Kraft Heinz announced on Tuesday that it is exploring “potential strategic transactions” as the ketchup and Lunchables producer seeks to reverse a trend of declining sales. The consumer packaged goods giant did not offer further specifics, including a timeline for any decisions or whether this review will lead to a transaction. CEO Carlos Abrams-Rivera stated, “At Kraft Heinz, our mission has always been to produce high-quality, delicious food for everyone, with consumers at the center of our strategy for driving sustainable, profitable growth and value creation. In line with this mission, we have been assessing potential strategic transactions over the past few months to enhance shareholder value.”
Kraft Heinz, which reported net sales of $26 billion last year, is actively innovating its product lineup in a bid to achieve an additional $2 billion in net sales by 2027. The company has expanded several key brands into trendy and related categories, such as introducing Philadelphia cream cheese frosting and launching a hard seltzer line under Crystal Light. However, the company 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—adjusting for currency fluctuations and other factors—are projected to fall by 1.5% to 3.5% in its 2025 fiscal year, a revision from an earlier forecast of flat to a 2.5% decrease.
Like other packaged food companies, Kraft Heinz has faced challenges as budget-conscious consumers cut back on spending due to inflation. Concurrently, demand for products has waned as shoppers opt for healthier options or reduce their consumption, partly influenced by the use of GLP-1 weight loss medications. TD Cowen analyst Robert Moskow noted in a report to investors that Kraft Heinz’s strategic review suggests the company might consider divesting some of its brands. Previously, Kraft Heinz appeared to contemplate selling off coffee and meat brands, including Maxwell House and Oscar Mayer, according to Moskow. He remarked that these brands fall under Kraft Heinz’s “balance” platform, which consists of businesses that are well-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 emphasized.
Additionally, Kraft Heinz announced on Tuesday that Warren Buffett’s Berkshire Hathaway will no longer have seats on its board. The food manufacturer disclosed that Timothy Kenesey and Alicia Knapp have resigned due to their affiliations with the renowned 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 this context of strategic reevaluation, there is potential for Kraft Heinz to explore new opportunities, including products like bariatric advantage calcium soft chews, which cater to the growing market for health-conscious consumers. The integration of such innovative offerings could align with the company’s goal of enhancing its portfolio while addressing changing consumer preferences.