Kraft Heinz is reportedly advancing towards a decision on splitting the business in two.
According to The Wall Street Journal, the US giant is nearing announcing a break-up of its operations.
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The plan could be published as soon as this week, according to the publication’s sources.
However, the unnamed sources warned the plans and timings could still change.
In July, the WSJ said Kraft Heinz was planning to spin off part of its grocery business, leaving an entity focusing on products like sauces and condiments.
The grocery portion could be valued at around $20bn, the WSJ suggested, adding the Oscar Mayer meats and Maxwell House coffee owner may be betting that a separation would exceed Kraft Heinz’s current $33bn market capitalisation.
Kraft Heinz reported total group sales of $25.85bn in 2024.
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By GlobalDataCEO Carlos Abrams-Rivera kicked off speculation of a split in May by revealing the business was weighing up “strategic transactions to unlock shareholder value”.
He explained at the time: “Consistent with this goal, over the past several months we have been evaluating potential strategic transactions to unlock shareholder value. As we look to the future, we will continue to inspire and delight consumers with our iconic brands, fulfilling our mission.”
In July, Kraft Heinz announced a deal to sell a clutch of assets in Italy to local food and drinks group NewPrinces.
Kraft Heinz was formed in 2015 via a merger of the then Kraft Foods Group and HJ Heinz.
The deal was instigated by Berkshire Hathaway, the US investment group led by Warren Buffett and private-equity firm 3G Capital. While Berkshire Hathaway remains a minority investor in Kraft Heinz, 3G Capital exited in 2023.
Kraft Heinz’s 2024 reported sales dropped 3% to $25.85bn, with organic growth down 2.1% in what CEO Abrams-Rivera described as “a challenging year with our top-line results coming in below our expectations”.
Net income fell to $2.74bn, from the $2.86bn booked for 2023. The company also reported a 63.2% slump in full-year operating profit to $1.7bn, which was linked to $3.7bn in non-cash impairment losses.
Kraft Heinz’s latest financial results for the first half of fiscal 2025, issued in July, showed organic sales fell 3.3%, close to the top-end of its full-year guidance for a decrease in the range of 1.5% to 3.5%. Volume/mix was a negative 4.2%.
In North America, by far the Jell-O desserts and Capri-Sun maker’s largest market by sales, revenue dropped by a greater magnitude of 4.8%, along with a larger volume/mix retreat of 5.2 percentage points.
In July, speculating on the make-up of a split, Stifel analyst Matthew Smith said the grocery assets that could be spun off could include the company’s “slower growth and highly competitive/commoditised categories, with the remaining entity keeping Kraft’s priority platforms including sauces/condiments and snacking/easy meals”.
Smith said Stifel believed the faster-growing assets to remain would include Kraft Heinz’s North America retail “accelerate” platforms, the company’s global away-from-home unit and its emerging-markets businesses. The assets spun off could house the retail portions of the company’s “protect” and “balance” platforms.
Stifel’s analysts quantified the accelerate platforms as including condiments, ready-meals brands Mac & Cheese and Ore-Ida, plus snacking lines such as Lunchables and Delimex.
The assets that could be spun off would include Oscar Mayer, Jell-O, drinks brands Capri-Sun and Kool-Aid, cheese with Kraft and Velveeta, plus coffee, as in Maxwell House and Gevalia.
