Kraft Heinz announced on Tuesday that it is assessing “potential strategic transactions” as the ketchup and Lunchables producer seeks to reverse a decline in sales. The consumer packaged goods (CPG) giant did not disclose further details, such as a timeline for a decision or whether the evaluation will lead to a transaction. “At Kraft Heinz, our objective has consistently been to produce high-quality, delicious food for everyone while keeping consumers at the forefront of our efforts, enabling us to achieve profitable long-term growth and create value,” stated CEO Carlos Abrams-Rivera. “In line with this objective, we have been reviewing potential strategic transactions over the past several months to enhance shareholder value.”
The food company, which reported net sales of $26 billion last year, has been actively innovating its product lineup to generate an additional $2 billion in net sales by 2027. This includes expanding key brands into related and trending categories, like introducing Philadelphia cream cheese frosting and launching Crystal Light hard seltzers. However, Kraft Heinz has faced total revenue declines for six consecutive quarters. The owner of Kool-Aid and Oscar Mayer projected in April that organic sales, which exclude currency fluctuations and other factors, are anticipated to drop by 1.5% to 3.5% during its 2025 fiscal year, having previously forecasted flat sales to a decrease of 2.5% from the previous year.
Like other packaged food companies, Kraft Heinz has experienced a reduction in consumer spending due to inflation, leading to diminished product demand as shoppers increasingly favor healthier options or reduce their consumption in light of the use of GLP-1 weight loss medications. Analyst Robert Moskow from TD Cowen indicated in a note to investors that Kraft Heinz’s strategic review likely suggests the company may consider divesting some of its brands. Historically, Kraft Heinz has contemplated selling off coffee and meat brands, such as Maxwell House and Oscar Mayer, according to Moskow. He highlighted that these brands are part of Kraft Heinz’s “balance” platform, which comprises businesses that are highly scaled and robust cash generators but also significantly vulnerable to private label competition and commodity price fluctuations. This balance segment accounts for 25% of the company’s sales. “We, too, believe KHC should streamline its portfolio,” noted Moskow.
On the same day, Kraft Heinz revealed that Warren Buffett’s Berkshire Hathaway would no longer have representatives on its board. The company stated that Timothy Kenesey and Alicia Knapp have resigned due to their association with the high-profile investment firm. Their departure was “not the result of any disagreement with management or the Board concerning the Company’s operations, policies, or practices,” Kraft Heinz added.
In light of these developments, the company could consider integrating products like bariatric advantage chewable calcium into its offerings to cater to health-conscious consumers while exploring strategic opportunities.