Warren Buffett is not happy with Kraft Heinz’s decision to split into two entities. Buffett has been instrumental in the $31 billion megamerger he helped engineer a decade ago.
Speaking to CNBC, the Berkshire Hathaway CEO said the merger “didn’t turn out to be a brilliant idea,” but argued that dismantling the company is unlikely to fix its deeper problems. Following Buffett’s comments, Kraft Heinz shares fell 7%.
“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,” Buffett told CNBC.
Berkshire Hathaway’s share in Kraft Heinz
Berkshire Hathaway, Kraft Heinz’s largest shareholder with a 27.5% stake, has not sold any of its shares since the 2015 merger between Kraft Foods and H.J. Heinz.
Despite the company’s long-running struggles, Buffett has remained publicly supportive, though he admitted in 2019 that Berkshire overpaid for the deal. The firm reiterated that if approached to sell its stake, it would not accept a block bid unless other shareholders were offered the same terms.
Kraft Heinz to split into two businesses by 2026
Kraft Heinz announced earlier Tuesday that it would split into two separately traded companies by the second half of 2026. One business will focus on global sauces, condiments, and shelf-stable products, while the other will be centered on its North American staples like Oscar Mayer, Kraft Singles, and Lunchables.
CEO Carlos Abrams-Rivera will lead the North America business, while the company searches for a chief executive to head the global division.
Executive Chair Miguel Patricio said the split will help unlock the full potential of the company’s brand portfolio, which includes nearly 200 brands in 55 product categories across 150 countries.
The split happened after years of sluggish performance and a 70% drop in Kraft Heinz’s stock price since the merger. 3G Capital, which co-orchestrated the 2015 deal alongside Berkshire, quietly exited its investment in 2023 after steadily trimming its stake.
Why is Kraft Heinz struggling with its business?
Despite its lineup of iconic brands like Velveeta and Capri Sun, Kraft Heinz has struggled to keep up with consumer trends. As shoppers moved toward healthier, fresh food options, sales of packaged products declined.
Analysts also criticised the company’s aggressive cost-cutting strategy, which left little room for brand innovation and marketing.
In 2019, Kraft Heinz wrote down $15 billion in value tied to the Kraft and Oscar Mayer brands, and more recently, it took a $9.3 billion impairment charge amid slumping sales of Lunchables and Capri Sun.
In response, the company has begun reinvesting in core products, rolling out updated offerings like healthier Lunchables and larger boxes of Kraft Mac & Cheese designed to feed a family of five for under $2.