In Corporate America, there have been several instances in which a larger company splits into smaller companies. For example, Kellogg executed a strategic spin-off in October 2023, resulting in two distinct companies, Kellanova and WK Kellogg Co. More recently, the Kraft Heinz Company just announced its Board of Directors approved a plan to separate the company into two independent, publicly traded companies.

Such de-consolidations with food shippers can have a significant impact on supply chain operations – both positive and negative. On the positive side, separating companies then can tailer strategies to their unique focus. For example, there is a larger potential for agile, global sourcing and innovation-driven operations and the ability to concentrate on cost-efficient, volume-driven supply chains. However, critiques suggest that splitting the business can result in loss of economies of scale in logistics and supply chain activities, reduce combined purchasing power, drive up per-unit costs, and duplicate supply chain functions currently centralized.

Let’s take a look at the Kellogg strategic spin-off and the recent Kraft Heinz announcement as two case studies.

Snap, Crackle, Pop: Kellogg Split into Separate Companies

Over the past several years, Kellogg’s® has been on a journey to transform its portfolio, enhancing performance and increasing value for all its stakeholders. The announcement to spin off the North American cereal business was the next step in that transformation. In October 2023, WK Kellogg Co. celebrated its launch as an independent, publicly traded company with the completion of its planned separation from Kellanova, formerly Kellogg Company.

Kellanova is a leader in global snacking, international cereal and noodles, and North America frozen foods with a legacy stretching back more than 100 years. Powered by differentiated brands including Pringles, Cheez-It, Pop-Tarts, Kellogg's Rice Krispies Treats, RXBAR, Eggo, MorningStar Farms, Special K, and Coco Pops, Kellanova's vision is to become the world's best-performing snacks-led powerhouse, unleashing the full potential of its differentiated brands and passionate people. The company’s net sales for 2024 were approximately $13 billion.

WK Kellogg Co is a leading food company in the U.S., Canada, and Caribbean with a deep heritage of innovation and operational success, supported by its portfolio of trusted, beloved brands including Kellogg's, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi, and Bear Naked, that have delighted consumers for more than a century.

As independent companies, executives from both businesses say they’re better positioned to:

• Focus on their distinct strategic priorities, with financial targets that best fit their own markets and opportunities
• Execute with increased agility and operational flexibility, enabling more focused allocation of capital and resources in a manner consistent with those strategic priorities
• Realize improved outlooks for profitable growth
• Shape distinctive corporate cultures and rewarding career paths for employees of each company, building on the “K values” and the incredible corporate culture that exists at Kellogg Company today.

Kraft Heinz To Separate Into Two Scaled, Focused Companies

A major recent development in the food industry is that the Kraft Heinz Company, a member of Food Shippers of America (FSA), recently announced its Board of Directors unanimously approved a plan to separate the company into two independent, publicly traded companies through a tax-free spin-off. So what does this mean for this leader in the food industry?

The separation is designed to maximize Kraft Heinz’s capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities. According to company executives, this focus will enable stronger performance while preserving the scale to compete and win in today’s environment.

The two resulting companies ultimately will be:

Global Taste Elevation Co. – a global leader in Taste Elevation and shelf-stable meals with approximately $15.4 billion in 2024 net sales. This newly formed company will include a roster of iconic brands and local jewels, with $3 billion-brands (including Heinz, Philadelphia and Kraft Mac & Cheese) with approximately 75% of net sales coming from sauces, spreads and seasonings. This company will be well-positioned to drive industry-leading growth across attractive categories and geographies, leveraging a proven go-to-market model and the “brand growth system” to deliver scale and performance.

North American Grocery Co. – a scaled portfolio of North America staples with approximately $10.4 billion in 2024 net sales. This company will include a portfolio of beloved brands, including $3 billion-dollar brands (including Oscar Mayer, Kraft Singles and Lunchables). This newly created company is expected to generate reliable free cash flow through operational efficiency across stable growth categories and through the pursuit of growth opportunities for its brands in existing categories, adjacencies and “away from home.”

So what’s the strategic rationale for the split?

“Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas,” says Miguel Patricio, Executive Chair of the Board for Kraft Heinz. “By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value. I look forward to working closely with Carlos and the Kraft Heinz team in the months ahead to prepare the organization for the separation.”

The separation will provide both companies with more strategic and operational focus, enabling them to:

• Dedicate the right level of attention and resources to all areas of the business, allowing each respective brand portfolio to reach its full potential.
• Reduce operational complexity, driving further efficiencies and industry-leading margins.
• Customize capital allocation based on the strategic ambition of each company, accelerating performance and retaining financial flexibility.

The companies are expected to have ample discretionary cash flow to invest in organic growth, return capital to shareholders and consider strategic transactions. In aggregate, the current dividend level is expected to be maintained. Management is targeting capital structures to maintain investment-grade ratings for both companies.

Says Carlos Abrams-Rivera, Kraft Heinz CEO: “This move will unleash the power of our brands and unlock the potential of our business. This next step in our transformation is only possible because of the commitment of our 36,000 talented employees who deliver quality and value for consumers every day. We will continue to operate as ‘one Kraft Heinz’ throughout the separation process.”

In May 2025, Kraft Heinz announced the Company’s Board of Directors and Executive Leadership Team had been evaluating potential strategic transactions to unlock shareholder value. The strategic review was led by the Company’s core belief that increased focus will translate into better performance and was guided by five principles:

1. Deliver long-term sustainable value creation
2. Preserve financial discipline that is part of the Company’s DNA
3. Maintain relevant scale while minimizing complexity and dis-synergies
4. Maximize the value of the Company’s iconic brand portfolio
5. Maintain attractive capital returns while preserving balance sheet flexibility.

Following a thorough evaluation of potential strategic transactions, Kraft Heinz has determined that separating into two standalone companies, Global Taste Elevation Company and North American Grocery Company offers the most compelling opportunity to unlock long-term value for all Kraft Heinz shareholders.

Related Articles:

• WK Kellogg Working On Its Supply Chain Modernization
• The Great Digital Transformation
• How Food Shippers Adapt to Permanent Volatility in Supply Chains
• Kraft Heinz To Build Major Automated CPG DC in North America
• Kraft Heinz and Microsoft Join Forces to Accelerate Supply Chain Innovation

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