Kraft Heinz announced plans to split into two separately traded companies, reversing its 2015 megamerger, which was orchestrated by billionaire investor Warren Buffett. Justin Sullivan | Getty Images News | Getty ImagesBig Food is slimming down. As both consumers and regulators push back against ultra-processed foods, the companies that make them have been splitting up or divesting iconic brands. Last year, Unilever spun off its ice cream business into The Magnum Ice Cream Company. Kraft Heinz is preparing to break up later this year, undoing much of the merger forged more than a decade ago by Warren Buffett’s Berkshire Hathaway and private equity firm 3G Capital. And Keurig Dr Pepper is planning a similar split after it finishes its acquisition of JDE Peet’s. In 2024, nearly half of mergers and acquisitions activity in the consumer products industry came from divestitures, according to consulting firm Bain. Over the next three years, 42% of M&A executives in the consumer products industry are preparing an asset for sale, a Bain survey found.Of course, the trend isn’t confined to just the consumer packaged goods industry. Industrial companies like GE and Honeywell have pursued their own breakups in recent years. It’s happening too in legacy media; Comcast spun off many of its cable assets into CNBC owner Versant, while Warner Bros. Discovery is planning to spin off its cable networks later this year as Netflix acquires its streaming and studios division.”In many of the spaces that we’re seeing this type of activity, there are many very fierce competitive pressures that are making it harder to operate,” said Emilie Feldman, a professor at The Wharton School at the University of Pennsylvania.The squeeze on packaged food and beverage companies comes from lower demand, which has led to shrinking volume for many of their products. To turn around their businesses and win back investors, they are counting on dumping underperforming brands. February will bring both quarterly earnings reports and presentations at the annual CAGNY Conference, offering investors more opportunities to hear about food executives’ plans for their portfolios. Companies to watch include Kraft Heinz, which could share more details on its upcoming split, and Nestle, which is considering selling off multiple brands in its portfolio.Cases of Dr. Pepper are displayed at a Costco Wholesale store on April 27, 2025 in San Diego, California.Kevin Carter | Getty ImagesShrinking salesFor more than a decade, consumers have been buying fewer groceries from the inner aisles of the grocery store, instead focusing on the outer aisles with fresh produce and protein. The pandemic served as the exception, as many consumers returned to the brands that they knew. However, price hikes and “shrinkflation” as life eased back to normal largely erased that shift in behavior.More recently, regulators, emboldened by the “Make America Healthy Again” agenda espoused by Health and Human Services Secretary Robert F. Kennedy Jr., have put both more pressure and a bigger spotlight on processed foods. And the rise of GLP-1 drugs to combat diabetes and obesity have meant some of food companies’ key consumers have lost their appetite for the sweet and salty snacks that they used to eat.As a percentage of overall spending, the consumer packaged goods industry has held onto its market share. But the biggest companies are losing customers to upstart brands or private-label products, according to Bain partner Peter Horsley.On average, about 35% of large consumer products companies’ portf …
