Warren Buffett expressed his disappointment on Tuesday regarding the planned split of Kraft Heinz, the food conglomerate he helped create through a blockbuster merger a decade ago. Speaking with CNBC, Buffett said the 2015 merger of Kraft Foods and H.J. Heinz, which he orchestrated alongside private equity firm 3G Capital, “didn’t turn out to be a brilliant idea,” and he does not believe breaking the company apart will solve its underlying challenges.
Berkshire Hathaway, Buffett’s investment firm, remains Kraft Heinz’s largest shareholder with a 27.5% stake and has not sold any of its shares since the merger. Shares of Kraft Heinz fell more than 7% following Buffett’s comments, reflecting investor concern over the company’s ongoing struggles.
The split, announced earlier Tuesday, will separate Kraft Heinz into two companies: one focused on sauces, spreads, and shelf-stable meals, and a second dedicated to North American staples such as Oscar Mayer, Kraft Singles, and Lunchables. The move comes as the company has faced years of underperformance, declining U.S. sales, and challenges adapting to changing consumer preferences. Health-conscious shoppers increasingly opted for fresh foods over packaged items, while cost-cutting measures limited Kraft Heinz’s ability to invest in its brands at critical times.
Over the years, Kraft Heinz has sought to reinvigorate its portfolio, selling off products like Planters nuts and parts of its cheese division while investing in brands such as Lunchables and Capri Sun. Analysts note that despite its roster of iconic products, the company’s performance has lagged, contributing to a dramatic decline in its stock price. Since the 2015 merger closed, Kraft Heinz shares have lost nearly 70% of their value, with the company’s market capitalization falling to roughly $33 billion as of last week.
Buffett also highlighted that Greg Abel, who will succeed him as Berkshire Hathaway CEO at the end of the year, had communicated disappointment to Kraft Heinz regarding the situation. Regarding Berkshire Hathaway’s future as an investor, Buffett emphasized that the firm will act in its best interests. If approached to sell its shares, Berkshire will not accept a block bid unless all other shareholders are offered the same terms.
Despite the challenges, Buffett has remained loyal to Kraft Heinz over the years, though he has acknowledged in the past, including after a difficult quarter in 2019, that Berkshire may have overpaid for the company. The planned split marks a significant turning point in Kraft Heinz’s journey, as it attempts to recalibrate its operations and address both declining sales and shifting consumer habits.
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