Kraft Heinz pauses split, new CEO says problems are 'fixable'

Title Kraft Heinz Halts Spin-Off Plans, New CEO Says Challenges are 'Fixable'

Packaged-foods giant Kraft Heinz has surprisingly put its plans to split into two companies on hold, citing deteriorating conditions in the food industry. The move marks a significant shift in strategy under new CEO Steve Cahillane, who is focusing on growing the business rather than separating it.

A New Direction

In September, Kraft Heinz announced its intention to spin off into two companies one focused on groceries and another on sauces and spreads. However, the company's struggles to achieve growth led to a recent spate of price hikes that alienated consumers. Cahillane noted that the company had increased prices too quickly, leaving customers feeling disappointed.

We accelerated our price increases through four or five levels, and the consumer was left very dissatisfied, Cahillane said during a post-earnings call.

A Pause Worth Considering

Kraft Heinz expects to save $300 million in costs by halting its spin-off plans. This rare reversal is seen as an acknowledgment that the company's struggles are not unique, with only about one in 10 spinoffs being canceled on average, according to a 2022 report by KPMG.

While the company has not ruled out the possibility of a split in the future, Cahillane emphasized that there is no end date for the pause. The focus now is on accelerating reinvestment and driving growth through investments in marketing, research, and development (R&D).

Next Steps

To turn things around, Kraft Heinz will invest $600 million in marketing and R&D to drive recovery in its US business. This includes increasing investments in R&D by approximately 20 percent in 2026 compared to 2025. The company will also focus on product innovation, with a emphasis on nutrition and value.

A Shift Towards Healthier Options

Cahillane acknowledged that Kraft Heinz has not provided consumers with additional benefits for the higher price tag. He emphasized the importance of investing in R&D to develop healthier options that meet consumer demands.

We have been underinvested in for quite some time, Cahillane said. And separations are always best done when the business is healthy, stable, and growing.

Industry Insights

The food industry has been grappling with endemic issues such as declining demand and competition from healthier alternatives. Kraft Heinz's struggles are not unique, with peers like PepsiCo also facing backlash against higher prices.

PepsiCo last week said it had cut prices on key snacks such as Lay's and Doritos in the US after consumer backlash against higher prices.

Conclusion

Kraft Heinz's decision to pause its spin-off plans signals a shift towards growth and reinvestment. With a new CEO at the helm, the company is poised to tackle its challenges head-on. By focusing on marketing, research, R&D, and product innovation, Kraft Heinz aims to restore profitability and drive growth in 2026.

Keywords Kraft Heinz, spin-off, split, CEO, Steve Cahillane, food industry, packaged foods, marketing, research, R&D, product innovation, health, wellness.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.