Massive shakeup at iconic American brand could change pantry favorites forever
Americans who like to pour ketchup on their mac and cheese, beware: your favorite combo is heading for a breakup.
Kraft Heinz is plotting a potential split. It comes nearly a decade after the pantry brands merged in a high-profile mega-deal.
The company could spin off much of the Kraft grocery business — including well-loved grocery items like the brand-name mac and cheese, Jell-O, Maxwell House, and Oscar Mayer — into a new $20 billion firm, according to the Wall Street Journal.
That move would leave ketchup-maker Heinz and its sister condiments, including Grey Poupon, in a separate company.
It's a big reset for a brand that ended up losing billions in value despite its big-money backing.
The companies merged in 2015, led by Warren Buffett and 3G Capital.
But the combination has lost billions of dollars — the combined company reported Kraft and Oscar Mayer lost $15 billion of value in 2019.
The combined company's stock price has dropped 60 percent since the merger.
A company that housed multiple pantry staples could soon be heading for a breakup
'As announced in May, Kraft Heinz has been evaluating potential strategic transactions to unlock shareholder value,' a company spokesperson told DailyMail.com.
'Beyond that, we do not comment on rumors or speculation.'
The company has been plotting major changes since the beginning of the year, including a potential sale of the Oscar Mayer brand, according to WSJ.
But the negotiations haven't netted much interest.
At the core of the brand's problem: American's shopping habits have changed substantially since the companies decided to join forces.
At the time, shoppers were buying experimental condiments, packaged meats, and convenient entrees in droves.
Now, today's consumers have turned their focus toward fresher foods, analysts told DailyMail.com. The changing consumer priorities have hurt Kraft's business, while supporting Heinz's.
'The grocery landscape has been tough for a while,' Neil Saunders, a retail expert at GlobalData, said. 'This means the big food firms are looking for ways to maximize the value of their businesses.'
Oscar Mayer, the iconic hot dog company, was part of a huge write off in 2019 after its parent company's value dropped
Investors were bullish on Kraft's continued dominance in the grocery store - but shoppers have moved their shopping habits into fresher produce
Analysts believe that Heinz, the company behind the name-brand ketchup, will quickly grow sales
That shift has put pressure on multiple iconic companies.
Earlier this month, Del Monte Inc., the 138-year-old American food producer that makes well-recognized canned fruits and vegetables, declared bankruptcy after seeing sales declines.
WK Kellogg, the iconic cereal maker behind Froot Loops and Frosted Flakes, just sold itself to the Italian chocolatier, Ferrero.
The American cereal company's May earnings report had some stinging numbers, including a 6.2 percent decline in sales.
Amid the turmoil, some experts think Kraft Heinz might be making the right call to call their relationship over.
Saunders believes the Heinz and Kraft split-up could stop the company's bleeding. Heinz's condiment sales are 'faster growing,' he said.
'If this goes through, consumers on the ground won't notice too many changes.'
The breakup might be good business. Your taste buds likely won't sense a difference.
