Even the greatest investors make mistakes, and Warren Buffett’s rare misstep with Kraft Heinz is a prime example. But here’s where it gets controversial: Berkshire Hathaway, under new CEO Greg Abel, is now taking formal steps to unwind its 27.5% stake in the struggling food giant, marking a significant shift in strategy. This move comes as Kraft Heinz, known for household favorites like hot dogs and mac-and-cheese, faces plummeting shares—down 70% since its 2015 merger—due to shifting consumer tastes, rising costs, and sluggish brand growth. Even billions in dividends haven’t offset the pain, with Berkshire writing down $3.8 billion on its investment last year.
The decision to exit isn’t just about cutting losses; it’s a bold statement by Abel to distance Berkshire from a deal that has tarnished Buffett’s otherwise stellar record. And this is the part most people miss: Kraft Heinz is simultaneously planning to split into two companies—one focused on sauces and spreads, the other on North American staples like Oscar Mayer and Kraft Singles. Buffett himself has admitted frustration with the merger’s unraveling, telling CNBC, ‘It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it.’
The filing allows Berkshire flexibility to reduce its stake gradually rather than signaling an immediate sale, according to analysts at Stifel. They note that updates will likely come in mid-May when Berkshire reports its first-quarter activity. Meanwhile, Kraft Heinz’s challenges persist, with softer U.S. consumption and slower growth in emerging markets delaying potential revenue rebounds, despite strong cash flow.
Adding to the intrigue, Berkshire’s former partner in the merger, Brazilian private equity firm 3G Capital, quietly exited its investment in 2023 after years of trimming its stake. Here’s the controversial question: Was the Kraft Heinz merger a doomed strategy from the start, or could better execution have saved it? And does Berkshire’s exit signal a broader shift in its investment approach under Abel’s leadership? Share your thoughts in the comments—this is one business story that’s far from over.
