Kraft Heinz Chooses New CEO for Breakup. Can He Fix a Broken Stock?

Steve Cahillane will head Kraft Heinz, effective Jan. 1. (Courtesy Kraft Heinz)

Key Points

• Kraft Heinz will split into two independent, publicly traded companies, reversing its 2015 merger, with completion expected in the second half of 2026.
• Steve Cahillane, former Kellanova CEO, will become Kraft Heinz CEO on Jan. 1. He will lead “Global Taste Elevation Co.” after the split.
• The changes at Kraft Heinz come as packaged-food makers face mounting pressures.

Kraft Heinz is getting a new CEO before breaking itself apart as it seeks to create shareholder value amid tepid sales in recent quarters.

Steve Cahillane, the CEO of Kellanova until its recent acquisition by Mars, will take the helm on Jan. 1, the company said Tuesday. Carlos Abrams-Rivera, who has been Kraft Heinz’s CEO since the start of 2024, will step down and remain as an adviser through March 6.

The leadership change follows the company’s September decision to split into two independent, publicly traded companies. The move, expected to be completed in the second half of 2026, will reverse the 2015 merger of Kraft and Heinz.

Kraft Heinz’s third-quarter sales, disclosed in October, fell short of analysts’ expectations. Management also cut its financial guidance for the full year.

After the split, Cahillane will head one of the businesses, called “Global Taste Elevation Co.” The company, which will include brands such as Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese, will mainly focus on sauces, spreads, and seasonings.

The other unit will sell grocery staples in North America, i ncluding brands such as Oscar Mayer, Kraft Singles, and Lunchables. Kraft Heinz said its board will launch a search for someone to lead that operation.

Kraft Heinz stock was 0.6% higher at $24.66 near midday on Tuesday, while the S&P 500 was 0.3% lower. Shares of Kraft Heinz have dropped 19% this year.

“I’m confident the planned separation will accelerate the company’s ability to compete and win in today’s environment and unlock the immense opportunity in front of us,” said Cahillane in a statement.

The changes at Kraft Heinz come as packaged-food makers face mounting pressures, from heightened scrutiny of processed foods to the rise of weight-loss drugs to tariffs and high commodity prices. Some companies have resorted to corporate breakups to improve efficiency and unlock more value.

Keurig Dr Pepper , for example, announced plans to split its coffee and beverage business in August.

Cahillane has experience on that front. He oversaw Kellogg’s 2023 split into Kellanova, a snack maker, and WK Kellogg, which makes breakfast cereal. Both units have since been snapped up: Mars bought Kellanova last week, while Ferrero acquired WK Kellogg in September.

Write to Evie Liu at evie.liu@barrons.com