Why Are Food and Beverage Giants Risking It All by Breaking Up? The Untold Strategy That Could Change the Industry Forever.

Ever wondered if “bigger really is better”? For decades, the food and beverage world marched to that relentless beat—pile on the mergers, stack up the shelves, grab every snack and sip on the globe. It was all about scale, scale, scale. Then, like cracks appearing on asphalt after years of wear, that gut belief started to fracture. The mega-merger mania? It’s flipping on its head by 2025. Suddenly, the industry’s titans are doing something downright counterintuitive—they’re breaking themselves apart. Kraft Heinz’s bold move to split, Kellogg’s earlier shake-up, and Keurig Dr Pepper’s un-merger plan? They’re signs that the sprawling, power-grabbing conglomerates might be more of a liability in today’s hyper-segmented, cost-burdened landscape. And here I am thinking—what if the real growth secret isn’t how big you get, but how sharp you stay once you break free? The story’s unfolding, and it’s anything but predictable. LEARN MORE

For decades, the food and beverage business was driven by a simple credo: “bigger is better,”. Consolidation promised purchasing power, shelf dominance, and global reach. The late 2010s and early 2020s brought a flurry of high-profile tie-ups, capped by Kraft’s megamerger with Heinz, and Kellogg’s expansive push into snacks. At the time, companies believed scale was their best defense against shifting consumer tastes and rising costs.

Fast forward to 2025, and the script has flipped. Instead of acquiring, several of the industry’s biggest names are breaking themselves apart.

Kraft Heinz’s announcement that it will separate into two public companies is the most striking signal yet. One entity will manage its traditional grocery staples; the other will focus on faster-growing packaged foods. The stated goal is simplification, “allowing both new companies to more effectively deploy resources toward their distinct strategic priorities.”

The Kellogg’s breakup, completed in 2023, set the tone for streamlining in the food and beverage sector. When the deal was first announced in 2022, the plan was to divide Kellogg’s into three publicly traded companies. In the end, however, Kellogg’s opted to split in 2023 into two companies: WK Kellogg Co., which became home to its North American cereal business, and Kellanova, which primarily focused on snack foods. Steve Cahillane, chairman and CEO of Kellanova, at the time touted the split as a step towards “becoming the world’s best performing snacks-led powerhouse.”

The list of food and beverage breakups goes on. After completing the $18 billion acquisition of Peet’s Coffee it announced in August, Keurig Dr Pepper said it will unwind its seven-year-old merger, splitting into two public companies – one focused on coffee and the other on its soft drink brands.

In some cases, instability is fueling speculation about potential splits. At PepsiCo, for example, share prices surged earlier this month following reports of an impending activist campaign by Elliott Management that might include divesting some of its brands. Nestlé, meanwhile, is grappling with governance turmoil following its CEO’s ouster, and the crisis has intensified calls to revisit its own sprawl of global businesses.

So what makes the “conscious uncoupling” trend so hot now? We can point to a handful of factors driving the spinoff trend. Segmentation among consumers with a variety of tastes makes broad portfolios harder to manage. Inflation and supply chain shocks have eroded the benefits of scale. Investors are pushing companies to simplify their strategies, while leadership crises like Nestlé’s can catalyze structural change.

Meanwhile, corporate boards are adjusting to mounting oversight challenges. They include explaining why bigger is better if they’re resistant to breaking up a company. In the event a breakup does occur, C-suites must carefully plan to ensure a smooth corporate separation. This includes issues such as eliminating disruptions to information technology and compliance systems. In addition, companies need to address disclosures that must be made to the Securities and Exchange Commission and investors.

For now, investors apparently see sprawling portfolios as inefficiency waiting to be fixed. Corporate activists are betting that smaller companies with more focus will outperform conglomerates weighed down by complexity. Mega-mergers are no longer viewed as the optimal growth strategy in corporate America – not when opportunities to break up companies are out there.