WSJ What’s News - Why Kraft Heinz Is Breaking Up

Episode Date: September 2, 2025

P.M. Edition for Sept. 2. Kraft Heinz plans to separate its business into two companies, unwinding a decade-old food-industry megamerger. WSJ reporter Jesse Newman joins to discuss why the company is splitting up and what it means for some of consumers’ favorite packaged-food brands. Plus, data centers driving the artificial intelligence boom are making more requests to connect to the U.S. electric grid—even though not all of them may get built. WSJ reporter Jennifer Hiller tells us why that might leave other customers footing the bill. And a federal judge finds the Trump administration’s deployment of troops in Los Angeles was illegal. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

When you're with Amex Platinum, you get access to exclusive dining experiences and an annual travel credit. So the best tapas in town might be in a new town altogether. That's the powerful backing of Amex. Terms and conditions apply. Learn more at Amex.ca. craft hines is officially headed for splitsville plus a i data centers are already haunting the u.s electric grid even if they don't exist yet or never will there's a huge amount of demand but there are utilities

saying maybe 20% of this is real and is the nfl's viewership being undercounted it's tuesday September 2nd. I'm Alex O'Sullough for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. After more than a decade together, Kraft Hines is splitting up. The food giant said it plans to separate its business into two companies, unwinding an industry mega merger that married two packaged food behemoths. I'm joined now by WSJ reporter, Jess So Jesse Newman. So Jesse, we reported in July that this was coming and now it has been formally announced. What are the details of this breakup? That's right. The divorce is here. So the details

are Kraft Hines, which is this huge food giant that was formed in 2015, a decade ago, is now splitting into two companies. There will be one globally focused company. They're calling it global taste elevation for now until it gets a name. And this company is going to focus on sauces and spreads and seasonings. So think Heinz condiments. Think Heinz ketchup, gray, Poupon, mustard. It will also have Philly cream cheese and craft macaroni and cheese. And then the other company is going to be this North America grocery business. And this is going to have a lot of the legacy craft brands. So Oscar Meyer, Jello, Cool Whip, Maxwell House. So just a lot of the brands that you see in the center aisle of the grocery store, that's going to be the

in business. Why do this now? What's the strategy here? So Kraft-Hine says that their business is really complex and that it has been really difficult to focus on all of the brands with their different needs. Craft-Hine says close to 200 different brands. They operate across 55 categories in 150 countries. So it's legitimately a complex business. And they say that they put most of their focus and investment into some of their highest growth brands. And as a result, they maybe can't give Jello all the love that it deserves and needs to flourish. They now believe that splitting up into two different companies will allow them to focus more deeply and more narrowly on the two sides of the business. Now, that's something that we're hearing from a couple of different companies in

the food and beverage industry over the past couple of years. So these corporates, breakups really are coming into vogue, which is pretty interesting because it's a huge shift away from what was traditional wisdom in the food industry for years and years, which was that you needed to get bigger. You needed to acquire brands in order to both have leverage when it came to your suppliers, but also with your customers, the grocery stores, that if you were bigger, you could be more powerful vis-a-vis your customers. And that sort of received wisdom seems like it's changing. Yeah, it seems like almost the opposite take of the conditions that brought Kraft and Heinz together in 2015. So what has really changed since then? Is the market dramatically

different? A lot has changed since then. You know, the need to have scale when dealing with suppliers, when dealing with customers, still exists. And this is something that the craft CEO, Carlos Abrams Rivera, talked about on the company's call this morning. But it's almost like a Goldilocks situation. You need scale. But once you're too big, things can get pretty complex. And there's a lot going on right now that has made operating in the food industry just more difficult. So consumers' tastes have been changing what they want to buy. It's pretty different from 2015. So there's all these pressures that food companies are dealing with. Many consumers are looking for fresher, less processed food. Inflation happened, and groceries are

much, much more expensive than they were, say, five years ago. And so food companies are not only having to try to improve their products and renovate them, but they are also having to really think about consumer preferences in a different way and how they can improve their products, but also keep them affordable, having to work through each of these different brands that they have, many of them, which are old legacy brands, that have sort of lost a lot of their cachet with consumers. That was WSJ reporter, Jesse Newman. Thanks, Jesse. Thanks so much. Now, moving from food to beverages, we're exclusively reporting that activist investor Elliott Investment Management has built a roughly $4 billion steak in PepsiCo and is pushing the drinks and snacks giant to make changes to boost its sagging share price.

The company's problems have only intensified in recent months because of tariffs and increasingly price-sensitive consumers. PepsiCo says it'll review Elliott's proposal and that it's confident in its own strategy. And in another exclusive, the NFL's chief data and analytics, officer said in a WSJ interview that Nielsen is underestimating the audience for the league's games. Lower numbers can cost the league's media partners ad revenue and hamper its rights negotiations. The league begins a new season this week and it's been experimenting with alternatives to Nielsen for additional viewing data. A Nielsen spokeswoman said it is, quote, confident this will be the most accurately rated football season in history.

