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For the second time in two weeks, we have a major food/beverage company splitting into two independently traded stocks. Last week, it was Keurig Dr Pepper (KDP) splitting its refreshment beverage segment from its coffee segment. And today, Kraft Heinz (KHC) is joining the fray by splitting into two yet-to-be-named segments. The decision stemmed from a strategic review that was announced in May 2025. Investors have been wanting this to happen for a while.

• One segment will be temporarily called "Global Taste Elevation Co." which includes Taste Elevation and shelf-stable meals with $15.4 bln in 2024 sales and $4 bln in adjusted EBITDA. This company will include three billion-dollar brands (Heinz, Philadelphia and Kraft Mac & Cheese) with approximately 75% of sales coming from sauces, spreads and seasonings.
• Then there will be its "North American Grocery Co." which includes a portfolio of North America staples with $10.4 bln in sales and $2.3 bln in adjusted EBITDA. This company will also include three billion-dollar brands (Oscar Mayer, Kraft Singles and Lunchables). Approximately 75% of sales come from brands that are #1 or #2 in their respective categories. Current KHC CEO Carlos Abrams-Rivera will become CEO of this segment.
• The idea behind the separation is to revive growth, simplify operations, and better focus resources. KHC's top line growth has been weak in recent quarters with yr/yr sales declines in each of the past seven quarters. As a result, the stock has come under pressure for much of the past year, which likely prompted the strategic review.

This definitely seems to be a trend as food/beverage companies get squeezed on both ends: facing rising cost pressures from tariffs while also being impacted by a weaker consumer. In addition to the KDP announcement last week, Kellogg split into two in 2023: Kellanova (snacks) and WK Kellogg (cereal). The latter of which is being acquired by Italian food group, Ferrero.

And there may be more to come. The WSJ reported this morning that activist investor Elliott Investment Mgmt has built a huge $4 bln stake in PepsiCo (PEP). Investors have been clamoring for years that PEP needs to separate its lucrative snacks business from its struggling soda business. Thus far, PEP has rebuffed those efforts. However, given the new macro pressures and these recent separations, the Elliott Mgmt team might be able to pressure PEP into a split.

Briefing.com is generally a fan when companies separate as it allows each segment to focus more on its own needs. It also often results in better trading multiples when good segments are free from struggling segments weighing them down. On a final note, KHC is trading lower on the news. Perhaps investors would have preferred that the strategic review had resulted in an outright sale of the company.