Marketing is the “number one priority” at FMCG giant Kraft Heinz, which announced yesterday (2 September) it will split into two separate businesses a decade on from its $23bn (£17bn) mega-merger.
With company names yet to be decided, the split will see the creation of the Global Taste Elevation Co spanning “iconic brands and local jewels”, including three billion-dollar brands – Heinz, Philadelphia and Kraft Mac & Cheese. These brands notched up $15.4bn (£11.4bn) in net sales in 2024, 75% of which was driven by sauces, spreads and seasonings.
The North American Grocery Co’s “scaled portfolio” of North America staples achieved $10.4bn (£7.7bn) in net sales last year. Described as a “portfolio of beloved brands”, this business also includes three billion-dollar brands – Oscar Mayer, Kraft Singles and Lunchables. According to Kraft Heinz, the division boasts 90% household penetration, while approximately 75% of net sales come from brands that are either number one or two in their respective categories.
Marketing is the “number one priority” at FMCG giant Kraft Heinz, which announced yesterday (2 September) it will split into two separate businesses a decade on from its $23bn (£17bn) mega-merger.
With company names yet to be decided, the split will see the creation of the Global Taste Elevation Co spanning “iconic brands and local jewels”, including billion-dollar brands Heinz, Philadelphia and Kraft Mac & Cheese. These brands notched up $15.4bn (£11.4bn) in net sales in 2024, 75% of which was driven by sauces, spreads and seasonings.
The North American Grocery Co’s “scaled portfolio” of North America staples achieved $10.4bn (£7.7bn) in net sales last year. Described as a “portfolio of beloved brands”, this business also includes three billion-dollar brands – Oscar Mayer, Kraft Singles and Lunchables. According to Kraft Heinz, the division boasts 90% household penetration, while approximately 75% of net sales come from brands that are either number one or two in their respective categories.
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The split is expected to be completed by the second half of 2026 and follows a strategic review launched in May.
Speaking to analysts about the $300m (£222m) worth of dis-synergies (costs/disruption) the separation is expected to create, global CFO and executive vice-president Andre Maciel stated the intention is to increase marketing headcount and resources.
“As we are deploying the brand growth system, we have been saying that marketing now is our number one priority. So adding more headcount we actually will help in the future with having more people that can help translate into better top line,” he explained.
“So we don’t have in this $300m more marketing dollars, we have more marketing headcount, but not marketing dollars. As Carlos [Abrams-Rivera, CEO] mentioned a few minutes ago, we have been adding more marketing dollars and investing in the product as needed.”
According to Kraft Heinz, the split will enable the business to dedicate the right level of attention to all areas, allowing each respective brand portfolio to “reach its full potential”.
As we are deploying the brand growth system, we have been saying that marketing now is our number one priority.
Andre Maciel, Kraft Heinz
“As a company, the reality is that we have made strong progress in our strategy, but the complexity of our business has impacted their ability to realise the full strength of our brands and operations,” CEO and director Carlos Abrams-Rivera told analysts.
“And as part of the conclusion of this process, we strongly believe that the sharpened strategic operational focus of both companies now will be able to drive stronger performance and sustain that performance over time.”
Abrams-Rivera will serve as CEO of the North American Grocery Co, while the company looks to appoint a CEO for the Global Taste Elevation Co. Formerly senior vice-president of marketing at Mondelez, Abrams-Riviera joined Kraft Heinz in 2020 and was appointed CEO in January 2024.
Reflecting on his new role, Abrams-Rivera described the likes of Kraft Singles and Lunchables as attractive, “highly relevant” brands with the potential for improved performance.
He argued the separation will provide both companies with “more strategic, operational and geographic focus”, meaning the team can dedicate the “right level of attention” to all aspects of the business, reduce operational complexity and drive “industry-leading margins”.
‘Great brands and great possibilities’
The FMCG giant has been exploring ways to adapt to the changing consumer environment, describing the launch of its strategic review in May as a means to evaluate “potential strategic transactions”.
In July, Kraft Heinz reported second quarter net sales were down 1.9% year-on-year to $6.4bn (£4.2bn), while the business made an operating loss of $8bn (£6bn).
Price driven sales increased 0.7 percentage points versus the prior year, largely driven by higher pricing in certain categories to mitigate higher costs, primarily in coffee. Volumes declined 2.7 percentage points year-on-year.
Speaking at the time, Abrams-Rivera claimed the business had improved since the first quarter, with product enhancements and manufacturing capabilities delivering “brand and product superiority”.
We have made strong progress in our strategy, but the complexity of our business has impacted their ability to realise the full strength of our brands.
Carlos Abrams-Rivera, Kraft Heinz
Despite the recent poor performance, executive chairman Miguel Patricio told investors yesterday this is not the separation of a “good company and a bad company”.
“This split is about two great companies with great brands and great possibilities,” he argued.
Given Kraft Heinz currently operates in 56 different categories, Patricio claimed dividing the company in two would give greater attention to different parts of the portfolio.
This attention could lead to an increased level of innovation, Abrams-Rivera suggested. He described the introduction of the “brand growth system” as one of the critical ways Kraft Heinz has identified spaces for NPD.
While the business has doubled its rate of innovation over the past three years, he claimed there is a “lot more” to do. The expansion of the Heinz business into pasta sauces and the extension of Taco Bell meals – a move which is driving “double digit growth” – were cited as key recent successes.
“From the consumer lens, the idea that we’re bringing new things to the world and making the process a lot better is part of how we’re thinking about innovation,” Abrams-Rivera explained.
“And you will see that as we go into two separate companies. It will give us the opportunity to further invest in both of those in a way that actually allows us to capture even further growth into the future.”
Speaking to Marketing Week in June, Kraft Heinz North America CMO Todd Kaplan claimed the business doesn’t have an issue with awareness or distribution. Instead, the focus is on relevancy, tapping into cultural moments and consumer “passion points”.
“It’s about, how do we make our brands relevant? How do we connect with people on deeper terms and how do we actually make these brands mean something?” Kaplan said.
