Kraft Heinz has confirmed the US food giant will split the business into two publicly-listed companies in a plan approved by the board of directors.
While the individual names of the separated businesses have yet to be determined the split will revolve around Kraft Heinz’s so-called global taste and elevation platform and North America grocery.
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To be conducted via a “tax-free spin-off”, the company said in a statement today (2 September) that “the separation is designed to maximise Kraft Heinz’s capabilities and brands, while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities”.
It added: “This focus will enable stronger performance while preserving the scale to compete and win in today’s environment.”
Described for now as the ‘Global Taste and Elevation Co.’, that business accounted for $15.4bn in sales last year and an adjusted EBITDA of around $4bn, according to Kraft Heinz.
Some 75% of those annual sales are centered around sauces, spreads and seasonings, with 20% generated from emerging markets and 20% from foodservice. Included in the division are brands such as Heinz, Philadelphia and Kraft Mac & Cheese.
“This company will be well positioned to drive industry-leading growth across attractive categories and geographies, leveraging a proven go-to-market model and the brand growth system to deliver scale and performance,” Kraft Heinz said.
In terms of the “staples” business unit identified as the ‘North American Grocery Co.’, that division is based on sales of $10.4bn (2024) and an adjusted EBITDA of around $2.3bn.
Current group CEO Carlos Abrams-Rivera will lead that division, overseeing brands such as Oscar Mayer, Kraft Singles and Lunchables. A search has been launched to find an executive to head up the Global Taste Elevation Co.
“This company [North American Grocery] is expected to generate reliable free cash flow through operational efficiency across stable growth categories and through the pursuit of growth opportunities for its brands in existing categories, adjacencies and away from home,” Kraft Heinz said.
Miguel Patricio, the executive chair of Kraft Heinz’s board, explained the thinking behind the separation.
“Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritise initiatives and drive scale in our most promising areas.
“By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value.”
Kraft Heinz said the business split is expected to be completed in the second half of next year.
Abrams-Rivera said: “This move will unleash the power of our brands and unlock the potential of our business.
“This next step in our transformation is only possible because of the commitment of our 36,000 talented employees who deliver quality and value for consumers every day. We will continue to operate as ‘one Kraft Heinz’ throughout the separation process.”