In other news today, a federal judge has a federal judge has a lot of the state. ruled that President Trump's deployment of troops to Los Angeles in response to protests over immigration policies was illegal. Judge Charles Breyer in San Francisco found that the administration violated the Posse Comitatis Act, an 1878 statute that restricts the use of U.S. armed forces on America's streets. He issued an injunction that applies only to California and does not require the withdrawal of the 300 remaining California Guard troops, but they can't perform certain functions like crowd control. The injunction won't go into effect until September 12th so that the administration can appeal. And as we mentioned in this morning show, a 6.0 magnitude earthquake hit eastern Afghanistan late Sunday.

Now officials say that the death toll has risen to 1,400 as rescuers struggle to reach survivors in the remote mountainous region, where aftershocks have followed the initial quake. Afghan disaster management officials say the quake has left some 3,000 people injured and destroyed at least 5,400 homes in towns in Kunar province. Humanitarian agencies say the death toll is likely to climb. Coming up, when big tech plans for data centers don't materialize, customers might end up paying the price. We'll explain why after the break. You can get protein at home or a protein latte at Tim's.

No powders, no blenders, no shakers. Starting at 17 grams per medium latte, Tim's new protein lattes, protein without all the work, at participating restaurants in Canada. U.S. stocks began September on a downbeat note. The culprits? A sell-off in government bonds, driven in part by concerns over deteriorating fiscal outlooks in many nations,

and jitters over President Trump's campaign to reshape the Federal Reserve. The major indexes dropped, led by the NASDAQ, which fell about 0.8%. The S&P 500 dropped 0.7%, and the Dow Industrials were 0.6% lower. Meanwhile, gold futures hit a fresh record today, above $3,500 a Troy ounce, after settling at a record on Friday.

It's been pushed higher by investor demand for safe havens, growing expectations for our U.S. interest rate cut, and steady purchases by central banks. And Klarna says it could raise as much as $1.46 billion in its long-awaited initial public offering. Shares of the Buy Now Pay Later lender are expected to be priced at between $35 and $37 a piece. That would give the company a market value of around $14 billion at the top end of the range. Data centers are desperate to connect to the U.S. electric grid.

U.S. utilities are reporting a sharp upswing in interconnection requests from prospective data centers. These data centers, which are key to America's artificial intelligence rates, require a huge amount of electricity. In some cases, the collective requests surpass the existing electricity demand in a utility's entire service region. But it's still unclear how many of these data centers will actually be built and how much electricity they'll need. Jennifer Hiller covers energy for the journal and is here now with more.

So Jennifer, how many of these requests from data centers are real demands for electricity? This is kind of the big mystery going on in the electric power industry. also kind of over on the data center tech side of things. People aren't sure where they can build a data center the quickest to get the data center connected. You've got to have the electricity there. And it can be a long process. So you want to try a bunch of places. So it's clearly a huge opportunity for utilities, but they are absolutely being flooded with requests. So the same data center is putting a request into multiple utilities at the same time?

Exactly. They're sort of venue shopping. Maybe they're looking at 10 different locations, but they're really going to build two. And they're just not sure what's going to kind of break loose first or end up making the most sense for them. There's a huge amount of demand, but there are utilities saying maybe 20% of this is real. So then for utilities, is there a risk in building infrastructure that might not be used? Yeah, absolutely. Utilities want to be really careful. When people are coming to them, because on the utility side, sometimes you're having to extend wires and poles. You might be adding new substations, new transformers, to bring on a really big customer, like a data center. And so there's an infrastructure cost on the utility side. So there is a mechanism for utilities to sort of figure out. They've got an interconnection queue, which is sort of the long line of people who want electric service,

and they go through studies and things like that. But there is a risk that if you build something, whether it's a big data center or a big factory or something and they've built a lot of utility infrastructure to serve you and then your data center closes in 10 years or five years, that infrastructure still has to get paid for and it would get paid for by all the other customers. That was Wall Street Journal reporter Jennifer Hiller. Thanks, Jennifer. Thank you. And finally, social media companies are cracking down on underage users. In the U.S., states like Texas and Utah have passed laws requiring parental permission before a child can download apps or make in-app purchases. Other states like Mississippi ask social media companies to verify users' ages. Tech companies are using things like photo IDs and technology like video selfies and AI to verify that users are who they say they are.

But as WSJ reporter Anne Marie Alcantara told our Tech News Briefing podcast, those methods aren't always foolproof. The technology, even though it's really good, it's not 100% accurate. A lot of users online have talked about how they've been gated, even though they are of age. Then they have to go through an appeals process. Also, the technology itself isn't quite there yet. Another reason it's so challenging is because you have to be accurate without collecting too much data. Basically, a lot of these companies are trying to figure out your age. Maybe sometimes they collect your government ID, et cetera, but they also want to make sure they don't retain that data.

So a lot of it's just trying to make sure they can actually figure out who you are, your age, but then also minimize the amount of data that's being shared about potentially a minor. For more from Anne-Marie, listen to today's episode of Tech News Briefing. And that's what's news for this Tuesday afternoon. Today's show is produced by Charlotte Gartenberg and Rodney Davis with Deputy Editor Chris Sinsley. I'm Alex Osloaf for The Wall Street Journal. We'll be back with the news show tomorrow morning. Thanks for listening.

Thank you. I. Thank you.