Kraft Heinz has entered a definitive agreement with private-equity firm One Rock Capital Partners, LLC, to sell its North American coffee business for $650 million, the food manufacturer announced Wednesday.
Kraft Heinz will maintain a 30% non-controlling equity stake in the coffee businesses, which includes Maxwell House, Gevalia, Nabob, Yuban, Tassimo, Ethical Bean and Sanka brands. The deal, pending regulatory approval, is expected to close in mid-2027, according to Kraft Heinz.
“This transaction is a meaningful step in unlocking value from our portfolio and will further accelerate the momentum behind our transformation,” said Steve Cahillane, CEO of Kraft Heinz. “We are proud of the role these brands have played in the lives of generations of coffee drinkers, and our continued stake reflects the confidence we have in their long-term potential under One Rock’s focused ownership.”
Debt paydown plans at Kraft Heinz
Kraft Heinz said the deal reflects its plans to accelerate areas of the company that provide growth and value to consumers and shareholders.
The cash proceeds of roughly $500 million will be used to pay down debt, according to Kraft Heinz.
Roughly 250 full-time employees associated with the coffee brands, including those working in supply chain, sales, marketing, finance, people and performance, and R&D, will transition to the new ownership, along with assets, brands, customer support and functional resources associated with the coffee brands. That also includes manufacturing facilities in Jacksonville, Fla., and Vancouver, British Columbia, in Canada.
One Rock investment plans
One Rock has engaged in other carve-out transactions, such as its 2021 purchase of Nestlé Waters North America, which became BlueTriton Brands, and includes Poland Spring, Deer Park, Ozarka and Pure Life.
“We intend to accelerate investment across the brand portfolio to drive growth and innovation, enhance the consumer experience, and strengthen relationships with retail partners,” said Tony W Lee, managing partner of One Rock.
More divestments to come?
It’s uncertain what might come next for Kraft Heinz in terms of divestments, but Cahillane said some of its other struggling brands are capable of a turnaround.
For example, Cahillane said the company’s meat business, Oscar Meyer, is a “strong brand” that is “fixable.”
“There’s still work to be done. We haven’t innovated around the Oscar Mayer portfolio in ways that you’d expect,” he said. “We haven’t addressed some of the concerns around the processed nature of it, so there’s a lot of things that we can do and we need to do around the Oscar business.”
Cahillane concluded by noting that Kraft Heinz is still looking for “opportunities to make our portfolio a more growth-oriented portfolio.”
Inflation could mean 2027 price increases
Kraft Heinz plans to release more information about price increases next week at its annual investor meeting, but Cahillane hinted that price increases could be coming in 2027.
“We are seeing more inflation,” he said, adding, “Our first line of defense is always productivity, and we’re stepping up that productivity as we think about price.
“We want to take as little price as possible because of the consumer dynamic, but price is likely to have to be taken in ‘27 for sure. And as I mentioned earlier, you know we’re very bullish about the investments that we’ve made and the fact that we will get better returns on those investments after the spring reset. And we’ll again talk more about that next week at our investor meeting.”
