Core Viewpoint - Kraft Heinz's plan to split into two independent publicly traded companies has disappointed Warren Buffett, but Berkshire Hathaway has not reduced its stake in Kraft Heinz, maintaining a 27.5% ownership [1][2] Group 1: Company Split Details - Kraft Heinz's board approved a spin-off plan to create two separate companies, one focusing on global flavor enhancement with projected sales of approximately $15.4 billion in 2024, and the other on North American staples with estimated net sales of about $10.4 billion [1] - The split aims to simplify operations, allowing each new entity to focus on its growth objectives and improve capital allocation while retaining necessary scale for competitiveness [1] Group 2: Market Reactions and Analyst Insights - Wall Street views Kraft Heinz's split as a calculated move, anticipating that Berkshire will ultimately accept the plan despite Buffett's public criticism regarding the lack of shareholder consultation [2] - Analysts suggest that both new entities must demonstrate their ability to operate independently and maintain brand strength in a rapidly changing food industry, with expectations for the global flavor enhancement company to achieve over 3% organic sales growth in the long term [2] Group 3: Historical Context and Performance - Buffett has acknowledged past mistakes in the investment in Kraft Heinz, including overpaying during the acquisition, which began in 2013 with a total deal value of $28 billion [3] - Kraft Heinz's stock has declined nearly 16% this year, with a significant drop of over 62% from its peak of $65.87 in 2017, reflecting challenges in adapting to changing consumer preferences for healthier food options [3]

Core Viewpoint - Kraft Heinz announced a plan to split into two independent publicly traded companies to accelerate profit growth, with Berkshire Hathaway as its largest shareholder holding approximately 28% [1][9]. Company Structure - The split will create two new companies: Global Taste Elevation Co, focusing on sauces, condiments, and ready-to-eat meals, and North American Grocery Co, concentrating on North American grocery products [7]. - Global Taste Elevation Co is projected to generate nearly $15.4 billion in sales for 2024, with 75% of revenue coming from sauces and condiments [7]. - North American Grocery Co is expected to have sales of about $10.4 billion in 2024 [7]. Strategic Rationale - The restructuring aims to simplify the business model, enhance brand resource allocation, and improve profitability in response to ongoing performance pressures and industry changes [7][8]. - The complexity of Kraft Heinz's operations, with nearly 200 brands across about 55 categories, has hindered focused investment in individual brands [7][8]. Market Context - Analysts suggest that the split will allow high-growth and cash flow businesses to operate independently, making it easier for investors to align their investments with specific business needs [8]. - The split is also seen as a response to changing consumer preferences for healthier and more cost-effective food options, as some of Kraft Heinz's brands have struggled to meet current market demands [10]. Historical Background - The merger of Kraft and Heinz was initiated by Warren Buffett's Berkshire Hathaway and 3G Capital in 2013, with a total transaction value of $28 billion [10]. - Since its market value peaked over $100 billion in 2017, Kraft Heinz has seen a decline of approximately 70% [10]. Shareholder Update - As of 2023, 3G Capital has fully divested its stake in Kraft Heinz, while Berkshire Hathaway remains the largest shareholder [13].