Dive Brief:
- Kraft Heinz has agreed to sell its North American coffee business to private equity firm One Rock Capital Partners. The transaction, which includes Maxwell House and Sanka, is expected to close in the middle of 2027.
- The deal has an enterprise value of $650 million, according to the food giant. Kraft Heinz will retain a 30% stake in the coffee business. The net cash proceeds after taxes are expected to be approximately $500 million, which Kraft Heinz expects to use to pay down debt.
- The sale comes as Steve Cahillane, who took over as Kraft Heinz’s CEO in January, has vowed to streamline the company's focus on product categories where it can accelerate growth, such as condiments, while committing millions of dollars to the marketing and innovation of its top brands.
Dive Insight:
Since Cahillane took the helm, the former Kellanova executive has wasted little time taking steps to reverse stagnating performance at the storied maker of Oscar Mayer cold cuts, Philadelphia cream cheese and Heinz ketchup.
Cahillane paused a plan to split the company, overhauled Kraft Heinz’s operating structure, pledged to invest $700 million in the business and brought brands into trendy categories such as Kraft Mac & Cheese into protein and Jell-O with no artificial colors or sweeteners.
Kraft Heinz has reportedly tried to sell underperforming segments like coffee for years, and some analysts have recently speculated that it could make a renewed push under Cahillane to further sharpen the focus around its core portfolio.
“This transaction is a meaningful step in unlocking value from our portfolio and will further accelerate the momentum behind our transformation,” Cahillane said in a statement. “Our continued stake reflects the confidence we have in their long-term potential under One Rock's focused ownership.”
While the coffee space has been strong, Kraft Heinz was going up against other coffee giants, including Nestlé with Nescafé and Nespresso and J.M. Smucker with Folgers and Dunkin’. The sale allows Kraft Heinz to focus on other higher-growth categories where it has a bigger presence while benefiting from further upside in coffee by retaining a 30% stake.
Kraft Heinz on Wednesday said net sales during its third quarter fell 2% to $6.12 billion, with sales in North America, its largest region, slipping 3.4%. The company narrowed its organic net sales forecast to drop between 0.5% and 1.25%, versus an earlier projection of as much as a 2% decline.
Cahillane said market share, sales and volume trends are improving in every region compared to a year ago.
“We are increasingly meeting consumers where they are, and giving them more reasons to choose our brands,” he said.
