Buffett Disappointed as Kraft Heinz Splits, Shares Slide 5%
In a dramatic turn of events, Kraft Heinz announced a breakup of its 2015 megamerger, splitting into two distinct publicly traded companies—Global Taste Elevation Co. and North American Grocery Co.. The decision sent Kraft Heinz shares tumbling nearly 5% in early trading, and prompted billionaire investor Warren Buffett to voice his disappointment.
Why the Split Now?
The once-celebrated merger between Kraft and Heinz faltered under mounting pressure from shifting consumer tastes toward healthier options and a growing appetite for fresh, less-processed foods. Despite aggressive cost-cutting, revenue continued declining—down 3% in 2024. It became clear that a leaner, brand-focused strategy was necessary.
What the New Companies Look Like?
- Global Taste Elevation Co. will lead the sauces, spreads, and indulgence division, steering iconic names like Heinz Ketchup, Kraft Mac & Cheese, and Philadelphia cream cheese—brands generating over $15 billion in 2024 sales.
- North American Grocery Co. will house staples such as Oscar Mayer, Kraft Singles, and Lunchables, under the leadership of current CEO Carlos Abrams-Rivera, with sales pushing $10 billion.
Buffett’s Dismay and Shareholder Concerns
Buffett, whose Berkshire Hathaway remains the largest shareholder with a 27–28% stake, stated plainly that he is “disappointed” in the direction the board chose—even though he has held firm through years of underperformance. He expressed frustration that shareholders will not receive a vote, despite paying a heavy price—partly a $3.76 billion write-down on Kraft Heinz in Q2.
Taking apart the merger that was never truly successful, Buffett mused, “I don’t think taking them apart will fix it.”
Stock Slides Amid Uncertainty
Markets responded swiftly. Shares plunged as much as 6% intraday, reaching lows not seen since 2023.
Analysts warn the breakup may give only a short-term lift unless both entities invest and innovate.
Industry Drift Toward Strategic De-Mergers
Kraft Heinz joins a growing list of mega-brands opting for structural simplification. Recent splits at Kellogg, Keurig Dr Pepper, and GE show courts now favor focus over sprawling conglomerates.
What’s To Come?
- The split is slated to complete by late 2026, expected to yield up to $300 million in cost savings.
- Carlos Abrams-Rivera will continue to steer the grocery unit, while a CEO search is underway for the sauces division. Both companies are expected to maintain current dividend policies and aim for investment-grade status.
In Retrospect
Kraft Heinz’s split signals a major pivot from the vision Warren Buffett once heralded. With sales slumping, stale structures, and rising consumer preferences shifting away from processed foods, the breakup aims to re-energize operations. But Buffett’s remarks and the share drop signal tough scrutiny ahead.
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