Packaged-food giant Kraft Heinz announced on Tuesday that it will separate into two companies, one focusing on the sauces business and the other on groceries, as it aims to revive growth after years of muted sales.
Its board of directors has "unanimously approved a plan to separate the company into two independent, publicly traded companies through a tax-free spin-off," the company said in a statement.
"The separation is designed to maximize 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.
The one unit, called the "Global Taste Elevation Co," houses brands such as Heinz, Philadelphia and Kraft Mac & Cheese, while the other, called "North American Grocery Co," consists of Oscar Mayer, Kraft Singles and Lunchables labels.
The sauces unit raked in about $15.4 billion in sales in 2024, while the grocery business generated about $10.4 billion in sales.
"Kraft Heinz's brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas," said Miguel Patricio, executive chair of the Kraft Heinz board.
The company expects the tax-free spinoff to close in the second half of 2026.
Kraft Heinz said in May it was looking at opportunities for mergers and acquisitions to shore up shareholder value. It has been struggling like other packaged food companies as consumers shop for healthier and more affordable condiments and snacks.
The company's shares were up about 1% in premarket trading. The stock has lost about 21% of its value over the past twelve months.
