Kraft Heinz (KHC 1.06%) has been back in the headlines -- and not for the usual reasons. After nearly a decade of slow growth, the company behind Heinz ketchup and Kraft macaroni and cheese is once again trying to reinvent itself. This time, it's going big: Kraft Heinz plans to split into two stand-alone companies.
The move has sparked debate among investors. Some see it as the long-overdue catalyst to unlock value. Others view it as the final chapter of an underwhelming merger. Either way, Kraft Heinz is suddenly interesting again -- and that's saying something for a stock that's spent years stuck in neutral.
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Breaking up the behemoth
In early September, Kraft Heinz announced plans to separate into two publicly traded companies by the second half of 2026:
- Global Taste Elevation Co.: Focused on the faster-growing sauces, spreads, and international markets (Heinz, HP, ABC, etc.)
- North American Grocery Co.: Home to classic pantry staples like Kraft Mac & Cheese, Oscar Mayer, and Philadelphia cream cheese.
The split aims to "accelerate profitable growth and unlock shareholder value," according to management. Investors are hoping that by giving each business a clearer mandate, Kraft Heinz can finally move beyond its identity crisis -- part global brand builder, part domestic grocery giant.
That's a smart move. The faster-growing global business deserves more capital and focus, while the North American grocery arm can prioritize steady cash generation and dividend payments. In practice, though, execution will make or break this move.
NASDAQ: KHC
Key Data Points
A failed merger of the past
Kraft Heinz's current story can't be told without its past. The 2015 megamerger, engineered by 3G Capital and backed by Warren Buffett, promised scale, efficiency, and unstoppable brand power. What followed was years of cost-cutting, eroding innovation, and a decline in consumer relevance.
In 2019, Kraft Heinz wrote down more than $15 billion in goodwill, and even Berkshire Hathaway, which still owns a sizable stake in the company, took a $5 billion write-down on its investment this year. For long-term investors, that history still stings.
That's partly why the split has attracted so much attention: It's a symbolic break from a disappointing past. The company is admitting the old playbook no longer works, and it's trying something bold to fix it.
The numbers tell a mixed story.
Financially, Kraft Heinz remains a study in contrasts. In 2024, it generated $25.8 billion in revenue, a decrease of approximately 3% from the prior year. Yet, gross profit margin increased by 120 basis points to 34.7%, suggesting that its ongoing activities to improve efficiency and reduce costs are still ongoing.
The latest quarterly results showed more of the same: declining sales, but improving free cash flow. That's not a disaster -- but it's not exciting either. The company is continuing to do what it has been doing for years, which is to improve the bottom line through cost-cutting and efficiency improvements.
However, the old saying that you cannot keep cutting costs to deliver growth remains relevant today. Unless the food company demonstrates that it can turn around its revenue trajectory, investors will remain pessimistic about its long-term prospects.
Can the split unlock real value?
The optimistic case goes like this: splitting the company allows each segment to focus on what it does best. The global "taste elevation" arm can reinvest in higher-growth brands and markets, while the grocery arm can prioritize stability and dividend returns.
If both execute well, the stock could see a re-rating over the next few years. In a market starved for predictability, a steady cash-flow machine with a clearer structure might earn back investor confidence. Additionally, these separate companies can now cater to different groups of investors, which could also lead to a better overall valuation.
The skeptical view: You can't split your way out of a structural problem. The challenges facing Kraft Heinz -- from private-label competition to changing consumer tastes -- won't disappear just because the business is smaller. If execution falters or the global arm underperforms, the breakup could make two sluggish companies instead of one.
What does it mean for investors?
So why is everyone talking about Kraft Heinz stock? Because for the first time in years, something meaningful is happening. The breakup marks a turning point -- one that could either unlock long-stagnant value, or confirm that Kraft Heinz's best days are behind it.
For long-term investors, this is a potential value reset play -- an opportunity to see whether management can reverse a decade of slow decline. If they can deliver even modest organic growth and margin improvement, Kraft Heinz could quietly reward patient investors.
But make no mistake: This one still has plenty to prove. All eyes are on the company's execution in the coming quarters.
