Kraft Heinz pauses split plan into 2 firms, invests $600 million in growth

Kraft Heinz is putting its previously announced plan to split into two separate companies on hold, choosing instead to invest in what its new strategy describes as near-term growth priorities, the company said Wednesday.

Chief Executive Steve Cahillane, who became CEO on Jan. 1, said the company wants to ensure resources are concentrated on profitable growth. In a statement, he said, “I have seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control,” as Kraft Heinz paused the restructuring plan it first announced in September.

Along with the change in direction, Kraft Heinz said it will pivot from the split and invest $600 million in marketing, sales and product development. Cahillane said the company is “confident in the opportunity ahead” and said it expects the investment to accelerate its “return to profitable growth.”

The decision comes after Kraft Heinz reported weaker results for the quarter ended in December. The company said net sales fell 3% to $6.35 billion in the October-December period, a figure that came in slightly below the $6.37 billion Wall Street forecast cited by analysts polled by FactSet. Kraft Heinz also said net income fell 69.5% to $651 million, while adjusted earnings were 67 cents per share, beating the 61 cents per share forecast from those analysts.

Cahillane and the company laid out the split plan last fall as a decade after the merger of Kraft and Heinz created one of the world’s largest food manufacturers. At the time, Kraft Heinz said one of the planned companies would focus on faster-selling brands such as Heinz, Philadelphia cream cheese and Kraft Mac & Cheese, while the other would include slower-selling brands such as Maxwell House, Oscar Mayer, Kraft Singles and Lunchables.

Kraft Heinz’s shift away from the split also comes after the company had already carried out some portfolio changes meant to improve growth. In 2021, it sold its Planters nut business and its natural cheese business, saying it would reinvest the proceeds in higher-growth areas, including P3 protein snacks. The company also said its net revenue has fallen each year since 2020, when it saw a pandemic-related bump.

In April, Kraft Heinz lowered its full-year sales and earnings guidance, citing weaker customer spending in the U.S. and what it described as the impact of President Donald Trump’s tariffs. On Wednesday, the company’s shares were flat in morning trading as Kraft Heinz reported the quarter’s results, with at least one analyst suggesting investors were concerned that the company’s view of its businesses may affect their ability to stand alone.

Kraft Heinz’s split plan had also been linked to the company’s past strategy under Berkshire Hathaway. The company said the path to the Kraft-Heinz merger began in 2013, when billionaire investor Warren Buffett and 3G Capital bought H.J. Heinz Co. In the years after the merger, Buffett said Berkshire became disappointed with the strength of Kraft Heinz’s competitive “moat,” and Berkshire later took a $3.76 billion write-down on its investment. The company said two representatives from Berkshire resigned from the Kraft Heinz board last spring, and Buffett said he was disappointed in the split plan.

The Wednesday statement also landed in a period when Berkshire Hathaway ownership could come under additional scrutiny. Kraft Heinz has warned investors in a regulatory filing that Berkshire Hathaway may be interested in selling its 325 million shares, and the company’s successor at Berkshire, Greg Abel, may be seeking to unload the stake, according to the reporting.