I was recently sent an article written by Rita McGrath, a C-Suite Strategist and Best-selling author, regarding the Kraft Heinz breakup. The article made me stop and think, so I wanted to share some of her thoughts. You can read her article in full HERE.
Kraft-Heinz was a mega-merger of iconic brands, supported by no less a genius than Warren Buffett. It was supposed to unlock value for investors and rethink how food would be consumed globally. But what if the unraveling of the Kraft-Heinz merger is actually a signal of a much more profound shift?
After a decade of wrestling with the effects of an ill-considered strategy, the leadership at Kraft-Heinz has thrown in the towel. The company has announced that it intends to unwind its entanglements, as the Wall Street Journal notes, one global company would focus on sauces, spreads, and seasonings, while another would sell grocery staples in North America. The move aims to create businesses with more focus and less complexity, Kraft Heinz said, and deepens a reversal of the food industry’s years-long strategy of pursuing deals to build scale.
The Kraft Heinz breakup may well bode one of the most fundamental shifts in consumer behavior since the rise of the supermarket. “Big Food,” a model of 20th-century mass production efficiency, is cracking apart because the premise it was built on, that millions of people will want exactly the same thing, is dissolving before our eyes.
From my perspective (KVT), this is something we need to think long and hard about on the farm. Consumers are certainly demanding more choices and greater traceability and transparency regarding their food. I think the breakup of Kraft-Heinz further solidifies that this is where the industry is headed. As producers, we need to make certain that we fully understand.
When Warren Buffett and 3G Capital orchestrated the 2015 Kraft Heinz merger, they were betting on scale. Bigger factories, longer production runs, more shelf space, cheaper per-unit costs. The industrial logic was impeccable: combine iconic brands under one roof, slash costs, and dominate supermarket aisles with products that could satisfy the least common denominator of taste preferences across America. After all, the company was over a hundred years old, baked into people’s habits, and so beloved by some consumers that their brands were tattooed on their bodies.
But here’s what I think they missed: the least common denominator was fundamentally changing. Consumers were shifting away from the kinds of highly processed packaged foods that Kraft sells, like Velveeta cheese and Kool-Aid. It further faced challenges distinguishing its products from cheaper store brands, with Heinz ketchup costing $2.98 versus Walmart’s brand at 98 cents. Costco, with its signature Kirkland brand, does significantly more in revenue than all of Kraft Heinz’s brands put together. The mass market, as it has come to be known, was going to Costco and other in-store brands. The premium shopper, meanwhile, was shopping in the perimeter of the supermarket, ignoring the packaged and processed foods in the middle.
Kraft Heinz executives acknowledged that the complexity of their business has impacted their ability to realize the full strength of their brands and operations across 56 different product categories, while facing budget-conscious shoppers buying more store-brand packaged foods and people willing to spend extra often reaching for fresher alternatives to processed products. This is another reflection of what I call the “hourglass” effect, where income inequality has hollowed out the middle bands of consumption. At the low end, customers are fair game for mass consumption. At the higher end, consumers are becoming pickier, expecting more tailored experiences and prepared to pay for them. The same demographic shift that doomed much of J. C. Penney’s is now showing up in the grocery aisles.
McGrath believes we are witnessing the early stages of what she calls the “Great Personalization,” the shift from mass market consumption to individually tailored experiences. And food, surprisingly, is among the first industries feeling the full force of this transformation. Think about how many people’s relationships with food have changed in the past decade. They’re not just buying “2 eggs over easy” anymore, they’re buying keto-friendly, gluten-free, locally-sourced, organic, or plant-based breakfast that aligns with specific dietary philosophy, health goals, and ethical framework. The rise of meal kit services, specialty diet plans, and even personalized nutrition based on genetic testing all point to the same trend: consumers increasingly expect their food to be as unique as they are.
Local food represents everything mass market food is not: seasonal rather than standardized, regionally-specific rather than universal, relationship-based rather than brand-driven, and inherently limited in scale. When someone buys tomatoes from their local farmer, they’re not just purchasing produce; they’re buying into a completely different value system that prioritizes freshness, sustainability, community connection, and individual choice over efficiency and scale. As Carlota Perez has long pointed out, these are lifestyle choices that currently represent aspirational conditions for the elite, but are likely to shift the culture in their direction as the meaning of a good life is redefined. What makes this shift different from past food movements is the underlying technology infrastructure that can now support mass personalization. The same digital platforms that enable Uber to match you with the right driver at the right time can connect you with local producers, customize meal plans based on your preferences and restrictions, or even enable vertical farms to grow precisely the varieties you want in your neighborhood.
We’re moving toward a world where local doesn’t mean small-scale in terms of impact; it means personally relevant at an unprecedented scale. Imagine a network of urban farms using AI to optimize crop selection based on hyper-local demand patterns, or meal services that adjust recipes in real-time based on individual health data and taste preferences. The same forces driving food personalization are rippling through retail as mass merchants are losing to specialty and direct-to-consumer brands, in media where network television is fragmenting into streaming niches, and even transportation, with private car ownership giving way to on-demand mobility services. The pattern is consistent: mass market solutions optimized for the average customer are losing to personalized solutions optimized for individual needs.
As Kraft Heinz executives noted, the complexity of their current structure made it challenging to allocate capital effectively, prioritize initiatives, and drive scale in their most promising areas. This isn’t just a problem for Kraft Heinz; it’s the central challenge facing every organization built for the mass market era. The companies that will thrive in the next decade won’t be those that can serve everyone adequately, but those that can serve specific individuals exceptionally well. They’ll need to develop what McGrath calls “personalization at scale,” the ability to deliver customized experiences while maintaining the economic benefits of efficient operations.
The great unraveling of Big Food isn’t an ending, it’s a beginning. It’s the start of a food system that treats you not as a demographic segment, but as an individual with unique needs, preferences, and values. And if that transformation can happen to something as established as Heinz ketchup and Kraft Mac & Cheese, it can happen to anything. The question isn’t whether your industry will experience its own version of the Kraft Heinz breakup. The question is whether you’ll be ready when it does.
I believe that part of the personal solutions that McGrath discusses will also include traceability and transparency back to the field. That word is definitely evolving from a buzzword to a requirement, something that Tom Willis of Conestoga Energy confirmed on our FARMCON podcast recently. Producers investing in identity-preserved supply chains through blockchain, QR codes, and regenerative certifications are finding a strong response from retailers and conscious consumers. Lots to consider when thinking about the future of food production, both on and off the farm. Very interesting… (Source: LinkedIn)
