Kraft Heinz Pauses Split, Shifts to $600 Million Business Optimization
The Kraft Heinz Co. was set to split its business, creating two standalone companies — Global Taste Elevation Co. and North American Grocery Co. — that would focus on shelf-stable meals and North American staples, respectively.
As Steve Cahillane stepped into the role of CEO on Jan. 1, however, he shifted the business's priorities, pausing the split and instead moving forward with a $600 million growth strategy.
The company will invest the funds primarily across its North American business, optimizing efforts in marketing, sales and R&D, and focusing on product superiority and pricing. Half of the investment will go toward price, product and packaging. Through this, Kraft Heinz expects to drive growth in e-commerce, according to statements shared by Cahillane during the recent earnings call.
"It will be across the portfolio, but a lot will be against what we have been calling the North American Grocery Co., where we've got some opportunities to really do better," he said. "But equally, brands like Heinz and Philadelphia Cream Cheese have already been showing, in the last 3 to 4 weeks, some meaningful improvement based on things that the team had started to do in the back half of last year, so we'll continue against that."
As part of this, Kraft Heinz will continue to invest in technology with a consumer-first mindset to supplement and bolster its team and commercial activities, said Cahillane. "AI is changing everything. And we need to be on the forefront of the way we think about technology and deploying it against our brands and with our customers."
Also: Kraft Heinz pilots ketchup-focused agent as part of AI ecosystem
This approach will get Kraft Heinz back to where it should be in terms of sufficiency against its brands and capabilities to remain competitive. Additionally, it is part of the company's strategy to show up for consumers with the right opening price points, the right promotional opportunities and right brand marketing, he said.
“Since joining the company, I have seen that the opportunity is larger than expected, and that many of our challenges are fixable and within our control," said Cahillane in a statement. "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."
There isn't a target date for continuing with the split, but the company hopes to return to growth by 2027.
