The news: Kraft Heinz will split into two companies, spinning off its slower-growing grocery unit—home to Oscar Mayer, Kraft Singles, and Lunchables. The remaining business will focus on faster-growing products such as Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese, along with its sauces and condiments.

The context: At a time when consumers have grown comfortable with trading down to lower-priced private labels, many consumer-packaged goods (CPG) brands are under growing pressure to focus on fewer, more profitable areas to reduce costs and simplify operations.

• Kellogg was one of the first to split, dividing itself into Kellanova and WK Kellogg—both of which have now been sold to other CPGs.
• Keurig Dr Pepper will divide itself into two smaller public companies following the acquisition of JDE Peet’s, with the aim of giving each segment more room to compete in its own market.
• Other companies, including P&G and General Mills, have offloaded or are looking to sell various assets to focus on higher-growth categories in their core markets.

Our first take: Kraft Heinz’s breakup shows the risks of CPG megamergers, especially given how quickly consumers’ tastes can change. Once prominent brands like Lunchables and Kraft Singles are rapidly losing value as more shoppers avoid ultra-processed foods and artificial dyes, while the company’s bloat has made it challenging to stay current with food trends.

The split will give the leadership of both companies more room to develop their brands and focus on faster-growing product lines, allowing them to be more nimble at a time when GLP-1 usage and the burgeoning MAHA movement are playing a larger role in how people eat and shop.