Unilever Just Proved Us Right. And It's Going to Get Worse.

How the McCormick deal, collapsing stock prices, and the Kraft Heinz reversal are reshaping the future of Big Food

This morning, Unilever confirmed it is in advanced talks to sell most of its food business — including Hellmann’s, Knorr, and a portfolio of globally iconic brands — to McCormick & Co. in a deal worth roughly $15.7 billion in cash plus McCormick equity, structured as a Reverse Morris Trust that would give Unilever shareholders approximately 65% of the combined entity. The combined business could be valued at over $60 billion.

Stop and think about that for a moment.

Unilever’s roots in food trace back to 1860, when one of its Dutch founding families began building a business in the butter trade. Unilever itself was created in 1929 when Margarine Unie and Lever Brothers merged in what was at the time one of the largest industrial mergers in European history. The company spent most of the last century snapping up food brands — from Marmite to Colman’s to Hellmann’s. And now it’s walking away from all of it.

This comes on top of the ice cream spin-off Unilever completed last year under Fernando Fernandez, who took the helm in March 2025 and has been more aggressive than his predecessors — two of whom were essentially shown the door by Nelson Peltz and others for not moving fast enough. After ice cream and now food, what remains is a pure-play beauty, personal care, and household products company. The 160-year-old diversified consumer goods empire is no more.

And look at the other side of the transaction. McCormick isn’t diversifying. It’s doing the opposite. It’s getting bigger within a single category lane — sauces, condiments, flavor. French’s, Frank’s Red Hot, Cholula, and now Hellmann’s and Knorr under one roof. One company is getting smaller and more focused. The other is getting bigger and more focused. Both are moving in the same direction.

This is de-conglomeration and category consolidation happening simultaneously in the same transaction.

The Framework

Over the past two years, we’ve laid out a three-part framework across several pieces.

In Expect Big Change in Big Food (July 2024), we showed how deteriorating total shareholder returns (TSRs) force boards into radical action — spin-offs, restructurings, or sales. This isn’t about management getting bored or excited. It’s about underperformance becoming intolerable.

In The Great De-Conglomeration (July 2024), we placed this moment in historical context. Big Food has been unwinding decades of conglomeration — when companies collected unrelated businesses for internal diversification reasons, encouraged by the management academia of the mid-20th century, only to realize investors could diversify more efficiently on their own. The new playbook was narrowing portfolios, carving off non-core divisions, and moving toward “bigger and fewer” category champions.

In All Quiet on the Midwestern Front (August 2024), we used Kellogg’s as a case study. Decades of underperformance and hometown ties made Kellogg’s look strategically lost, but its cereal spin had unlocked optionality. We contemplated its endgame was either rerating or being taken out as was being rumored in the press — with Mars or Hershey as the logical buyers. Mars was announced as the acquirer the next morning. That deal closed in December 2025 for $35.9 billion.

Then in August 2025 — in One Year Later: Big Food Is Breaking Apart, Just Like We Predicted — we catalogued the cascade of transactions that followed. Conagra shedding Chef Boyardee and frozen seafood brands. Kraft Heinz announcing its split. Ferrero acquiring WK Kellogg for $3.1 billion. KDP striking an $18 billion deal for JDE Peet’s while splitting itself in two. General Mills selling its US and Canadian yogurt businesses for $2.1 billion. PepsiCo acquiring Siete Foods and Poppi. Nestlé reviewing its vitamins and supplements business. Unilever spinning off ice cream. Water consolidation. Smucker reshaping around premium snacks.

That was seven months ago. What’s happened since has been even more dramatic.

The Stocks: From Bad to Catastrophic

Here’s the uncomfortable truth. Since we published our last update on August 31, 2025, the S&P 500 is roughly flat — down about 2%. Meanwhile, most of Big Food has continued to get destroyed.

