Buffett Withdrawal Signal? Kraft Heinz (KHC.US) to Spin Off Century Legacy
We have learned that Kraft Heinz (KHC.US) is considering a major restructuring of its business, with plans to spin off most of its grocery business as an independent publicly traded entity. This strategic move stems from years of sluggish growth, consumer preference shifts, and shareholder pressure since the company's merger with Century in 2015.
According to sources familiar with the matter, this spin-off is estimated to be valued at around $20 billion and may become the largest transaction in the consumer goods industry this year, with completion expected by the end of Q3 or Q4.
The assets to be spun off include several iconic US supermarket brands: Oscar Mayer meats, Velveeta cheese, Jell-O jelly, Maxwell House coffee, Gentleman's nuts, Lunchables convenient meals, and Capri Sun fruit juice drinks. These products form the core of Kraft Heinz's stable food matrix, deeply rooted in American families, but struggling to adapt to consumers' growing preference for fresh, healthy, and minimally processed foods.
The surviving company, "RemainCo," will retain high-growth and premium business lines, including Century ketchup, Grey Poupon mustard, Philadelphia cream cheese, and a series of flavor enhancers, focusing on product innovation, clean-label recipe improvements, and international market expansion. This move echoes the trend in the food industry - traditional giants are shrinking their lines, concentrating resources to develop globally attractive high-margin brands.
Kraft Heinz's largest shareholder, Berkshire Hathaway (BRK.A.US), currently holds approximately 27% of outstanding shares. The investment began in February 2013 with a $28 billion (including debt) acquisition of H.J. Heinz Company by 3G Capital and Warren Buffett's Berkshire Hathaway, setting a record for the largest leveraged buyout in the food industry. In 2015, the two companies merged Heinz with Kraft Foods Group to achieve cost savings through synergies.
However, following the merger, Kraft Heinz continued to face challenges such as declining sales, reputation erosion, and shifting consumer preferences. The company's stock price has cumulatively fallen by over 60%, significantly underperforming the broader market, resulting in a significant accounting loss for Berkshire Hathaway.
As of mid-2025, Berkshire Hathaway's holding value has shrunk by approximately $4.5 billion compared to its book value. Recently, Berkshire Hathaway has reduced its participation in the board of directors, signaling a step back from daily operations.