U.S. packaged foods giant Kraft Heinz announced plans on Tuesday to separate into two independent publicly traded companies one focused on groceries and the other on sauces and condiments marking a reversal of the decade-old merger that created the $45 billion conglomerate.

The decision aims to revitalize growth after years of stagnant sales and underperformance in the competitive food industry.

The breakup unwinds the 2015 union between H.J. Heinz and Kraft Foods, a deal orchestrated by Warren Buffett’s Berkshire Hathaway and Brazilian private equity firm 3G Capital.

The merger initially promised synergies and market dominance but struggled with evolving consumer preferences, brand relevance, and operational inefficiencies.

The new structure will allow each entity to pursue tailored strategies: the grocery unit will prioritize staples like macaroni and cheese and cold cuts, while the sauces and spreads business will focus on brands such as Heinz ketchup and Kraft mayonnaise.

Investors reacted positively to the announcement, anticipating that streamlined operations and distinct growth plans could enhance shareholder value.

The move reflects a broader trend in the consumer goods sector, where companies like Kellogg’s and Johnson & Johnson have similarly split to improve agility and market focus.

Kraft Heinz CEO Miguel Patricio emphasized that the separation will enable both companies to innovate faster, optimize resources, and respond more effectively to trends like health-conscious eating and premiumization.

The restructuring comes amid persistent challenges, including inflation-driven cost pressures and competition from smaller, niche brands. By decoupling, each company can allocate capital more efficiently, explore targeted acquisitions, and reset investor expectations.

The grocery business will retain a stable, volume-driven profile, while the sauces unit may leverage its global brand recognition to expand in international markets.

Kraft Heinz expects to complete the separation by late 2026, pending regulatory and board approvals. The split symbolizes a pragmatic retreat from the consolidation model that once defined Big Food, acknowledging that scale alone cannot guarantee success in a rapidly changing consumer landscape.

Source: Reuters.