Kraft Heinz halts plan to split company

Kraft Heinz has halted efforts to split the company, in a surprise move, with new CEO Steve Cahillane saying it was necessary due to deteriorating conditions in the food industry, though he called the challenges “solvable and within our control.”

canned food company Announced plans to split into two in September – One company focused on groceries and the other on sauces and spreads – after failing to achieve the kind of growth the company had hoped for. was made a decade agoUnder the merger orchestrated by Warren Buffett’s Berkshire Hathaway and 3G Capital.

Kraft Heinz has since lost ground to rivals, Cahillane said, adding that recent price increases have alienated consumers who were already straying from its brands in favor of healthier options at lower costs.

“We went through four or five tiers of price points very quickly and the consumer got very frustrated with that,” Cahillane said on a post-earnings call.

Shares were little changed on Wednesday after falling nearly five percent earlier.

‘We must stop’

“Faced with the choice of continuing the isolation and doing all the work required there or growing the business and shifting all resources against early opportunities, it became very compelling that we must stop the isolation,” Cahillane told Reuters in an interview.

Although he did not rule out the possibility of a future divestment, Cahillane said there is no end date for the breakup, which is expected to save the company US$300 million in costs in 2026.

Kraft Heinz had expected to close the spinoff in late 2026 and brought in industry veteran and former Kellogg boss Cahillane in January to guide it through the division.

Deutsche ⁠Bank analyst Steve Powers said, “The company’s decision to introduce/postpone separation plans and instead accelerate reinvestment reveals deeper problems than the company has previously acknowledged.”

Kraft Heinz is one of the few companies that has reversed a major breakup, as only one in 10 corporate spinoffs is canceled on average, according to KPMG’s 2022 report.

Buffett rejected the split

In January, shares of Kraft Heinz plunged after it revealed that Berkshire Hathaway may sell its 27.5 percent stake in the company and exit more than a decade old investments that did not work out for Buffett.

buffet told cnbc He and Greg Abel, who was Berkshire’s vice chairman at the time and is now its chief executive, rejected the split when the split was announced.

“We support the decision of CEO Steve Cahillane and the Kraft Heinz board of directors to pause work on the previously planned separation of the company under Steve’s new leadership,” Berkshire Hathaway CEO Greg Abel said in a statement Wednesday.

“As a result, management can commit to strengthening Kraft Heinz’s ability to compete and serve customers.”

Cahillane also outlined his strategy to position the company for profitable growth.

He said Kraft Heinz would focus on marketing and research with a US$600 million investment to improve its US business, where market conditions have deteriorated since the divestment decision last summer.

Kraft Heinz, like other packaged food companies, has struggled with weak demand for its expensive spices and pantry staples as consumers look for cheaper alternatives, but has also lost out to rivals due to a lack of innovation.

Q4 results were weak

On Wednesday, Kraft Heinz Fourth quarter results reported Which is lower than expected and it is estimated that the income in 2026 will be lower than expected.

“To change this, we are increasing investment in R&D by approximately 20 percent in 2026 compared to 2025,” Cahillane said. He said product innovation would also span nutrition and value.

He also acknowledged that Kraft Heinz did not provide consumers with additional benefits to make up for the higher price tag.

“There are great brands out there. And they’ve been underinvested for a long time. And separations are always better when the business is healthy, when it’s stable and when it’s growing.”