·M&AWarren Buffett’s $57 billion face-plant: Kraft Heinz breaks up a decade after his megamerger souredBy Eva RoytburgBy Eva RoytburgFellow, NewsEva RoytburgFellow, NewsEva is a fellow on Fortune's news desk.SEE FULL BIO “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,” Warren Buffett told CNBC.
Daniel Acker—Bloomberg/Getty ImagesKraft Heinz, the packaged-food giant created in 2015 by Warren Buffett and Brazilian private equity firm 3G Capital, is officially up.
The Tuesday announcement ends one of Buffett’s highest-file bets—and one of his most painful—as the merger that once mised efficiency and dominance instead wiped out roughly $57 billion, or 60%, in market value.
s slid 7% after the announcement, and Buffett, whose Berkshire Hathaway still owns a 27.5% stake, was blunt his feelings.
“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,” he told CNBC, adding he was “disappointed” by the decision.
A split in two The company announced that it will divide into two publicly traded es by late 2026: Global Taste Elevation Co.
will be focused on classic Heinz items, such as sauces, spreads, and condiments, Heinz ketchup, Kraft Mac & Cheese, and Philadelphia cream cheese among them. North American Grocery Co.
will be to iconic staples Oscar Mayer, Kraft Singles, Maxwell House, and Lunchables.
Current CEO Carlos Abrams-Rivera will lead this unit, while the board es for a new leader for Global Taste Elevation.
Executive chair Miguel Patricio launched the move as a way to simplify capital allocation and sharpen strategic focus on a marketing level.
“We can allocate the right level of attention and resources to unlock the potential of each brand,” he told the Wall Street Journal. The separation comes after a decade of underperformance.
Since Kraft and Heinz merged in 2015, the stock has lost more than $57 billion in market capitalization, been battered by $15 billion in write-downs, and weathered waves of consumer rejection as shoppers turn away from cessed staples.
Buffett has been candid the misstep.
In 2019, he admitted Berkshire had “overpaid for Kraft.” Since then, the Oracle of Omaha has written down billions on the stake, while 3G Capital quietly headed for the exit, leaving Berkshire as the mostly exposed, and bruised, holder.
Will a split help?
The separation poses a tougher blem for investors: If consumers are fleeing “old” grocery brands that haven’t adapted to the health and wellness standards of today, why should separate brands fare better in the same silos?
“More marketing support isn’t some form of magic elixir,” analyst and Yahoo Finance executive editor Brian Sozzi wrote on LinkedIn the deal.
TD Cowen’s Robert Moskow argued to the Journal that food conglomerates often overestimate the benefits of size.
“Food companies have found that their breadth of influence in the grocery store does not necessarily yield the advantages they expected,” he said.
In other words, Kraft Heinz into two units may up some bureaucratic inefficiencies, but it doesn’t change the fact that there’s simply less customer demand for hot dogs or cessed foods Lunchables.
For Buffett, the split is a symbolic closing chapter on a rare miscalculation.
As the Oracle of Omaha prepares to hand over the reins to Greg Abel at year’s end, Kraft Heinz will stand as a cautionary tale: Even the most iconic brands can’t outrun shifting consumer tastes.
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