Kraft Heinz will remain one entity – for now – after another disappointing quarter in which sales and margins fell, prompting leadership to “pause” work on the previously announced separation.
“My No. 1 priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan. As a result, we believe it is prudent to pause work related to the separation and we will no longer incur related dis-synergies this year,” CEO Steve Cahillane said in a statement ahead of the company’s earnings call Feb. 11.
The company also will invest $600 million in marketing, sales, R&D and “product superiority and select pricing” to further “drive recovery in our US business,” he added.
The about-face comes after a rocky year in which net sales fell, compressing the company’s gross profit margin, and in which its biggest investor moved to divest its entire stake in the business.
In fiscal 2026, ending Dec. 27, Kraft Heinz’s net sales fell 3.5% and organic sales dropped 3.4%, leading to a decrease of 140 basis points in the business’ gross margin to 33.3%. The full year results mirrored those of the fourth quarter, in which net sales fell 3.4% and the gross profit margin decreased 150 basis points to 32.6%.
One month earlier, Kraft Heinz’s biggest investor holding company Berkshire Hathaway, filed paperwork with the SEC to sell its entire stake in the business, which is about 325 million common shares or 27% of the company.
The move was viewed by many as a dismissal of the company’s attempts to reverse sliding sales first with a marketing blitz followed by an announcement to divide into two independent, publicly traded companies – the North American Global Grocery Co, which would focus on iconic staples like Kraft Singles and Oscar Mayer, and Global Taste Elevation, which would include high-growth sauces and condiments.
The decision is one of the first made by Cahillane as the company’s CEO, a position he officially began Jan. 1, after serving as chairman, president and CEO of Kellanova.
His appointment likely hinged in part on his experience at Kellogg Co. when it divided into Kellanova, which includes the company’s snack brands, and WK Kellogg Co, which focuses on the North American cereal business. Given his track record navigating high-profile separations, the move may come as a surprise to some.
A history of ups and downs
Kraft Heinz is no stranger to remaking itself – sometimes with more success than others.
Under former CEO Miguel Patricio, who took the helm in mid-2019 through the end of 2023, the company clawed its way up from “the bottom” after a strategy of aggressive cost-cutting and zero-based budgeting backfired brilliantly.
That rebound was driven by a “growth mindset” outlined in its strategic agile@scale initiative, which included partnerships with tech giants and innovators. It also pushed its iconic brands into new areas of growth, such as repositioning cream cheese as more than a base for cheesecake and topping for bagels.
Patricio was succeeded by Carlos Abrams-Rivera, who served as CEO for about two years before transitioning to an advisory role he will hold until March 6.
Under Abrams-Rivera, the company divided its brands into three platforms – accelerate, protect and balance. The first category included brands with higher market share and limited exposure to private label – a position that the company planned to make the most of by innovating to meet modern consumer demands, such as for new flavors and expanded uses.
The other two platforms, which included brands with moderate growth potential and high growth margins or large scale and cash generation potential, took a backseat to the brands in the accelerate platform.
In the back half of Abrams-Rivera’s leadership, the company struggled with declining revenue against a difficult backdrop in which grocery prices surged and the Trump administration opened an ongoing attack against processed food, which makes up the bulk of the company’s portfolio.
