MICHEL MARTIN, HOST:
A week ago, we were talking about a big engagement. Now, though, a big breakup. But no, we're not talking about a celebrity couple here. No, it's the food giant Kraft Heinz that's splitting up after a decade-long marriage arranged by billionaire investor Warren Buffett. NPR's Alina Selyukh has this report.
ALINA SELYUKH, BYLINE: It's hard to find two American food brands more storied than Heinz and Kraft.
(SOUNDBITE OF AD)
UNIDENTIFIED ACTOR #1: (As character) Thick, rich Heinz ketchup, the taste that's worth the wait.
(SOUNDBITE OF AD)
UNIDENTIFIED ACTOR #2: (As character, singing) Kraft Singles. More milk makes 'em - more milk makes 'em good.
SELYUKH: Heinz has been making condiments for over a century and a half. Kraft brothers began selling cheese by horse and wagon. Their firm later bought Velveeta, Cool Whip and Philadelphia Cream Cheese, and in the 1980s, joined in with Jell-O, Maxwell House and another American classic, Oscar Mayer.
(SOUNDBITE OF AD)
UNIDENTIFIED ACTORS: (As characters, singing) 'Cause if I were an Oscar Mayer wiener...
SELYUKH: One of the biggest fans of these long-lasting brands is Warren Buffett, and 10 years ago, he played matchmaker for a deal to combine H.J. Heinz and Kraft Foods. His partner was an investment firm, 3G Capital, famous for successful mergers with intense cost-cutting. But this time, falling sales would lead Buffett to make this rare admission.
(SOUNDBITE OF ARCHIVED RECORDING)
WARREN BUFFETT: I was wrong in a couple of ways on Kraft Heinz.
SELYUKH: That's Buffett on CNBC in 2019. That was the year Kraft Heinz shocked Wall Street by writing down the value of marquee brands, Oscar Mayer and Kraft, by $15 billion. Since the merger, the company's share price has lost two-thirds of its value. The decade has been transformative for processed and packaged foods. Younger shoppers increasingly reach for smaller brands that claim to be healthier. Inflation has more shoppers switching to cheaper store brands. Kraft Heinz is so vast that executives now acknowledge their focus has been spread too thin, and the giant is breaking into two.
(SOUNDBITE OF ARCHIVED RECORDING)
MIGUEL PATRICIO: The split is not between a good company and a bad company.
SELYUKH: That's executive chair, Miguel Patricio, speaking on an investor call.
(SOUNDBITE OF ARCHIVED RECORDING)
PATRICIO: It's really split thinking that focus will help us tremendously.
SELYUKH: One company will keep the sauces, condiments and spreads, the other lunch meats, juice boxes and coffee. Kraft Heinz executives hope that the sum of the parts will prove greater than the whole.
Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
