Kraft Heinz has earmarked $700 million this year for marketing and research and development, betting that investment in its own brands will do more for shareholders than splitting the company in two. Nico Amaya, the company's North America president, explained the thinking in an interview with Reuters on October 6. The business, he admitted, hasn't kept up. "Quite frankly, we haven't innovated at pace," he said. "We have some great brands that we haven't invested in in the past."
It's a notable reversal. Under Steve Cahillane, who took over as CEO in January, the US packaged food company dropped plans to split the business in two. Instead, it's putting the money toward reversing years of market-share losses.
The Spending Picture
Marketing and R&D spending behind brands such as PowerMac is up 35% this year, and Amaya said Kraft Heinz would keep spending at that level. The payoff won't come right away. Cahillane expects the innovation pipeline to accelerate in 2027, leaving shareholders to wait.
The market hasn't been entirely patient. Kraft Heinz's share price has slid around 10% this year. Still, the company has outperformed US packaged-food peers Conagra Brands, General Mills and PepsiCo. That points to strain across the sector, while investors weigh Kraft Heinz's turnaround against a tough field.
Consumers Under Pressure
The pressures are plain. Persistent inflation has squeezed household budgets, and consumers have shifted to cheaper private-label alternatives. For a branded manufacturer, that's the central threat: shoppers who no longer see a reason to pay for the name on the box.
A second force is changing the shelf. Rapid adoption of GLP-1 weight-loss drugs is pushing packaged-food makers to reformulate products for growing demand for healthier food. Kraft Heinz has reformulated over 1,000 recipes, adding protein and fiber while reducing added sugar and fat. The company is also bringing out smaller portioned PowerMac cups, Amaya said.
"Better-for-you in many aspects is here to stay," Amaya told Reuters. "And protein will become just part of what everyone does."
New Categories, New Risks
The company launched its high-protein PowerMac & Cheese this year and now sells a wider range of products with less sugar and salt and more protein and fiber. It's also moving into unfamiliar territory. On Tuesday, Kraft Heinz introduced cheesy ramen in the United States, after launching the product in Canada, seeking to tap growing demand for different flavors and convenience.
Amaya pointed to the $2.7 billion ramen market, dominated by small players. "We're leaning more into really playing in different areas, disrupting some of the categories," he said.
The approach is a classic corporate wager: fund new products from within rather than restructure the balance sheet. The results will show up in market share, the very measure the company has lost for years.
Why This Matters:
The Kraft Heinz story offers a case study in how a large food company responds when inflation, private-label competition and changing consumer health habits squeeze margins at once. The company chose sustained investment in innovation over a corporate split, and it's keeping spending at a 35% higher level despite a share-price decline. For European policymakers, the lesson is about competitiveness: firms that can fund product development and respond quickly to shifting demand tend to hold their ground, while those weighed down by cost pressures fall behind. Rising household costs push shoppers toward cheaper alternatives, a trend any food manufacturer, on either side of the Atlantic, has to price in. Kraft Heinz expects the payoff in 2027, but it remains unproven, and investors will be watching the results closely.