Kraft Heinz Bets $700 Million on 2027 Growth Turnaround

Kraft Heinz Co. expects organic net sales to be relatively flat in 2027. The company anticipates a low-single-digit percentage decline in adjusted operating income for the full year before both metrics return to growth in the second half. This outlook follows a narrowed forecast for 2026 organic net sales to drop between 0.5% and 1.25%. Formal 2027 guidance will be issued with fourth-quarter results.

The 157-year-old food manufacturer is committing more than $700 million to marketing and product innovation to drive its recovery. Management has pledged to maintain that raised spending level into 2027. The strategy aims to generate 60% more innovation than in 2026, with new launches expected to account for roughly 5% of U.S. retail net sales next year. This marks a significant increase from approximately 3% this year.

Innovation Investment and Health Focus

Nearly half of the company's innovation pipeline is now dedicated to health and wellness trends. This includes developing products with higher protein, reduced sugar, and simpler ingredients. Specific successes cited include double-digit growth for its Heinz Simply and Heinz Zero ketchup lines. Of the $700 million incremental investment in 2026, approximately $325 million is allocated to marketing, with another $250 million directed toward price management.

Chief Executive Steve Cahillane stated that the plan rests on better products and stronger market capabilities. "The opportunity ahead of us is significant, and we have the brands, scale and capabilities to capture it," Cahillane said.

Strategic Portfolio Shifts

To redirect capital toward its core innovation goals, Kraft Heinz is shedding slower-growth segments. The company recently agreed to divest its North American coffee business, including the Maxwell House brand, to a private equity firm. Kraft Heinz will retain a 30% ownership stake in the unit. This sale, the company's first meaningful merger and acquisition transaction in five years, is anticipated to close in mid-2027. Its closure would create a 150- to 200-basis-point headwind to the full-year adjusted operating income outlook.

The company, which had about $25 billion in net sales in 2025, also expects to exceed its target of unlocking $2.5 billion in productivity by the end of 2026. It is targeting at least 4% productivity in cost of goods sold for 2027.

Emerging Market and Financial Targets

Emerging markets are a central pillar of the growth strategy. This segment has delivered 10% organic net sales growth year to date, with a 15.6% surge in the third quarter. Kraft Heinz forecasts these markets will deliver low-double-digit organic sales growth moving forward. Meanwhile, the Away From Home food service business in developed markets is seen rising at a low-single-digit rate.

In North America, the company's largest region, the organic sales decline has improved, narrowing to 2.4% from 4.7% in 2025. U.S. consumption trends had improved by 250 basis points versus the prior year, and Canada had grown for 11 consecutive quarters.

The company raised its 2026 adjusted earnings per share outlook to a range of $2.07 to $2.13. It expects to end 2026 with net leverage between 3.2 and 3.3 times. For 2027, free cash flow conversion is expected to stay at or above 100%, with roughly $500 million in excess cash generated after dividends. Looking further ahead, the company's Investor Day materials outlined a path to consistent sales growth and margin expansion by 2028, and a double-digit total shareholder return by 2029.

Management acknowledged ongoing consumer and cost pressures. Chief Financial Officer Andre Maciel said inflation could run slightly above 5% next year, with the greatest pressure in the first half. Work on a previously planned separation into two listed companies remains paused as the company executes this strategic pivot.