Kraft Heinz seeking to reshape portfolio

“At Kraft Heinz, our goal has always been to make high-quality, great-tasting food for all and to keep consumers at the forefront of all we do, enabling us to drive profitable long-term growth and value creation,” said Carlos Abrams-Rivera, chief executive officer. “Consistent with this goal, over the past several months we have been evaluating potential strategic transactions to unlock shareholder value.”

In May 2024, the Wall Street Journal reported that the company was seeking to sell its Oscar Mayer processed meats business for between $3 billion and $5 billion, Food Business News reported. In November 2021, the company sold portions of its cheese business to the Lactalis Group and Emmi Roth USA Inc.

Kraft Heinz’s announcement comes as the company has reported several quarters of weak financial performance, particularly in North America. For the first quarter of fiscal 2025 ended March 29, Kraft Heinz’s net income fell 11% to $712 million from $801 million during the first quarter of fiscal 2024.

Quarterly sales fell 6.4% to $5.99 billion from $6.41 billion.

In North America, the company’s largest business unit, net sales fell from $4.8 billion during the first quarter of fiscal 2024 to $4.5 billion during the same period in fiscal 2025. Key brands that were identified as problematic by company management included Lunchables, Capri Sun, Kraft Mac & Cheese, and Kraft Mayonnaise.

In an investor research note published after Kraft Heinz’s announcement, Robert Moskow, an analyst with TD Cowen, wrote that he took the announcement as meaning the company is planning to divest some businesses and, “we, too, believe KHC should slim down its portfolio.”

In 2024, Kraft Heinz segmented its portfolio into three categories — accelerate, protect and balance.

“Balance” brands were identified as those that are scaled and cash generators but exposed to private label and commodity market volatility. Businesses in the portfolio include Oscar Mayer, Gevalia coffee, Maxwell House coffee, Jell-O, Lunchables and some cheese brands.

In the TD Cowen research note, Moskow indicated Balance brands may be divestment targets, and added, “our understanding is that the company has considered selling coffee and meats in the past. It is unclear at this time whether today’s announcement marks an acceleration in these efforts.”