Kraft Heinz taps ex-Kellanova boss as new chief for looming break-up

The packaged foods industry is undergoing a leadership shuffle as Kraft Heinz hired a new chief executive from Kellanova and said its current CEO would no longer have a management role when a planned split in two takes place next year.

Steve Cahillane will become chief executive of Kraft Heinz on January 1, the company said on Tuesday. Cahillane previously led Kellanova, whose $36bn sale to privately held Mars closed last week.

Kraft Heinz in September announced plans to divide itself into two groups in an effort to jump-start declining sales. One will contain faster-growing brands such as Heinz ketchup and Philadelphia cream cheese, with the other focusing on slower-selling grocery-store staples.

The current Kraft Heinz chief, Carlos Abrams-Rivera, had been chosen to lead the grocery group after the break-up was completed in the second half of next year. But on Tuesday, Kraft Heinz said the board would search for a different grocery boss as he exited the company. Cahillane is set to lead the faster-growing business, with the working title Global Taste Elevation Co, after the split.

Cahillane told the Financial Times that he had considered multiple opportunities as the Kellanova sale was set to close this year, but Kraft Heinz was “love at first sight”.

He noted that its planned break-up was similar to the process that he oversaw as CEO of Kellanova, which was formed from Kellogg Co in 2023 after it separated its North American breakfast cereals business as WK Kellogg.

“I’ve got the game plan and the road map to not only return the company to organic growth but then to do the separation,” he said.

Mars’ acquisition of Kellanova came at a lofty premium to the company’s market value — an accomplishment “the KHC board probably wants to see repeated”, said Jonathan Feeney, managing partner at Optimal Advisory, a research firm. WK Kellogg was acquired by Italy’s Ferrero.

Pittsburgh-based Heinz combined with Chicago-based Kraft in 2015 in a deal engineered by the Brazilian-US investment firm 3G Capital and backed by Warren Buffett’s Berkshire Hathaway. The merger created one of the biggest food companies in the world, but it delivered disappointing results.

Cahillane, who will be based in Chicago, said he would “not necessarily” be looking at a sale of the future Global Taste Elevation Co, “but when you’re a public company, as I’ve said many times, you’re for sale each and every day. So the goal will be to make the company as valuable as possible to its share owners”.

Packaged food volumes have stagnated after many companies aggressively raised prices in the years following the onset of the pandemic. Consumers and health authorities are also raising new concerns over the nutritional value of processed foods.

Cahillane said there was scope to revive sales as grocery inflation decelerated. “I think what you’re seeing is the outcome of an inflationary period that we went through that was unprecedented in certainly my pretty long career now,” he said. “We were going up double digits for a long period of time.”

Abrams-Rivera took over as chief executive of Kraft Heinz at the beginning of 2024, succeeding Miguel Patricio, who is also board chair. The company said on Tuesday that board member John Cahill would take over from Patricio as chair. Cahill had served as chief executive of Kraft before the 2015 merger.

Shares of Kraft Heinz closed 0.7 per cent higher on Tuesday.