Campbell’s: $32 → $22, down 31%. After a dismal Q2 FY26 showing revenue declining 4.5% with a major guidance cut, the stock hit a 23-year low. Then a PR crisis erupted late last year when a secretly recorded executive rant went viral. We flagged Campbell’s as “the next name to watch” in our August piece. We weren’t wrong.

General Mills: $49 → $37, down 24%. The stock is now at levels not seen since 2012-2013 and has declined 60% from its all-time high. The company cut its fiscal 2026 outlook, and analysts have been slashing price targets — TD Cowen took theirs down to $32.

McCormick: $70 → $54, down 23% before the Unilever news. For McCormick, this deal is either the defining move of a generation or a massive overreach for a company with a $14 billion market cap taking on a business valued in the $30+ billion range.

Kraft Heinz: $28 → $22, down ~20%. More on this one below.

Conagra: $19 → $15-16, down ~20%. Net sales declined 6.8% in Q2 2026, and the dividend yield has spiked into the 8-9% range — a classic “show me” signal from a market that doesn’t believe the payout is sustainable. The stock now carries one of the highest dividend yields in the S&P 500.

Smucker: $110 → $95, down 14%.

Post Holdings: $113 → $97, down 14%.

Hormel: $25 → $23, down 8%.

Mondelez: $61 → $58, down 5%.

That’s since August. The longer-term picture is even grimmer. On a five-year basis, Conagra is down 58%. Campbell’s is down 55%. McCormick is down 39%. General Mills is down 39%. These are multi-year destructions of shareholder value that make the case for transformational change almost self-evident.

Now look at who’s held up.

PepsiCo: $150 → $157, up about 5%. On a five-year basis, PEP is up about 11% — modest, sure, but light years ahead of the wreckage above. PepsiCo is one of the biggest actual conglomerates in all of food and beverage, and activists like Peltz’s Trian have pushed for years to separate the beverage business from Frito-Lay. But it’s held together because — unlike most of the names above — its two businesses (instant consumable beverages and snacks) share genuine synergies in marketing, distribution, and cross-promotion at retail. It’s diversified, but within a narrow lane. That’s the difference.

Coca-Cola — arguably the purest of pure plays in the sector — is up 45% over five years. Focus works.

Unilever and Mondelez are roughly flat over five years. Unilever’s flatness despite being the quintessential diversified conglomerate is precisely what created the pressure from Peltz and others that ultimately led to today’s McCormick deal. Mondelez, spun out of the original Kraft in 2012 as a focused global snacking business, has at least avoided the carnage — but “flat” is still a far cry from the rolling triple-digit 10-year TSRs investors were accustomed to in the 2000s and early 2010s.

And then there’s the outlier.

Hershey: $184 → $212, up 15%. On a five-year basis, HSY is up about 35%, though still down 20% from its all-time high of $254 from May 2023. Its recent rally has been driven by the cocoa cycle turning. After years of surging cocoa prices that crushed margins across confectionery, the commodity has finally begun to deflate — falling over 60% from its peak. Hershey’s Q4 earnings reflected the turn, with management guiding for a 30-35% increase in adjusted EPS and 400 basis points of gross margin recovery in 2026. New CEO Kirk Tanner has been praised for rationalizing the portfolio and focusing investment on the company’s core domestic brands.

But it’s not just cocoa. What’s interesting about Hershey’s outperformance through the lens of our thesis is that Hershey is essentially the poster child for “bigger and fewer.” It has deliberately narrowed its focus — pulling back from international markets where its competitive position lagged, doubling down on US confection and salty snacks, and using acquisitions like LesserEvil (popcorn and puffs) to extend along category lines rather than diversify into unrelated businesses. It also benefits from the Hershey Trust’s ~80% voting control, which shields it from the activist pressure that has destabilized peers.

In other words, the most focused, most category-disciplined major food company is the one whose stock is going up. Coca-Cola, essentially a pure play, is up 45% over five years. PepsiCo, disciplined across two synergistic lanes, is modestly positive. And the diversified conglomerates managing dozens of disparate categories are getting crushed. If you needed a real-time controlled experiment to validate our framework, this is it.

