The food and beverage sector continues to face a difficult backdrop shaped by both structural and cyclical headwinds. Consumer preferences have steadily shifted away from traditional packaged goods toward fresher, healthier, and more affordable alternatives. Many companies have relied on pricing to offset slowing demand, but price fatigue has taken hold and volume declines have accelerated, particularly in core grocery categories. Private-label competition is intensifying, and with brand loyalty weakening, organic growth has become increasingly elusive.
On the cost side, persistent inflation in key inputs such as cocoa, sugar, wheat, energy, and packaging continues to pressure margins. Geopolitical instability, climate disruption, and new tariffs have amplified volatility across supply chains. Labor shortages and rising compliance burdens are adding further complexity, especially for global operators. As a result, many food and beverage names are stuck in a difficult cycle of sluggish growth, margin compression, and relative market underperformance.
These fundamental challenges in the food and beverage sector are visible on the SIA point and figure chart of the Food and Beverage Equal Weight Index (EWI386), where there is stiff resistance in and around the 101 to 106 level—an area that has not been penetrated with any conviction since 2021. This upper level is bookended by a lower level of support at 94.7 to 93.8 (see green shading), which also coincides with the 2021 support. Below this level, another support zone is identified at 84.9 to 84, with additional support highlighted at 83.2 by the green line. Trend-level support is also seen at 80, as indicated by the light green oval. From a relative strength perspective, the SIA Food and Beverage Equal Weight Index is positioned near the bottom of the SIA Sector Report, in position 31, while the Consumer Staples sector carries a low SMAX score of 3 out of 10, further highlighting the lack of relative strength compared to SIA’s basket of five alternative asset classes.
Turning next to Kraft Heinz, the focus of today’s report, the company has announced a major corporate restructuring with plans to split into two independent, publicly traded companies. This move reverses the 2015 mega-merger. The two new entities will be Global Taste Elevation Co., focusing on international sauces, spreads, and shelf-stable meals, and North American Grocery Co., which will concentrate on core grocery brands such as Oscar Mayer, Kraft Singles, and Lunchables. The split is expected to be completed in the second half of 2026, and aims to simplify operations and allow each business to respond more effectively to market dynamics. Carlos Abrams-Rivera, the current CEO, will lead the North American Grocery unit while a search is underway for the head of the global foods division.
This breakup comes amid declining consumer demand for processed foods and growing complexity within Kraft Heinz’s portfolio of nearly 200 brands across 150 countries. The move follows a broader industry trend, as Kellogg completed a similar split in 2023 by spinning off its cereal division into WK Kellogg Co. and rebranding its snack business as Kellanova. For Kraft Heinz, the split is intended to unlock value and sharpen focus, but it carries execution risks including separation costs estimated at 300 million dollars. Analysts view the restructuring as a necessary step for a company that has struggled to meet expectations since the merger.
From a stock perspective, the rationale for shareholder expectations is clear. Over multiple timeframes, Kraft Heinz (KHC) has significantly underperformed the broader market. While SIA’s benchmark S&P 500 Index Equal Weight Index (EWIIVV) posted gains of 12.29% over three years and 14.16% over five years, KHC recorded a -4.77% return over three years and was essentially flat over five years (+0.06%). Year-to-date, the divergence is even more pronounced, with KHC down 4.98% compared to a 9.37% gain for the index. Similar to the broader sector, KHC faces technical resistance, with major overhead resistance at $37.87 and shorter-term resistance near the negative trend line (see red oval) and around $28.70, a level dating back to the original 2015 merger. Support levels are identified at $24.99, dating back to 2020, as well as $22.63 and deeper support near $18.56. The stock’s weak SIA SMAX score of 4 out of 10 further reflects its underperformance relative to alternative asset classes, including cash.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
