Since its inception in 1903, Kraft Foods has been a major player in the household brands and products that make their way to our table. What started as a humble cheese company would go on to be one of the most recognizable and influential companies in the world. Today, Kraft Foods, more formally known as Kraft-Heinz, manages a portfolio of over 200 brands that span the world over.
From cookout staples like Oscar Mayer to Kool-Aid, Velveeta, and even Jell-O, the multi-hyphenate consumer goods company has made a name for itself by acquiring other brands and taking them to new heights. The most notable brands they manage, however, are the two that merged in 2015 to give the company its current name. But if recent reports are true, their romance might soon be coming to an end.
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Kraft and Heinz are instantly recognizable in the grocery store and carry considerable cachet in their own right. But together, they’re one of the largest food and beverage companies in the world. They’ve even got the financial backing of Berkshire Hathaway (see: Warren Buffett)—so what gives? Earlier this year, the two brands began exploring strategic transactions to help unlock shareholder value, according to a company spokesperson. In layman’s terms, the companies are potentially worth more separate than they are together.
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To put the numbers into perspective, some estimates say that Kraft could be worth a whopping $20 billion on its own. Compared to the $31.33 billion they’re worth together, it sounds like a no-brainer to me. While the structure of the deal is up for debate and could potentially never materialize, the news comes just a week after WK Kellogg agreed to a $3.1 billion buyout deal by Italy’s Ferrero.
Due to shifting consumer sentiment around processed foods and a demand for fresher ingredients and products, the companies that largely produce and distribute highly processed food products have seen demand fall. Additionally, political pressure and adminstration changes have forced companies like Kraft-Heinz to reevaluate their strategy altogether.
Last month, the brand also announced that it would be joining the growing list of companies removing artificial colors and food dyes from their products to address chronic illnesses and conditions. Whether the split actually happens or not, it signifies a growing trend in the consumer goods space as brands grapple with the changing economic landscape and consumer demand. Only time will tell, and we’ll make sure to keep you posted.
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