These are supposed to be defensive consumer staples. Instead, most have been among the worst-performing stocks in the market. The TSR gap we’ve been writing about since 2024 hasn’t closed. For most of Big Food, it’s blown wider.

Our thesis in Expect Big Change in Big Food was that when TSRs deteriorate badly enough, boards are forced into transformational action. If the pressure was building at the levels we showed in mid-2024, it is now at a breaking point for several of these companies. More radical change is not just likely — for some of them, it’s now almost certain.

What’s Driving This

The causes are layering on top of each other in ways that weren’t fully in play when we started writing this series.

GLP-1 drugs are reshaping consumer demand. Over 12% of American adults are now on semaglutide or tirzepatide medications, up from under 6% in early 2024. Users are eating less, snacking less, and gravitating toward protein-forward and nutrient-dense foods. Households with a GLP-1 user reduce spending on salty snacks, cookies, and baked goods more than any other categories. Oral pill formats rolling out this year could accelerate adoption further.

MAHA and the new dietary guidelines are adding regulatory pressure. The 2025-2030 Dietary Guidelines recommend Americans consume no added sugars if possible and no more than 10 grams per meal. Health Secretary RFK declared the government is “at war with added sugar.” These guidelines influence school meals for 30 million children and SNAP — and SNAP cuts are already hitting companies like Kraft Heinz, where 13% of US retail sales come from SNAP households.

Private label keeps gaining share. Value-conscious consumers have driven store brands to record revenue levels, and cross-shopping between traditional grocers and dollar/discount chains continues to increase.

Tariffs and geopolitics — including the Iran conflict’s disruption of the Strait of Hormuz — have squeezed input costs. Over half of supply chain leaders have raised consumer prices in response, but consumers are pushing back.

And the macro consumer sentiment is simply exhausted. As Kraft Heinz’s new CEO put it:

“We busted through four or five levels of price points in a very accelerated fashion, and the consumer was left very disappointed.”

The upshot is that Big Food is simultaneously facing structural demand erosion, regulatory headwinds, cost inflation, and consumer fatigue. And it’s doing so with stock prices at or near multi-decade lows. Boards are running out of options.

The Kraft Heinz Question

Perhaps the most interesting development since our last update is Kraft Heinz — and what its reversal says about the limits of the de-conglomeration thesis.

In September 2025, Kraft Heinz announced it would split into two companies: “Global Taste Elevation” (Heinz, Philadelphia, Kraft Mac & Cheese — roughly $15.4 billion in sales) and “North American Grocery” (Oscar Mayer, Kraft Singles, Lunchables — roughly $10.4 billion). It was precisely the kind of de-conglomeration we had been predicting. We called it “the dismantling of the 3G/Berkshire experiment.”

Then in December, the company hired Steve Cahillane as CEO — the same Steve Cahillane who had steered Kellogg’s through its own breakup and then led Kellanova until its sale to Mars. A man whose entire recent career was built on executing exactly this kind of separation.

Six weeks later, he ripped up the playbook. On February 11, Cahillane announced the split was paused. His argument:

“Separations are always best done when the business is healthy, when it’s stable and when it’s growing.”

The brands, he said, had been underinvested for years. The problems were “fixable and within our control.” He pledged $600 million in marketing, R&D, and sales investment to turn the business around.

The market’s initial reaction was brutal — shares fell nearly 8%. Analysts were skeptical. Deutsche Bank’s Steve Powers said the decision “reveals deeper problems than previously acknowledged by the company.” Stifel’s Matthew Smith called it a “negative” in a single word. The pause also removes what many analysts had viewed as a valuation floor — the expectation that a pure-play condiments business would rerate higher on its own.

And yet, some voices supported the move. Barclays’ Andrew Lazar called reinvestment “the right set of first steps.” Piper Sandler acknowledged that Cahillane had reshaped KHC’s plans “much more significantly than we had expected in just six weeks.” And Berkshire’s Greg Abel — who had reportedly been privately skeptical of the split — said Berkshire has no immediate plans to alter its 27.5% stake.

