Kraft Heinz is set to divide into two separate companies, marking a significant shift a decade after their merger formed one of the largest food corporations globally. The announcement was made on Tuesday, revealing that one entity will be named Global Taste Elevation Co. This company will focus on shelf-stable meals and include well-known brands such as Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese. The second company, currently referred to as North American Grocery Co., will encompass brands like Oscar Mayer, Kraft Singles, and Lunchables. The official names for both companies will be disclosed later.

In May, Kraft Heinz indicated it was undergoing a strategic review, hinting at a possible split. The merger in 2015 aimed to leverage the company's vast scale, but changing consumer preferences have complicated those efforts. Many households are now leaning towards healthier food options, prompting Kraft Heinz and other food manufacturers to adapt their product lines accordingly.

Executive Chair Miguel Patricio stated, "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."

The merger of Kraft and Heinz traces back to 2013 when billionaire investor Warren Buffett partnered with Brazilian investment firm 3G Capital to acquire H.J. Heinz Co. This $23 billion deal was the largest in the food industry at that time. 3G Capital is also known for its role in creating Restaurant Brands International, which includes Burger King, Tim Hortons, and Popeyes, as well as Anheuser-Busch InBev. The firm is recognized for its stringent cost controls and a budgeting approach that requires all expenses to be justified quarterly.

The merger aimed to enhance Heinz's market presence, particularly in condiments and sauces. However, the new owners quickly initiated cost-cutting measures, resulting in hundreds of layoffs shortly after the acquisition. Kraft, based in Chicago, was seeking a partner following its 2011 separation from its snack division, which became Mondelez International. The 2015 merger created the fifth-largest food and beverage company worldwide, generating annual revenues of $28 billion. Buffett and 3G each contributed $5 billion for a special dividend for Kraft shareholders.

Despite these efforts, the combined company faced challenges. Many consumers began moving away from highly processed foods, such as Velveeta cheese and Kool-Aid, which are staples of Kraft's offerings. Additionally, Kraft Heinz struggled to differentiate its products from cheaper store brands. For instance, a 14-ounce bottle of Heinz ketchup retails for $2.98, while Walmart's Great Value brand sells for just 98 cents.

In 2019, Kraft Heinz reduced the value of its Oscar Mayer and Kraft brands by $15.4 billion, citing operational costs and supply chain issues. Investors criticized the company's leadership, arguing that its focus on cost-cutting stifled brand innovation. In 2021, Kraft Heinz divested its Planters nut business and natural cheese business, pledging to reinvest the proceeds into higher-growth brands like P3 protein snacks and Lunchables.

However, the company's net revenue has declined each year since 2020, following a pandemic-related sales surge. In April, Kraft Heinz revised its full-year sales and earnings projections downward, attributing the changes to reduced consumer spending in the U.S. and the effects of tariffs imposed during Donald Trump's presidency.

Carlos Abrams-Rivera will remain as CEO of Kraft Heinz and will take on the role of CEO for North American Grocery Co. once the split is finalized. The board is currently collaborating with an executive search firm to find a CEO for Global Taste Elevation Co. Kraft Heinz has confirmed that it will maintain its headquarters in Chicago and Pittsburgh. The company anticipates completing the transaction in the second half of 2026. Following the announcement, shares of Kraft Heinz saw a slight increase before the market opened.