TLDR
- Kraft Heinz halted its planned company split as new CEO Steve Cahillane says most problems are “fixable and within our control”
- The company will invest $600 million in marketing, sales, and R&D to revive its struggling U.S. business
- Shares dropped 5% Wednesday after the announcement and muted 2026 earnings forecast
- Berkshire Hathaway, which owns 27.5% of Kraft Heinz, supports the decision to pause the separation
- The pause saves $300 million in costs for 2026 but reverses September’s plan to split into two companies
Kraft Heinz stock dropped 5% Wednesday after the company halted its planned separation. The move marks a reversal of the September announcement to split into two publicly traded companies.
New CEO Steve Cahillane, who joined in January, said the company’s challenges are “fixable and within our control.” His priority is returning the business to profitable growth.
“My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan,” Cahillane said. The pause will save $300 million in costs during 2026.
The company had planned to split into two entities. One would focus on groceries. The other on sauces and spreads.
The original split aimed to reverse the 2015 merger orchestrated by Warren Buffett’s Berkshire Hathaway and 3G Capital. That $46 billion deal created one of the world’s largest food companies.
But the combined company struggled. U.S. sales slipped. Iconic brands like Oscar Mayer and Maxwell House saw writedowns. For six years, Kraft Heinz has been in turnaround mode.
Berkshire Hathaway CEO Greg Abel said the company supports the decision. “Management can commit to strengthening Kraft Heinz’s ability to compete and serve customers,” Abel said in a statement.
Investment Strategy Takes Shape
Kraft Heinz will pour $600 million into its U.S. business turnaround. The money targets marketing, sales, and research and development. The investment also covers “product superiority and select pricing.”
Cahillane outlined plans to increase R&D spending by 20% in 2026 compared to 2025. The company acknowledged it raised prices to combat inflation without providing extra value to consumers.
PepsiCo recently cut prices on Lay’s and Doritos after consumer backlash. Kraft Heinz faces similar pressure as shoppers seek cheaper options.
Challenging Road Ahead
The company reported fourth-quarter earnings that topped Wall Street estimates. But revenue fell short of analyst projections.
Kraft Heinz forecast 2026 organic net sales to decline between 1.5% and 3.5%. Annual profit is expected between $1.98 and $2.10 per share. That’s well below the $2.49 analyst estimate.
The packaged foods maker has lagged competitors in the U.S. food sector. Consumers pulled back on spending after years of price increases.
Andrew Lazard, analyst at Barclays, called the reinvestment and separation pause “the right set of first steps.” But he noted that reversing market share declines will take time.
Kraft Heinz is among few companies to reverse a major breakup. Only one in 10 corporate spinoffs are canceled on average, according to a 2022 KPMG report.
Cahillane did not rule out a future split. But he said there’s no end date for the pause.
The company brought on Cahillane to guide the separation. He previously led Kellogg through its own breakup and then headed Kellanova until its sale to Mars.
Kraft Heinz has been struggling with weak demand for pricier condiments and pantry staples. It also lost ground to rivals due to lack of innovation.
Arun Sundaram, analyst with CFRA Research, questioned whether separation would have delivered value. “With multiple parts of the business now facing operational and demand challenges, a separation may not have delivered the value management initially envisioned,” he said.
Berkshire Hathaway disclosed in January it may sell its 27.5% stake in Kraft Heinz. The investment hasn’t worked out as Buffett hoped.
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