So here we have the irony of ironies: the man who literally executed the Kellogg breakup is now arguing against breaking up Kraft Heinz.

Is he right? The honest answer is… maybe, but probably not for long. His logic — fix the brands first, then reassess — has some merit. Splitting a business while it’s in free-fall could destroy value rather than unlock it. You don’t perform surgery on a patient who’s bleeding out.

But the megatrend we’ve identified hasn’t changed.

The structural forces pushing Big Food toward simplification are only accelerating. Kraft Heinz managing 200 brands across 55 categories and 150 countries is the definition of conglomerate complexity. The question is whether Cahillane is buying time to split from a position of strength later — or whether this is a new CEO’s attempt to prove he can be more than a breakup artist, at the expense of the inevitable.

We shall see. But if the stock continues to underperform, the pressure from activists — or from Berkshire itself — will eventually force the issue regardless.

Once Upon a Farm: A Signal From the Other Direction

While Big Food stocks were collapsing, something interesting happened in early February. Once Upon a Farm — the organic children’s nutrition company co-founded by Jennifer Garner and run by John Foraker, the former CEO of Annie’s Homegrown — priced its IPO at $18 per share on the New York Stock Exchange and promptly jumped 17% on its first day of trading, eventually running up to about $24 before settling back down to around $15 today.

So the stock hasn’t exactly been a home run. But the signal matters more than the subsequent price action. The company does $200 million in annual sales across 19,000 stores and was valued at roughly $724 million at pricing. That Goldman Sachs and JP Morgan underwrote the deal, that the IPO priced in the middle of its range, and that public investors showed up on day one — all of that happened while Big Food stocks were hitting multi-year lows. The market was willing to assign a premium multiple to a small organic kids food brand at the very same moment it was punishing legacy food companies with some of the lowest valuations in 20 years.

The IPO came, as CNBC noted, “as shoppers and policymakers alike have pushed back on ultra-processed foods.” Once Upon a Farm is a direct beneficiary of the trends that are crushing Big Food — clean-label preferences, GLP-1 adoption, the MAHA agenda, and millennial and Gen Z parents making different choices than their own parents did.

There’s a deeper irony here. General Mills acquired Annie’s Homegrown in 2014 for $820 million. John Foraker — Annie’s CEO at the time — left, co-founded Once Upon a Farm, and took it public at nearly the same valuation. Meanwhile, General Mills’ own market cap has been cut in half. The talent and the innovation that Big Food needs is walking out the door and being rewarded by the public markets for doing so.

Big Food companies need to wake up. The market is telling them — loudly — that the future belongs to focused, innovative, consumer-aligned brands, not sprawling conglomerates managing dozens of tired categories from Midwestern headquarters with brass handrails.

What Comes Next

The Unilever-McCormick deal will dominate headlines today, and it should. It’s the most dramatic single validation yet of the de-conglomeration thesis we’ve been writing about. When the world’s second-largest consumer goods company exits food entirely — the category that was foundational to its very existence — the trend is no longer debatable.

But the bigger story is the compounding pressure building across the rest of Big Food. Stock prices are at or near generational lows. Consumer demand is structurally shifting. Regulatory scrutiny is intensifying. And the playbook is clear. It’s get bigger in fewer things, or get broken up by someone who will.

Campbell’s, General Mills, and Conagra sit at the bottom of the TSR charts with stock prices that have been cut by a third to more than half over the past few years. All three remain broadly diversified across categories that provide few obvious synergies. All three have the kind of underperformance that historically attracts activist investors. Campbell’s has notably strong shareholder protections that may delay but cannot indefinitely prevent the reckoning.

The conglomerates are still breaking apart. The category champions are still bulking up. And the “bigger and fewer” playbook that we described as the industry’s future is now, unmistakably, its present.

Get your popcorn ready, again.