Kraft Heinz announces major split to revive brand performance

In the United States, Kraft Heinz has announced its decision to split into two independent companies, reversing the merger that occurred a decade ago in 2015. This strategic move comes as the company has struggled with complex internal structures and stagnant demand for its products. The split aims to enhance the efficiency of capital allocation and allow each entity to focus on its respective brand strengths. One of the spin-off companies will focus on shelf-stable meals, housing well-known brands like Heinz and Philadelphia, which are expected to drive higher sales figures. The other company, which will include brands such as Oscar Mayer and Kraft Singles, targets the grocery sector and aims for better performance in a highly competitive environment. The separation was revealed on a Tuesday and is set to take effect in the latter half of 2026. Throughout its history, the Kraft Heinz brand has been known for a range of iconic products but has faced increasing challenges in meeting changing consumer preferences, particularly as buyers look for healthier and organic options. The merger in 2015, valued at $23 billion, was the largest in the food industry at the time, designed to enhance operational efficiency and cut costs. However, this strategy has drawn criticism as it seemed to inhibit innovation and brand distinction. The management believes that by separating into two focused companies, they can drive growth more effectively and ultimately unlock shareholder value. The shift is precipitated by declining sales in various sectors, prompting a need for urgent re-evaluation of brand strategies as customer demand begins to shift. Investors remain cautiously optimistic about the potential for value creation and better market performance following the separation.