Detailed narrative
2025 Performance Overview
Kraft Heinz faced a challenging 2025, with significant year-over-year declines in both top and bottom-line results. Organic net sales were pressured by market share losses, particularly in U.S. retail, and adjusted gross profit margin declined by 120 basis points due to inflation and tariffs.
Despite these headwinds, the company generated strong free cash flow of $3.7 billion, up nearly 16% from the prior year, demonstrating robust cash generation capabilities.
Strategic Growth Pillars Performance
In North America retail Accelerate platforms, organic net sales declined 5.2%, mainly from Lunchables, Spoonables, and Frozen Meals/Snacks. Global Away From Home organic net sales were down 1.5%, impacted by lower U.S. traffic, though international markets saw approximately 9% growth.
Emerging Markets organic net sales grew 4.6%, driven by double-digit growth in LatAm and East regions, but offset by a significant 740 basis point decline in Indonesia due to inventory resets.
2026 Operating Plan & Investment Strategy
The company is committing approximately $600 million in incremental investments in 2026 to drive volume-led, sustainable, and profitable top-line growth. This investment, funded by a strong balance sheet and robust free cash flow, will focus on aligning brands with consumer preferences, improving commercial execution, and providing a balanced value equation.
Approximately half will go to price, product quality, and packaging, and the other half to SG&A (sales, R&D, marketing).
Pausing Separation
Due to increasingly challenging market conditions, including worsening consumer sentiment, softened industry trends, and increased geopolitical volatility🌐, Kraft Heinz has paused the work related to the separation of the company. Management believes that investing in and turning around the core business will improve optionality for future portfolio optimization, making it the right decision at this time, and will avoid $300 million in dis-synergies in 2026.
Innovation & Product Development
R&D investments will increase by approximately 20% in 2026, focusing on value-driven innovation across nutrition, convenience, and new occasions. Examples include the launch of Kraft Mac & Cheese PowerMac, offering 17 grams of protein and 6 grams of fiber, and the expansion of Capri Sun single-serve bottles, which are nearly 60% incremental to the category.
The iconic Heinz brand will also see global expansion into new occasions and geographies, including pasta sauces and modern condiments.
Commercial Execution & Pricing Strategy
Investments will strengthen the sales organization and marketing efforts, increasing marketing spend to approximately 5.5% of net sales. The pricing strategy for 2026 involves a three-pronged approach: improving promotional ROI by redirecting funds to higher-return programs, focusing on opening price points for affordability, and selectively revisiting base prices to pass on savings to consumers where necessary.
Progress in Key Categories
The company saw positive momentum in Taste Elevation categories (cream cheese, salad dressing, ketchup, mustard), moving from share loss in H1 2025 to share gains in Q4 2025, with over 70% of the platform gaining share. Consumption also improved significantly in critical U.S. retail categories like Lunchables (+11pp), Capri Sun (+7pp), Mayo (+13pp), and Mac & Cheese (+2pp) from H1 to Q4 2025, providing conviction for the new investment plan.