The decade-long ultra-processed marriage between CPG giants Kraft and Heinz appears to be failing.
Since the 2015 megamerger that created Kraft Heinz, the company has planned to spin off part of its grocery business, including several Kraft products, according to The Wall Street Journal. Kraft Heinz—known for boxed macaroni and cheese, condiments, Lunchables, and Capri-Sun—hopes to get around $20 billion for the slate of brands, the Journal reported.
A Kraft Heinz spokesperson declined to confirm the report, stating, “As announced in May, Kraft Heinz has been evaluating potential strategic transactions to unlock shareholder value. Beyond that, we do not comment on rumors or speculation.”
The 2015 merger, orchestrated by Warren Buffett and investment firm 3G Capital Partners, never achieved the success that its masterminds had envisioned. Rather than boosting the profitability of the two companies’ collection of processed food and condiment brands, the initial combined revenue of $28 billion plummeted to an estimated $15 billion valuation over the next four years, the Journal reported.
Kraft Heinz stock, down 60% since the merger, jumped 4% after the breakup was reported, before settling around a 2.4% gain, signaling the market’s preliminary approval of the split.
The CPG industry has faced a variety of headwinds in recent years, from mounting health concerns over ultra-processed foods and the rise of GLP-1 drugs to inflationary pressures that are ushering consumers toward private label knockoffs in lieu of name brands.
