Overview:

It’s official. The Kraft Heinz company is splitting into two. One may wonder what caused this. Also, how did Kraft and Heinz merge in the first place. In the end, what can businesses do to prevent something like this.

The Word Is Out

The Kraft Heinz Company is officially splitting into two separate companies by the second half of 2026. What was once hailed as a powerhouse merger in 2015 has since unraveled into declining brand values, financial struggles, and shareholder disappointment.

The two spinoffs will divide operations: one focusing on groceries, the other on sauces and spreads. But how did one of North America’s largest food and beverage companies get to this point?

The Beginning of Kraft and Heinz

Kraft:
Founded in 1903 by James L. Kraft, the company grew from a small cheese business into Kraft Foods, Inc. After years of expansion and spinoffs, Kraft Foods Group, Inc. emerged in 2012 as the brand’s North American grocery business.

Heinz:
The H.J. Heinz Company began in 1869. Nearly 150 years later, it merged with Kraft Foods Group, Inc.

The 2015 Kraft-Heinz Merger

On July 2, 2015, Kraft Foods and Heinz officially merged, backed by Warren Buffett’s Berkshire Hathaway and 3G Capital. A press release at the time announced that the merger created the third-largest food and beverage company in North America.

Kraft shareholders held 49% of the new company, while Heinz shareholders controlled 51%. Initial expectations were high, but within a few years, cracks began to show.

Business Issues That Led to Failure

Restructuring Problems
The company leaned heavily on cost-cutting to boost efficiency. However, as Harvard Business Review explained, this slowed down innovation and made it difficult to adapt to shifting consumer demand for fresher, healthier, and more affordable options.

SEC Charges Against Kraft Heinz
In 2019, the U.S. Securities and Exchange Commission (SEC) launched an investigation into Kraft Heinz. The SEC charged the company with engaging in an accounting scheme involving unearned supplier discounts and misleading contracts. In 2021, Kraft Heinz agreed to pay $62 million without admitting or denying the claims.

The Breakup in 2026

Reuters reports that Kraft Heinz will divide into two businesses: one specializing in groceries and the other in sauces and spreads.

Warren Buffett voiced his frustration, stating:

“The merger did not turn out to be a brilliant idea, but taking the company apart will not fix its problems.”

Kraft Heinz board chair Miguel Patricio added:

“The complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives, and drive scale in our most promising areas.”

ESG: A Path Forward for Brands

The Kraft Heinz split reflects a larger trend — global companies reevaluating structure and sustainability. Environmental, Social, and Governance (ESG) practices are increasingly seen as essential for business survival.

Environmental: ESG integration can reduce costs and improve competitiveness.
Social: Employee rights, job security, and fair wages remain critical.
Governance: Transparent management and accountability build stronger companies.

Examples like Danone and Patagonia highlight how ESG integration fosters loyalty, innovation, and resilience.

Conclusion: Lessons for Business Strategy

The Kraft Heinz split stands as a cautionary tale. Cost-cutting without innovation, weak adaptability, and governance issues can erode even the strongest brands. Moving forward, companies that prioritize ESG initiatives and flexible structures will be better positioned to thrive.

Sources

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