Updated September 2, 2025 at 5:32 PM EDT
Hot dogs go to the left; ketchup to the right. That's Kraft Heinz, one of the world's largest food conglomerates, splitting into two companies.
The breakup comes a decade after its messy megamerger, orchestrated by billionaire investor Warren Buffett and considered one of his notable missteps. In recent weeks, both Kraft Heinz and Buffett's Berkshire Hathaway took multibillion-dollar impairment charges reflecting the declining value of the food giant.
Kraft Heinz spent years slicing its costs, while rivals invested in new ideas to keep up with changing consumer tastes. Budget-conscious shoppers have been buying more store-brand packaged foods, while people willing to spend extra often reach for fresher alternatives to processed products. Executives on a call Tuesday announcing the split also cited "historically low consumer sentiment."
Now, Kraft Heinz executives hope the sum of two parts will prove greater than the whole.
After Kraft Heinz splits, the first firm will keep some of the fastest-growing categories, such as sauces and condiments, and will carry brands Heinz, Philadelphia and Kraft Mac & Cheese.
The second company will include more of the slower-growing grocery business, including brands such as Oscar Mayer, Maxwell House, Capri Sun and Lunchables. Current CEO Carlos Abrams-Rivera will stay with the latter firm.
Kraft Heinz executives admitted to investors on Tuesday that the combined conglomerate saw its focus spread too thin, across 56 different product categories.
"The complexity of our business has impacted that ability to realize the full strength of our brands and operations," Abrams-Rivera said on Tuesday's call.
The merger went sour
Kraft Foods and H.J. Heinz merged in 2015 in a megadeal led by the firms that controlled Heinz: Buffett's Berkshire Hathaway and Brazilian private-equity firm 3G Capital.
3G was famous for its cost-cutting approach to consumer companies, having reinvigorated Burger King and beverage giant Anheuser-Busch. But the strategy failed to feed much growth at Kraft Heinz.
In 2019, after massive layoffs and lost sales, the company shocked Wall Street by writing down the value of marquee brands Oscar Mayer and Kraft by $15 billion. It faced shareholder lawsuits and an investigation by U.S. financial regulators.
In July, Kraft Heinz once again reported a drop in sales and a net loss of nearly $8 billion, largely thanks to a $9.3 billion impairment charge attributed to the declining share price. Soon after, Berkshire Hathaway also wrote down the value of its investment in Kraft Heinz with its own $3.8 billion impairment charge.
By mid-2025, the company's shares lost two-thirds of their value from the post-merger peak. On Tuesday, the news of the breakup sent the company's stock price down nearly 7%.
Buffett had maintained his financial stake even as 3G Capital completed its quiet exit from Kraft Heinz last year. In a rare admission, Buffett did acknowledge he "was wrong in a couple of ways on Kraft Heinz" and had overpaid in the deal, but praised the historic strength of the brands.
Berkshire Hathaway did not reply to NPR's inquiry on Tuesday. But CNBC cited Buffett as saying he was disappointed in the breakup, adding: "It certainly didn't turn out to be a brilliant idea to put them together, but I don't think taking them apart will fix it."
History is a who's who of food brands
Pittsburgh-based Heinz began in 1869 with grated horseradish that Henry J. Heinz packaged in a clear jar to show off its quality. But of course it was his ketchup — or "catsup" as it was known for a while — that brought Heinz fame, followed by baked beans.
Illinois-based Kraft brothers started their business selling cheese by horse and wagon in the early 1900s. During World War I, they supplied the U.S. Army with cheese processed to resist spoilage.
The Great Depression saw Kraft introducing the mayo-like Miracle Whip and the iconic mac and cheese mix, one of the first prepackaged, shelf-stable dinners. The Kraft brothers also acquired Philadelphia — the cream cheese — and Velveeta. And in 1935, hot liquid cheese poured onto cold stainless steel and cut into squares set the stage for Kraft Singles cheese slices.
In the 1980s, Kraft was bought by tobacco giant Philip Morris during a food-company buying spree. That's when Kraft ballooned to include Nabisco, Jell-O, Maxwell House and hot-dog-maker Oscar Mayer.
In the early 2000s, Kraft again became its own publicly traded company. Later it spun off a separate snacking company, Mondelez, which makes Oreo cookies and Ritz crackers.
The big food meltdown
After its 2015 merger, Kraft Heinz wanted to jump-start growth by buying rival Unilever, maker of Hellmann's mayonnaise and Ben & Jerry's ice cream. But the European conglomerate rejected the deal.
Kraft Heinz tried to refresh its food offerings and address families' growing health concerns. It cut the sugar level in its Capri Sun juices. It launched cheese-stuffed hot dogs, hot honey and plant-based cheese and mayo. It began making mac and cheese with natural food coloring. Last year, after reports about Lunchables' sodium and heavy metals content, the company stopped offering the snack packs for school-lunch programs. It is now removing artificial food dyes from all U.S. products.
But years of high inflation have shoppers at Walmart, Costco and supermarket chains increasingly choosing private-label packaged foods, including in categories where brand names had long enjoyed high loyalty. And smaller startups continue to pose fierce competition with new takes on familiar snacks and meals.
In February, CEO Abrams-Rivera said Kraft Heinz was focusing its resources on faster-growing and more profitable products "to become a sauces and meals powerhouse." But by May, the company said it was exploring potential deals to get on stronger footing.
NPR's Maria Aspan contributed to this report.
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