Kraft Heinz wants to slim down as Americans lose their taste for processed food
The packaged food giant was whisked up in a $46 billion merger a decade ago. Now it might break up.
Kraft Heinz is preparing to spin off a large portion of its grocery business, which could mean ditching Kraft-branded staples like boxed mac and cheese, Oscar Mayer classic wieners, and frozen meals, according to The Wall Street Journal. The new entity could be worth ~$20 billion, with the remaining company leaning into its faster-growing condiments and sauces, like Heinz ketchup and Grey Poupon mustard.
The possible split follows six straight quarters of sales declines, as inflation-weary shoppers pulled back and health-conscious consumers continued to drift away from preservative-packed staples. In fact, it marks a broader pivot from Kraft’s roots in processed cheese, the very product that built the company’s legacy over a century ago, fueling everything from war rations to school lunches.
But Americans aren’t as into processed foods and long-life staples as they used to be — just ask canned goods specialist Del Monte, which just filed for bankruptcy.
According to the USDA, per-capita consumption of natural cheese has surged 3.6x over the past five decades, while processed cheese consumption has barely changed — a trend that’s shown up in Kraft Heinz’ own sales, with cheese and dairy making up just 14% of its revenue in 2023, down from 21% in 2016.
If finalized, the spin-off would partially unwind the 2015 megamerger that created today’s Kraft Heinz — a deal backed by Warren Buffett and 3G Capital that aimed to build the next processed food powerhouse. Instead, the company has shed more than 60% of its market value since, and Buffett himself (still Kraft Heinz’s largest shareholder through Berkshire Hathaway) later conceded that he had “overpaid” for the deal.
