Ketchup manufacturer Heinz has decided to split its business into two companies

Kraft Heinz, the maker of Heinz ketchup and Kraft cheese, has announced plans to split the business into two separate companies. The move reverses a deal nearly a decade ago that created one of the world’s largest sellers of packaged foods.

The merger of Kraft and Heinz a decade ago, brokered by 3G Capital and Warren Buffett’s Berkshire Hathaway, created an industry giant, but the company has since faced new challenges: rising demand for healthier foods and inflation that is forcing consumers to save money.

The goal is to shift its struggling food staples into a new structure that will give its popular products more room to grow and its management more room to better develop every aspect of the business.

The first company will combine fast-growing brands such as Heinz ketchup, Kraft Singles cheese and Philadelphia cream cheese. The unit currently generates $15.4 billion in sales.

The second company will focus on slower-growing products, including Oscar Mayer hot dogs and other meal kits, with revenue of $10.4 billion.

“The complexity of our current structure makes it difficult to effectively allocate capital, prioritize initiatives and scale in our most promising areas. By splitting into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand,” said Miguel Patricio, current chairman of Kraft Heinz.

The company’s move is nothing new in the food market. Previously, such giants as Kellogg, which in 2023 split into two companies: WK Kellogg (cereals) and Kellanova (snacks), made a similar decision. These companies were later acquired by private investors, and analysts predict a similar fate for the new Kraft Heinz divisions.

Recall, in May it was reported that Kraft Heinz would invest $3 billion in upgrading its plants in the US. This will be the company’s largest investment in the last decade, despite forecasts of a decline in sales and profits for the manufacturer.

Tags: Heinz