The CEO Who Split Kellogg in Two Reported Earnings at Kraft Heinz Last Week. Splitting Is the One Thing He Won't Do. — Woody Magazine, Aug. 11, 2026
The CEO Who Split Kellogg in Two Reported Earnings at Kraft Heinz Last Week. Splitting Is the One Thing He Won't Do.
Last Wednesday, Kraft Heinz reported its second-quarter results. The company raised its outlook for the year and said it would add to its investment budget. The man delivering the numbers was Steve Cahillane, who became chief executive in January. He led Kellogg through its breakup into two companies, and when Kraft Heinz's board hired him on December 16, the announcement specified that he would run the sauce company once the split was done. His first major decision, six weeks into the job, was to call the breakup off.
The story starts in 2015, when Warren Buffett's Berkshire Hathaway and the Brazilian private-equity firm 3G Capital merged Kraft with Heinz. 3G had made its name buying Burger King and squeezing costs until profits rose. The logic of the merger was clean. Put ketchup and cheese under one roof, and the factories, trucking routes, and head offices overlap. What overlaps can be cut, and what gets cut becomes profit. It's a reasonable calculation, and for the first few years it ran on schedule.
3G's tool was zero-based budgeting. Whatever you spent last year, this year's budget starts at zero, and every line item must justify itself from scratch. On that scale, the factory's electric bill survives. The advertising budget does not — because if you stop advertising this quarter, ketchup still sells this quarter. By 2017, two years after the merger, annual ad spending had fallen to $629 million, 39 percent below what Kraft and Heinz had spent separately in the year before they combined. Operating margins climbed sharply, and Wall Street applauded.
The bill arrived in February 2019. Alongside its earnings, the company announced a $15.4 billion write-down — an accounting admission that assets on its books were worth less than their listed value. The assets in question were not factories. They were the names Kraft and Oscar Mayer. While the company skipped ads and postponed new products, shoppers had quietly drifted to other shelves, and the balance sheet now said so. The stock opened nearly 30 percent lower the next morning. The brands never recovered. By last September, the shares had lost more than 60 percent of their value since the merger.
Picture a restaurant that is losing customers. For its first decade, this restaurant survived by cutting the kitchen budget — cheaper ingredients, no new dishes. The ledger improves right away. But customers do not keep returning to a restaurant where the food never changes. So what is the next prescription? Fix the sign out front.
That was Wall Street's favorite prescription of the 2010s: the spin-off, in which one company divides into two publicly traded ones and shareholders receive stock in both. The logic runs like this. When a growing business and a fading one share a sign, investors cannot price either. Hang two signs, and each gets its true value. This, too, sounds right, and there was a live example. In 2023, Kellogg split into Kellanova, the snack company, and WK Kellogg, the cereal company. The chief executive who ran that split was Cahillane.
But look at what happened next. In August 2024, Mars agreed to buy Kellanova for $35.9 billion, closing the deal last December. Ferrero, the maker of Nutella, announced its purchase of WK Kellogg last July for $3.1 billion and completed it in September. The two halves did not grow side by side; they were acquired side by side, and the Kellogg name vanished from the stock listings. The customers who walked into the two freshly signed shops were not there for dinner. They came to buy the shops. What the split produced was not two companies but two well-packaged properties for sale.
On September 2, 2025, with neither of those sales yet complete, Kraft Heinz's board approved the same prescription. One company would hold Heinz ketchup and Philadelphia; the other, Oscar Mayer and Lunchables. Completion was targeted for late 2026. Buffett, who had engineered the original merger, went on television that day to say he was disappointed. The merger had not been a brilliant idea, he conceded — but taking the company apart would not fix its problems either. The first objection he named was the cost: separating would run about $300 million. After his remarks aired, the stock fell more than 7 percent.
Three months later, the board announced Cahillane's hiring. The market read the appointment in one line: they have brought in the man who has actually finished a breakup, to finish this one. A fair reading. Then, on February 11, six weeks into the job, Cahillane announced the split was on hold, with no date to resume. His reason fit in a sentence.
The figure he cited was volume: the company had sold 5 percent less product in the second half of 2025. Rather than spend the $300 million Buffett had flagged, he said, the company would put $600 million into marketing and new products, with research spending up 20 percent. These were precisely the line items 3G had spent a decade scraping off the scale. The sign renovation stopped. The money went to the kitchen.
It matters who made this call. The person who understands breakups best is the one who stopped this one. At Kellogg, he watched to the end what happens to a shop that divides its sign. A split turns a healthy company into two healthy properties. Divide a sick one, and you simply get two sick companies. By his own account, Kraft Heinz was not the healthy kind.
Six months have passed since that decision, and last week's results were its first report card. Sales are still shrinking. But one number moved.
The company's account is that customers came back first where the money went — the advertised brands, the refreshed products. Cahillane raised this year's investment to $700 million, saying the company was adding money not because the plan was failing but because it was working. Profits are down: adjusted earnings per share fell 18.8 percent in the quarter. No one knows yet whether Kraft Heinz will grow again. The split has not disappeared; it sits in a drawer. But the order of operations is settled. First fix the food. Then worry about the sign.
- Kraft Heinz hired Steve Cahillane to break the company in two. Six weeks in, he paused the split, saying the company is not healthy enough to stand as two.
- He has run a breakup before, at Kellogg. By 2025 both halves had been sold — to Mars and to Ferrero.
- The split's budget went to brands instead, $700 million this year. Last week's results showed the share of U.S. revenue holding or gaining market share up from 12 to 30 percent.
- Source ↗ Kraft Heinz, "Kraft Heinz Reports Second Quarter 2026 Results" (Aug. 5, 2026)
- Source ↗ CNBC, "Kraft Heinz pauses work to split the company as new CEO says 'challenges are fixable'" (Feb. 11, 2026)
- Source ↗ CNBC, "Kraft Heinz to split into two companies" (Sep. 2, 2025)
- Source ↗ Reuters, "Kraft Heinz splits, unwinding disappointing merger" (Sep. 2, 2025, via AOL)
- Source ↗ Forbes, "The Lesson Of The Kraft Heinz Nosedive" (Feb. 24, 2019)
- Source ↗ Forbes, "The Kraft Heinz Mess Is A Warning To Advertisers" (Mar. 6, 2019)
- Source ↗ CNBC, "Warren Buffett says he is disappointed in Kraft Heinz split" (Sep. 2, 2025)
- Source ↗ Kraft Heinz, "The Kraft Heinz Company Names Steve Cahillane Chief Executive Officer" (Dec. 16, 2025)
- Source ↗ The Marketing Society, "How can Kraft Heinz's brands bounce back?" (2019)
- CNBC and Ferrero press releases — Kellanova (Mars) and WK Kellogg (Ferrero) acquisitions (2025)
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