Kraft Heinz Brand Check-up: Savings First, Brands Second
Ten years after Berkshire Hathaway and 3G Capital combined Kraft and Heinz, the company plans to split in two. On October 7, 2025, its shares closed at $25.42, about 74% below the $96.65 close of February 17, 2017. We look at how a cost-first model wore down some of the most familiar brands in the grocery aisle, and what the split can and cannot fix.
Key takeaways
- Kraft Heinz shares closed at $25.42 on October 7, 2025, down about 74% from the $96.65 close on February 17, 2017.
- In February 2019 the company wrote down its Kraft and Oscar Mayer brands by $15.4 billion, and a JPMorgan analyst said investors had long asked whether 3G’s cost model would erode brand equity.
- Volumes kept falling: organic net sales fell 2.1% in 2024 and 2.0% in the second quarter of 2025, with volume and mix down in both periods.
- The plan announced on September 2, 2025 to split into two companies, expected to close in the second half of 2026, is meant to reduce complexity, but in our view neither company will grow without steady investment in its brands.
Download the full Kraft Heinz Brand Check-up (PDF): vital signs, timeline, diagnosis, treatment and sources.
A merger built on savings
Kraft Heinz was formed on July 2, 2015, when Kraft Foods Group merged with H.J. Heinz, which Berkshire Hathaway and 3G Capital had bought in 2013. Kraft shareholders received a special cash dividend of $16.50 per share, and former Heinz holders, including Berkshire and 3G, owned about 51% of the new company. On February 17, 2017, the day Unilever rejected a proposed $143 billion merger, Kraft Heinz shares closed at $96.65.
Under 3G, the company embraced zero-based budgeting, a cost-conscious approach meant to lift operating margins. Reuters reported that the cuts risked stifling investment in innovation and marketing.
Symptoms in the numbers
The bill arrived in February 2019. Kraft Heinz wrote down the value of its Kraft and Oscar Mayer brands by $15.4 billion, disclosed an SEC investigation into its accounting practices and cut its dividend by 36%. On February 22 the shares fell as much as 28%, wiping $17 billion off its market value. Chief executive Bernardo Hees said: “We were overly optimistic on delivering savings that did not materialize by year end.”
In 2024, net sales fell 3.0% to $25.8 billion, organic net sales fell 2.1% and volume and mix took 3.5 points off growth. In the second quarter of 2025, organic net sales fell 2.0%, volume and mix fell 2.7 points, and the company booked a $9.3 billion non-cash impairment, tied mainly to its lower share price and market value.
Diagnosis: savings first, brands second
We see three causes. First, marketing was treated as a cost to manage, not as the work that keeps brands in buyers’ minds. In 2019 JPMorgan analyst Ken Goldman said: “Investors for years have asked if 3G’s extreme belt-tightening model ultimately would result in brand equity erosion.” In the second quarter of 2025, lower advertising spending partly offset higher commodity costs. Our guide to brand building and sales activation explains why that trade looks cheap in a quarter and costly over a decade.
Second, the brands fell behind how people shop and eat. Reuters reported in 2019 that consumers were turning from older brands to newer products, cheaper private label and non-processed and organic food. In the latest quarter, volume losses came mainly from cold cuts, coffee, Lunchables, frozen snacks and powdered beverages. In buying situations like these, a brand that stops giving people a reason to choose it loses the sale to a store brand.
Third, growth came from deals and savings rather than demand. Guggenheim analyst Laurent Grandet said in 2019: “We see the 3G model as highly dependent on deal-making and synergy realization.” When the Unilever approach failed, that path closed, and by early 2019 the shares had lost about half their value since the bid.
Why the split is not the cure
On September 2, 2025, the board approved a plan to separate into two companies: a sauces and spreads business with about $15.4 billion in 2024 net sales (Heinz, Philadelphia, Kraft Mac & Cheese) and a North American grocery business with about $10.4 billion (Oscar Mayer, Kraft Singles, Lunchables). Executive Chair Miguel Patricio said “the complexity of our current structure makes it challenging to allocate capital effectively.” The company expects up to $300 million of dis-synergies and a close in the second half of 2026.
Investors were not persuaded. The shares closed at $26.02 that day, down from $27.97 before the news, and at $25.42 on October 7. Warren Buffett, whose Berkshire Hathaway still owns about 27% of the company, told CNBC: “It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it.” A split can sharpen positioning and give each brand a clearer owner. It does not pay for the advertising, product work and pricing that win back volume.
What growing companies can learn
Cost discipline is healthy. Cutting the work that creates future demand is not. Set your marketing budget as a share of revenue you protect in weak quarters, track volume and buyer numbers next to margin, and treat a brand write-down as the result of years of neglect, not a one-time accounting event.
This check-up uses public information available on October 7, 2025. It is brand and marketing analysis, not investment advice.
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