Struggling Kraft Heinz Plans Shake-Up, Could Spin Off Iconic Brands Like Velveeta

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Struggling Kraft Heinz Plans Shake-Up, Could Spin Off Iconic Brands
A sign outside of the Aon Center marks the location for the headquarters of Kraft Heinz on May 14, 2025 in Chicago, Illinois. Scott Olson/Getty Images/Getty Images

Kraft Heinz is thinking about making a big change. The company, known for household names like Velveeta, Oscar Mayer, and Lunchables, may spin off some of its slower-growing food brands into a separate company.

This possible move could undo its 2015 merger with H.J. Heinz, which was backed by Warren Buffett's Berkshire Hathaway.

The food giant has struggled since the merger. Shares have dropped about two-thirds in value. Changing customer tastes and rising prices have made it harder to sell name-brand packaged foods.

In the US, where most of its business is based, many shoppers are turning to cheaper store-brand options.

And with health movements like MAHA (Make America Healthy Again) gaining momentum, products like Lunchables are now under scrutiny, Reuters said.

The company's leadership has been under pressure to create more value for investors. In May, Kraft Heinz said it was "evaluating potential strategic transactions," shortly after Berkshire Hathaway directors stepped down from its board.

Kraft Heinz May Split Into Two: Global vs. US Brands

According to people familiar with the matter, the company could separate many of its older grocery brands—including Kraft-branded products—into a new company worth as much as $20 billion.

That would make it the largest consumer goods deal of the year. Kraft Heinz has not confirmed the report.

If the spin-off happens, Kraft Heinz might divide into two major parts: one focused on fast-growing international brands like Heinz ketchup and Philadelphia cream cheese, and the other on older US-focused products like Velveeta and Oscar Mayer.

In 2023, the ketchup and cream cheese division brought in $11.4 billion in sales and still has global growth potential. Analysts believe this part of the company could become more valuable on its own.

There's another hidden asset that could give Kraft Heinz an edge as it makes these big decisions—its pension plan.

According to Bloomberg, the company has a $4.3 billion pension, with over $800 million in surplus. Experts say this extra money could help attract buyers or partners, especially for the less-profitable brands.

That surplus might also be used to cover retirement benefits or save costs on 401(k) contributions.

Still, experts say spinning off brands won't guarantee success. "It really is reliant on an acquisition down the line," said Peter Galbo, an analyst at Bank of America.

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