Summary of Kraft Heinz demerger and future outlook
- Kraft Heinz will split into two independent companies in 2026
- Global Taste Elevation Co will focus on sauces and shelf-stable meals
- North American Grocery Co will manage staples like Oscar Mayer and Lunchables
- Analysts expect stronger growth for sauces business versus grocery division
- Success depends on execution, R&D investment, and retailer relationships
News that one of the biggest mergers in food and beverage history had collapsed shocked the industry, when it was announced back in September 2025.
In a statement released by the multinational it revealed the Board of Directors had unanimously approved a plan to separate into two independent, publicly traded companies through a tax-free spin-off.
The separation, said the statement, is designed to maximise Kraft Heinz’s capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources towards their distinct strategic priorities.
What we know so far ?
Kraft Heinz has confirmed the company will be divided as follows:
Global Taste Elevation Co.
A global leader in Taste Elevation and shelf-stable meals with approximately $15.4bn (€13.2bn) in 2024 net sales and approximately $4.0bn in 2024 Adjusted EBITDA.
Its brand portfolio will include Heinz, Philadelphia and Kraft Mac & Cheese, with approximately 75% of net sales coming from sauces, spreads and seasonings.
North American Grocery Co.
A scaled portfolio of North America staples with approximately $10.4bn in 2024 net sales and approximately $2.3bn in 2024 Adjusted EBITDA.
This company will include a portfolio of brands, including Oscar Mayer, Kraft Singles and Lunchables.
But while that went some way to outlining the structure of the demerged company, little has been disclosed since, other than of course the appointment of Steve Cahillane as CEO of the newly-formed Global Taste Elevation Co.
So how will the separation of the $28.7bn (€24.6bn) food giant actually work?
Why is Kraft Heinz separating?
“Kraft Heinz has failed to ignite sales growth,” says Erin Lash, CFA director of consumer equity research at financial services firm Morningstar.
The problem, she explains, has been exacerbated by weak consumer spending, increased regulatory oversight, and heightened demand for healthier products.
The company has argued that the separation will allow each business to sharpen its strategic focus and stabilise brand equity.
Morningstar’s Lash isn’t convinced.
“We believe the primary motivation is to unlock a higher multiple for the higher-margin, faster-growing sauces business.”
This move, she says, mirrors similar simplification actions from WK Kellogg/Kellanova, Kraft/Mondelez, Conagra/Lamb Weston, Sara Lee, Fortune Brands, and others over the past 10-15 years.
Successful demerger
Establishing two independent, fully functioning businesses is inherently complex, involving operational disentanglement, IT systems separation, talent allocation, and the creation of distinct governance structures.
These challenges often introduce transitional inefficiencies and execution risks, particularly around shared services and supply chain integration.
However, Kraft Heinz appears well-positioned to navigate this process thanks to leadership experience. The newly appointed CEO brings direct expertise from Kellogg’s 2022–2023 split into WK Kellogg and Kellanova, a precedent that required similar strategic and operational rigor.
This background should provide valuable insights into sequencing, stakeholder communication, and mitigating disruption, which could accelerate the transition and reduce uncertainty for investors.
That said, even with experienced leadership, the separation will demand significant resources and management bandwidth.
Key watchpoints include maintaining brand momentum during the transition, ensuring continuity in retailer relationships, and avoiding cost inflation as duplicate infrastructures are established.
Successful execution will hinge on balancing short-term complexity with the long-term goal of unlocking value through sharper category focus.
Growth post-separation
While details on the split remain scarce, making predictions on potential growth opportunities remains complex. Though Morningstar’s Lash believes the global sauces business is poised for “more robust growth” than the North American grocery business.
Analysts say they’ll be paying close attention to the company’s commitment to R&D and marketing investment.
These areas are critical for sustaining innovation, brand relevance, and consumer engagement, particularly in categories where differentiation drives pricing power.
“If the firm opts to ratchet back spending here, that could constrain not only its sales growth and market share – but also its standing with retailers that depend on leading brands to drive traffic into stores and onto ecommerce platforms," says Morningstar’s Lash.
Beyond consumer dynamics, there’s a strategic channel risk - leading retailers and e-commerce platforms rely on strong, well-supported brands to attract traffic and drive basket size. If Kraft Heinz underinvests, it risks weakening its negotiating position with these partners, potentially losing shelf space or promotional support. This could create a negative feedback loop – lower visibility leading to weaker sales, which in turn pressures margins and further limits reinvestment capacity.
In short, while cost discipline may appeal to investors in the near term, sustained underinvestment in R&D and marketing could undermine long-term brand equity and retailer relationships, ultimately jeopardising the company’s competitive standing in a highly fragmented and innovation-driven marketplace.
The road ahead
As Kraft Heinz embarks on this historic split, the stakes couldn’t be higher. The company is betting that sharper category focus and operational agility will unlock long-term value, but success will hinge on disciplined execution and sustained investment in innovation.
For Global Taste Elevation Co., the challenge will be to leverage its global footprint and premium positioning to capture growth in sauces and condiments, while North American Grocery Co. must defend share in a mature, price-sensitive market.
Investors and industry watchers will be looking for early signals – clear brand strategies, robust R&D pipelines, and retailer alignment – that indicate whether this separation delivers more than just structural change.
In an era of rapidly shifting consumer preferences, the real question is whether two leaner, more focused Kraft Heinz businesses can succeed where one giant struggled.
With the split slated for completion in the second half of 2026, all eyes will be on execution, because the outcome could redefine not only Kraft Heinz’s future, but the next chapter in food industry consolidation.
