The Wall Street Journal published a report on Friday that Kraft Heinz was preparing for a major restructuring, possibly the most important since its formation in 2015.
The WSJ reported that, nearly a decade following the merger of Kraft with Heinz–engineered jointly by Warren Buffett’s Berkshire Hathaway & 3G Capital – the packaged food giant now plans to sell a large portion of its grocery division.
The publication cites people familiar with the issue who said that the company was considering a split into two separate entities. One entity would house traditional Kraft-branded groceries such as cold cuts, processed cheeses and boxed meals, while the other entity would retain higher-growth segments, like international sauces and condiments. This includes its iconic Heinz mustard and Grey Poupon ketchup.
It is possible that the proposed spin-off grocery company could have a value of up to $20 billion. The company hopes a separation would create greater shareholder value, than what its $31 billion current market capitalization indicates.
This move is a result of the constant pressure from consumers to adapt their preferences. They are increasingly moving away from packaged foods and towards fresher, premium products.
News of positive investor response is welcomed
Sources caution that Kraft Heinz is still weighing other options with its advisers.
Key details, such as the brand portfolio for the new entity are still to be determined.
Stocks of Kraft Heinz rose by 3.4% intraday after the news broke about its possible breakup. This reflects investor confidence in a more lean and focused Kraft Heinz.
It then gave back some of its gains, and at 1:55pm, the price was higher by 2.09 percent.
Unveiling the process in public for the first time, a spokesperson confirmed to Reuters that Kraft Heinz had been “evaluating strategic transactions” that could unlock value for shareholders.
In the coming weeks, we could see an official announcement.
The sale of Italian Baby Food Unit aligns with Portfolio Shift
This restructuring conversation follows another major strategic decision: The sale to Italian food company NewPrinces of Kraft Heinz’s Italian infant nutrition and specialty nutrition business, which includes the well-known Plasmon label.
This deal is valued at EUR120m ($140.07m), and includes smaller brands as well as a production plant in Italy.
Last year the business had a revenue of EUR170 millions, and a profit core of EUR17million.
Plasmon is best known in Italy for its biscuits made especially for babies. However, its potential market has shrunk due to the falling birth rate.
This divestiture is part of Kraft Heinz’s larger effort to concentrate on areas with core growth while removing categories that face structural demographic challenges.
The transaction is anticipated to be completed by the end of 2025, subject only to approval from regulatory authorities.
Kraft Heinz will release their second quarter 2025 earnings report on July 30. Investors and analysts are expected to seek further clarification on the possible split as well as the company’s future strategy.
The report Kraft Heinz weighs $20 Billion Grocery Spin-off, plans to break up and may change as new information becomes available.
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