00:00hey everyone and welcome back to business breakdowns take a second and think about
00:08your fridge or pantry we can almost guarantee you'll find at least one of these a bottle of
00:13heinz ketchup a box of kraft mac and cheese maybe some oscar mayor bacon these aren't just products
00:19they're pieces of american culture they felt permanent untouchable that's why it was such
00:25a huge deal a decade ago when two of the biggest investing legends on earth decided to merge them
00:29into a single 45 billion dollar mega company it was supposed to be an unstoppable empire but today
00:36that empire is breaking up this is the story of how the kraft heinz merger became a 45 billion
00:42dollar lesson in what happens when business strategy fails to listen to the consumer
00:46the news broke in september 2025 kraft heinz announced it would split into two separate
00:53publicly traded companies one company currently called global taste elevation gets the growth
00:59stars heinz ketchup philadelphia cream cheese and kraft mac and cheese the other called north
01:05american grocery gets the legacy brands oscar mayor lunchables kraft singles and maxwell house
01:11the official reason the company had become too complex and couldn't focus but the real reasons
01:18are so much deeper let's rewind to 2015 billionaire warren buffett's berkshire hathaway and the brazilian
01:26private equity firm 3g capital masterminded omega merger their strategy wasn't a secret it was called
01:32zero-based budgeting the goal squeeze every ounce of profit out of these beloved brands through ruthless
01:38efficiency and it worked for a little while but there was a massive unforeseen problem while they
01:45were busy cutting costs they were starving the brands consumers started wanting healthier less
01:51processed foods why would a family pay three dollars for heinz when the store brand right next to it
01:56costs less than a dollar the house of cards began to collapse in 2019 in a moment of stunning honesty
02:03kraft heinz admitted its iconic brands weren't worth what it paid for them it slashed their value by over
02:0915 billion dollars since the merger the stock has lost about 60 percent of its value and here's the craziest
02:17part of this story the split was announced and the company's largest shareholder warren buffett was
02:23furious he publicly stated that he opposed the move saying it certainly didn't turn out to be a
02:28brilliant idea to put them together but i don't think taking them apart will fix it kraft heinz isn't
02:34alone this is part of a huge trend kellogg split up keurig dr pepper is splitting up the era of the
02:43massive conglomerate is over the new strategy is focused be an expert not a giant so what's next
02:50the split will cost an estimated 300 million dollars the new companies will have two huge tasks one must
02:58prove it can grow globally and the other must prove it can survive the breakup of kraft heinz is more than
03:04a corporate divorce it's a lesson that you can't just cut costs to win you have to innovate you have to
03:11listen to consumers for a much more in-depth analysis of this story be sure to check out the
03:16link to the full article in the description below but what do you think was the merger always doomed
03:22to fail let us know in the comments and if you want more breakdowns of the biggest business stories
03:28make sure to hit that subscribe button and the bell for notifications thanks for watching
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