Today’s big news: Kraft Heinz is splitting up into two separate publicly traded companies. This appears to be the end result of the 2015 merger — deemed largely unsuccessful and managed by “Warren Buffett’s Berkshire Hathaway and the investment firm 3G Capital, Heinz and Kraft’s owners at the time,” per CNN Business — and the beginning of a new era for both Kraft and Heinz as distinct entities.
In the intervening decade following that merger, Kraft Heinz shed more than two-thirds (68%) of its share price. The company’s sales dipped by 1.9% in the last quarter of business, representing seven consecutive quarterly declines.
Warren Buffett Expresses Disappointment Over Kraft Heinz Breakup, But Won’t Block the Move
“The Oracle of Omaha” Warren Buffett expressed disappointment over the revelation regarding the Kraft Heinz split, telling CNBC that while the merger didn’t exactly pan out as initially planned, the dissolution of said merger wouldn’t be a quick fix for shared problems.
Buffett went on to signal that Berkshire Hathaway, which still holds a 27.5% stake in Kraft Heinz — and is thus the company’s largest shareholder — would not be moving to block the breakup.
Interestingly enough, as the Financial Post noted, Centerview Partners has landed the key advisory role for Kraft Heinz as the split proceeds forward. Centerview was also present during the initial 2015 merger operation, acting as the exclusive financial advisor for Kraft Foods Group Inc. at that time.
Kraft and Heinz May Face Long-Term Challenges Related to Changing Consumer Tastes
As CNN Business writers Kate Trafecante and Nathaniel Meyersohn underscored, Kraft Heinz has been facing a number of significant headwinds in terms of its business, largely stemming from shifting consumer tastes.
The introduction and proliferation of GLP-1 drugs has harmed most food brands, whether CPG-oriented enterprises such as Kraft Heinz or fast-food chains like McDonald’s, as consumers curb appetites overall — particularly for foods seen as unhealthy or less nutritious.
Cash-strapped Americans are also increasingly opting for private label grocery and CPG offerings due to perceptions of improved quality of said store brands in recent years, as well as an assumed favorable value proposition.
“Kraft Heinz failed to keep up with consumer tastes. Many of its brands, such as Kraft Mac & Cheese, Lunchables and Velveeta, have fallen out of favor with customers seeking healthier or organic options as opposed to processed cheese and lunch meat,” Trefacante and Meyersohn wrote.
Bank of America analyst Peter Galbo also put forth his opinion over Kraft Heinz’s fortunes.
“What’s been notable about Kraft in particular has been that it’s suffered in just about all of its categories,” Galbo said.
“The legacy of Kraft Heinz when 3G and Berkshire Hathaway put the company together was this synergy story, that they were going to rip out a bunch of costs. [But] the bigger question for Kraft over time has always been, did they really invest enough money in the business?” he added.
Discussion Questions
Is the Kraft Heinz breakup ultimately good news for the troubled company? Why or why not? What are the next steps for the two separate entities?
Can Kraft and Heinz retake market share from the grocers and warehouse clubs who have moved in with their private label CPGs? If so, what moves would have to come first?
Poll
Loading …BrainTrust
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
John Lietsch
CEO/Founder, Align Business Consulting
Paula Rosenblum
Co-founder, RSR Research
Recent Discussions
More Discussions
Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?Will Ford’s New Retail Experience Deliver Results?
Ford is revamping its global dealership model, in terms of physical space and other aspects. Will…Will Target’s Rebalancing Act Solve its ‘Sloppier’ Stores Problem?
Target is making an operational move to take fulfillment duties away from certain stores. Will this…
The CPG landscape is tough: many categories are seeing volumes stagnate or decline. Branded CPG is also facing added pressures from consumers trading to private label. One response is to engage in corporate dealmaking to satisfy investors. In the case of Kraft Heniz, this means creating two businesses – one with faster growing products like sauces and the other with the slower growing processed foods. The thinking is that the valuation of the two separate entities would be more than the current combined valuation of Kraft Heinz. Of course, the move does nothing to resolve the underlying issues. While it may allow more focus, it is akin to shuffling deckchairs on – well, perhaps not the Titanic – but a boat whose engines have stalled.
Exactly. No there there in the first place
There is such a thing as “too big” and when you look at how few companies control ALL the CPG in the world, it makes one both uncomfortable and baffled. There’s no synergy between Morningstar farms and Campbell’s soup. So I truly don’t get the point. At all.
i don’t think breaking them up matters a lot, because I don’t think there was any there there in the first place.
This latest shifting of brands into different piles & new companies does little to overcome the many challenges facing these brands: changing consumers, growth of private label, tired brands, etc.
Unfortunately for Kraft Heinz, the lesson that should be learned is that scale does not trump strategy & strategy is more than reshuffling the deck.
I don’t know that I’d call it good news, but I’d call it “not bad” news. What would seem to have been bad news was the merger itself: the usual spurious claims created to support the real premise: you can never be big enough.
By breaking up these two brands, each entity can focus more specifically on its core products and market strategies, resulting in increased innovation and efficiency.
In operating independently, both companies may be better positioned to respond to consumer trends and demands, potentially improving their competitiveness.
In order to maximize profitability and shareholder value, the two separate entities will need to establish clear strategic goals and optimize their operations. It’s yet to be known if that will occur. Both were very strong brand-names and I have no reason to doubt them.
The message here is that giants need to carefully monitor changing consumer tastes. Households have been focused on “healthier” and “more natural” for many years, but that seems to have fallen on deaf ears at Kraft. Let’s hope this story has a happy ending.
Hindsight being what it is, the merger wasn’t a good move. I suspect that the split will not fare much better because in the end, it’s not “the merger” or “the split” that dictates the ultimate success of the underlying company or companies. It’s their management. The future success of the combined or split companies is reliant solely on leadership and strategic execution. Mergers and Splits are often just diversionary dust storms. We know where the dust settled on the merger; let’s see if the split fares any better.
The breakup is good news because it finally aligns the strategic approach with category reality. But it’s an expensive redemption—$57 billion— to learn that not all businesses belong together, especially when they require opposite strategic sequences to win (see my https://www.linkedin.com/feed/update/urn:li:activity:7350245955947937792/).
The new Kraft entity becomes a predictable, efficiency-focused partner perfect for private label defense strategies. Meanwhile, the Heinz entity can invest in premium innovations that create differentiation from store brands. Yet, both entities still face the same consumer velocity problem that led to the $57 billion destruction.
American pantries are undergoing a transformation driven by three critical forces that the original merger failed to recognize: the impact of GLP-1 drugs reducing overall consumption, the inflationary tide pushing consumers toward private label options, and a generational shift in preferences leaning toward fresh foods.
While this breakup does not eliminate these pressing economic challenges, it empowers each business to flourish or falter based on its own strategic merits, free from the constraints of incompatible portfolio dynamics. This new direction not only highlights the path forward but also presents a promising opportunity for innovation and growth in their respective markets.
“Kraft Heinz shed more than two-thirds (68%) of its share price.” Not surprising. In horizontal mergers, shareholders rarely do well. Most often (80%+), the enterprise value of the merged companies declines by half or more. This was very predictable. I recall predicting it in 2015 on RetailWire.
But it won’t stop companies from making the same mistake over and over and over in the future.