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According to reports from major media outlets, including Bloomberg and Financial Times, Kraft Heinz Company is actively considering a significant restructuring that would involve spinning off a substantial portion of its grocery business, which includes several iconic Kraft products.

Sources familiar with the company's situation indicate that this new entity could be valued at as much as $20 billion. However, the exact structure of the deal remains uncertain, and there is no guarantee that it will be finalised.

The potential spin-off comes as Kraft Heinz seeks to address persistent challenges in its grocery segment, which has struggled to keep pace with evolving consumer preferences.

The company has been under pressure from shareholders to enhance value, particularly as economic conditions prompt consumers to seek more affordable options and healthier alternatives.

This exploration follows a similar move by WK Kellogg, which recently agreed to a $3.1 billion acquisition by Ferrero, indicating a trend of consolidation in the food sector.

Reports suggest that the spin-off would allow Kraft Heinz to retain its core brands, such as Heinz ketchup, Grey Poupon mustard and a range of sauces, while divesting traditional grocery items like boxed dinners and processed cheese.

Such a separation could potentially position the remaining business for faster growth, capitalising on the increasing consumer demand for condiments and sauces over processed meal solutions.

As of now, Kraft Heinz's market capitalisation stands at approximately $31.33 billion, and the company's shares closed up 2.5% following the news of the potential spin-off.

Kraft Heinz was formed in 2015 through the merger of Kraft Foods and HJ Heinz, backed by Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital. Despite initial optimism surrounding the merger, Kraft Heinz has faced significant hurdles, including inflationary pressures that have negatively impacted demand for its products.

The company has also lowered its annual forecasts and reported disappointing results in recent quarters, citing muted consumer spending.

In addition to these challenges, Kraft Heinz announced last month that it would cease launching new products containing artificial colours in the US. This decision aligns with broader industry trends toward cleaner labels and transparency in food ingredients, reflecting growing consumer health consciousness.