Kraft Heinz announced Tuesday that it will split into two companies – much to the dismay of legendary investor Warren Buffett, who orchestrated their megamerger a decade ago.
Buffett – whose investment firm Berkshire Hathaway is Kraft Heinz’s largest shareholder with a 27.5% stake – said he was “disappointed” by the breakup.
“It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it,” Buffett told CNBC.
Greg Abel – who will take over the Oracle of Omaha’s role at Berkshire at the end of the year – tried to dissuade Kraft Heinz executives from moving forward with their decision during a meeting last week, Buffett told CNBC on Tuesday.
Shares in the company fell 7% on Tuesday after Buffett’s remarks.
Kraft Heinz plans to split into a $10 billion North America grocery business — with brands like Oscar Mayer, Kraft Singles and Lunchables — and a $15 billion global business focused on “taste elevation” that include Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese.
The company has struggled to invest evenly in its nearly 200 brands, which span 55 categories and 150 countries, according to Kraft Heinz CEO Carlos Abrams-Rivera, who will lead the North America business.
“We can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance,” Miguel Patricio, executive chair of Kraft Heinz, told the Wall Street Journal.
Kraft Heinz said it expects to complete the split in the second half of 2026. Its board is currently looking for potential candidates to lead the global business, the company said.
In 2015, Kraft Foods and HJ Heinz merged into a $31 billion food and beverage conglomerate as part of a deal struck by Berkshire Hathaway and Brazilian private equity firm 3G Capital.
3G Capital quietly exited its Kraft Heinz investment in 2023 after years of trimming the stake.
Berkshire, meanwhile, hasn’t touched its Kraft Heinz shares since the 2015 merger.
If Berkshire is approached to sell its shares, the firm will not accept a block bid unless other shareholders receive the same offer, Buffett said Tuesday.
Since 2015, Kraft Heinz has lost approximately $57 billion in market value.
In 2019, it announced a $15 billion write-down tied to the Kraft and Oscar Mayer labels, citing rising costs and a sales slump. At the time, Buffett admitted that Berkshire had overpaid for Kraft.
The food giant recently reported a loss in its second quarter due to a $9.3 billion noncash impairment charge, largely driven by a decline in its share price as it has struggled to sell Lunchables and Capri Sun to shoppers on the “Make America Healthy Again” bandwagon.
Kraft Heinz said it has been working to invest in healthier options and recently vowed to scrap artificial dyes in its US products amid pressure from Health and Human Services Secretary Robert F. Kennedy Jr.
The company is now attempting to boost sales with offerings like a larger box of macaroni and cheese that can feed a family of five for less than $2, and using better cookies and crackers in Lunchables.
In July, it warned that it expects its costs to rise between 5% and 7% this year, but it will only pass a portion of that along to consumers.
TD Cowen analyst Robert Moskow said food megamergers have had low success rates, adding that companies with smaller portfolios have better odds in the long term.
“Food companies have found that their breadth of influence in the grocery store does not necessarily yield the advantages they expected,” Moskow told the Journal.
In 2023, Kellogg split into snack giant Kellanova and North American cereal business WK Kellogg.
Keurig Dr Pepper recently revealed plans to unwind its 2018 merger, which united the coffee maker and soda giant under a single umbrella.
