Speculation about a possible split of Kraft Heinz gives new momentum to the discussion about a fundamental realignment in the food industry. According to a Wall Street Journal report, the company is considering separating its food segment, while the sauces and spreads business could be operated independently. The background: The company faces an intensified competitive environment, changing consumer habits due to GLP-1 weight loss medications, and growing demand for healthier products.

Analyst Robert Moskow of TD Cowen sees in a client note obtained by MarketWatch the limits of large mergers in the food industry reached. Focused portfolios offer better long-term value enhancement opportunities. Moskow argues that the requirements in segments like frozen foods, refrigerated goods, or snacks differ greatly, and a clear delineation of business areas could ensure more efficiency. He also sees potential for structural separation in competitors like PepsiCo and Campbell’s. An acquisition of UTZ Brands by Campbell’s would be sensible in his view, as would the sale of Hidden Valley Ranch by Clorox to a classic food company. ConAgra and General Mills should also consider further portfolio cleanup according to Moskow.

CFRA analyst Arun Sundaram expresses a similar view. If Kraft Heinz proceeds with the split, other corporations could follow, as continued weak sales figures and low stock valuations increase pressure on company managements to explore alternative strategies for value enhancement. Sundaram points to structural market influences such as the trend towards healthier foods or the effects of GLP-1 medications in addition to price increases.

Parallel to these thought experiments, the industry is moving anyway: Mars Inc. reportedly signaled interest in purchasing Kellanova, known for Cheez-Its, last year. Kellanova itself restructured under the name WK Kellogg in 2023 after spinning off its North American cereal business. In July, WK Kellogg agreed to be acquired by Ferrero, which complements its portfolio with brands like Ferrero Rocher.

While rumors of a takeover boosted WK Kellogg on the stock market, Kraft Heinz has only recorded a moderate price increase of around 5 percent on NASDAQ since July 10. On Friday, the stock closed at $27.82. Thus, the 52-week high of $36.53 from August 2024 remains a distant prospect. Pre-market on Monday, the stock rose another 0.4 percent to $27.93.