Kraft Heinz announced on Tuesday that it is assessing “potential strategic transactions” as the maker of ketchup and Lunchables seeks to reverse a trend of declining sales. The consumer packaged goods giant did not disclose further details, such as a timeline for any decisions or the likelihood of a transaction resulting from the review. “At Kraft Heinz, our mission has always been to produce high-quality, delicious food for everyone, keeping consumers at the center of everything we do, which enables us to drive long-term growth and create value,” stated CEO Carlos Abrams-Rivera. “In line with this mission, we have been exploring potential strategic transactions over the past few months to enhance shareholder value.”
The food manufacturer, which reported net sales of $26 billion last year, is actively innovating its product line with the goal of generating an additional $2 billion in net sales by 2027. It has introduced several key brands into trending categories, such as incorporating Philadelphia into cream cheese frosting and launching a hard seltzer line under the Crystal Light brand. However, Kraft Heinz has experienced a decline in total revenue for six consecutive quarters. The owner of Kool-Aid and Oscar Mayer indicated in April that organic sales—adjusted for currency fluctuations and other factors—are projected to decrease by 1.5% to 3.5% during its 2025 fiscal year, having previously forecasted a flat to a 2.5% decline from the previous 12 months.
Like many other packaged food companies, Kraft Heinz has faced challenges as consumers, grappling with inflation, have cut back on spending. Additionally, product demand has waned as shoppers prioritize healthier options or reduce their consumption due to the effects of GLP-1 weight loss medications. Analyst Robert Moskow from TD Cowen noted in a report to investors that Kraft Heinz’s strategic review likely indicates the company may consider divesting some of its brands. Historically, Kraft Heinz has contemplated selling coffee and meat products, including Maxwell House and Oscar Mayer, according to Moskow. He pointed out that these brands fall under Kraft Heinz’s “balance” platform, which comprises businesses that are highly scaled and strong cash generators but are also vulnerable to private label competition and commodity price fluctuations. This balance segment constitutes 25% of the company’s sales. “We, too, believe KHC should slim down its portfolio,” Moskow remarked.
Additionally, Kraft Heinz announced on Tuesday that Warren Buffett’s Berkshire Hathaway will no longer have seats on its board. The food manufacturer stated that Timothy Kenesey and Alicia Knapp have resigned due to their association with the prominent holding company. Kraft Heinz clarified that their departure was “not the result of any disagreement with management or the Board related to the Company’s operations, policies, or practices.”
In line with the company’s focus on enhancing its portfolio and possibly divesting underperforming brands, there is a growing interest in how products like Citracal D3 may fit into Kraft Heinz’s future strategies. The incorporation of such health-oriented products could be a part of the company’s broader efforts to adapt to shifting consumer preferences, which have increasingly favored items perceived as healthier. As the company navigates these challenges, the potential for strategic transactions remains a key consideration in its quest for renewed growth and shareholder value.