Kraft Heinz to Separate into Two Businesses via a Tax-Free Spin-Off
A Dual Recipe for Shareholder Value - Growth Abroad, Stability at Home
Executive Summary
Kraft Heinz (Nasdaq: KHC) is splitting itself into two independent, publicly traded companies via a tax-free spin-off expected in H2 2026. The transaction will create two companies: Global Taste Elevation Co (sauces, spreads and shelf-stable meals) and North American Grocery Co. (grocery staples business). The move is designed to disentangle distinct brand portfolios, so each can pursue clearer growth, margin and capital-allocation strategies.
Spin-Off Details
What’s being spun off & what parent retains
Global Taste Elevation Co.: will comprise sauces, spreads and seasonings and the shelf-stable meals category. It will include iconic brands like Heinz, Philadelphia, Kraft Mac & Cheese. It generated approximately $15.4 billion in sales in FY 2024. Its core mix (~75%) comes from sauces, spreads, and seasonings. Exposure includes ~20% net sales from Emerging Markets and ~20% from Away-From-Home channels.
North American Grocery Co.: This entity will house North American staples such as Oscar Mayer, Kraft Singles, Lunchables. It generated sales of $10.4 billion in 2024. Brands with category leadership (~#1 or #2) make up ~75% of its mix.
Tax status & timeline
The spin-off is tax-free for Kraft Heinz and its shareholders, pending customary filings and approvals.
Expected closing: The transaction is expected to be complete dby H2 2026, subject to board approval, regulatory / tax opinions, and SEC filings.
Strategic Rationale / Why the Split
Complexity vs focus: The current structure has made capital allocation, innovation, and prioritization less efficient given the large portfolio size of the company. Separation reduces internal trade-offs and allows each business to tailor strategy.
Growth profile divergence: The sauces/spreads/seasonings / shelf-stable meals business has different margin pressures, geographic expansion and Away-From-Home exposure. In contrast, staples are more domestically tethered and likely lower growth but more stable cash flows. Splitting the two businesses will allow investors to chose exposure as per their risk appetite.
Brand leverage & scale: Many of the brands are strong (#1 or #2) in their categories; but the scale and go-to-market models needed for international vs. domestic staples differ. Each SpinCo can deploy its own systems, investments, marketing more sharply.
Conclusion
Kraft Heinz’s decision to split into Global Taste Elevation Co. and North American Grocery Co. is a strategic move intended to recalibrate the Company amid flattening growth. The split offers a clean choice for investors - exposure to faster growing and higher margin Global Taste Co, or opt for the stability of U.S. grocery staples. A successful spin-off has the potential to unlock value as the Global Taste Co could command premium multiple given its growth and geographic leverage while North American Grocery may trade as a stable, high-cash‐flow business.