Kraft Heinz splits, but Heinz brand stays strong
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Kraft Heinz, the mega-company with headquarters in Pittsburgh and Chicago, announced plans Tuesday to split into a pair of independent, publicly traded companies.
The big picture: The split comes 10 years after merging, and leaders at the company say it will help to refocus and maximize the potential of the company's iconic brands, like Heinz ketchup.
Zoom in: "The name of the Heinz brand is not changing," a Kraft Heinz spokesperson tells Axios.
- There are no plans to move the headquarters out of Pittsburgh and Chicago, the company told TribLive.
Between the lines: Permanent names have not been chosen for each new company.
- One of the companies will be referred to as Global Taste Elevation Co. for now, and will include Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese.
- The other will be referred to as North American Grocery Co. for now and will focus on grocery staples like Oscar Mayer hot dogs, Kraft Singles and Lunchables.
Zoom out: This follows similar separations by Kellogg and Keurig Dr Pepper, and is the ignominious end to Warren Buffett's rare foray into private equity.
What they're saying: Vanitha Swaminathan, marketing professor at Pitt, tells Axios it makes sense for Kraft Heinz to split so each arm can refocus on the strength of all their brands and move away from the cost-cutting measures brought on by the merger.
- "Storied legacy brands like Heinz and Kraft are still strong. This split allows them to continue to focus on brand innovation, and maybe consider a different brand for the low end for consumers looking to cut costs," said Swaminathan.
Ketchup quick: Pittsburghers are obsessed with their affiliation with Heinz, which was started in Sharpsburg in 1869.
- When Acrisure Stadium changed its name from Heinz Field, two massive ketchup bottles were removed from the stadium, causing a public outcry.
- The Steelers reinstalled one of the bottles at Acrisure to placate the fans.
- The other bottle is on display outside the Heinz History Center in the Strip District.
The other side: Duquesne University marketing professor Audrey Guskey sees the move as a backslide and said Kraft Heinz didn't understand the scale of the merger and how it might impact their popular brands.
- "Didn't they realize it was so mega and big? It was destined for a downfall," she said.
By the numbers: Kraft Heinz shares fell about 0.7% in premarket trading on Tuesday.
- The stock's down about 9% so far this year and 20% over the last five years, badly underperforming broader markets.
The bottom line: Yinzers can rest easy knowing they won't have to order Global Taste Elevation Co. ketchup with their fries.