For decades, The Kraft Heinz Company (KHC) almost monopolized the macaroni and cheese aisle in supermarkets. Therefore, when a premium brand named Goodles first appeared on store shelves in 2022, Kraft Heinz wasn't particularly concerned. Headquarters in Chicago issued a directive for employees to conduct a taste test. Employees purchased several boxes, prepared the gooey meals in the company kitchen, and then dug in. The conclusion was: Goodles' "Cheddy Mac" tasted good. However, the tasters believed other flavors needed improvement. The texture of the noodles was also an issue. Kraft Heinz employees indicated that this market-leading product was long overdue for an upgrade, but with its annual sales reaching $1 billion, executives were in no hurry. Related deliberations dragged on for years: Should protein content be increased? New flavors launched? Or more cheese added? According to market research firm Circana, Goodles has now captured 6% of the U.S. macaroni and cheese market, while Kraft Mac & Cheese's share has dropped from 45% in 2022 to 39%. When two American food giants, Kraft and Heinz, merged in 2015, the combined company was supposed to inject new vitality into these legacy brands. However, years of cost-cutting, underinvestment, and internal chaos have left the $26 billion food empire besieged on all fronts, facing pressure from both trendier premium brands and the relentless squeeze from cheaper supermarket private-label products. Kraft Heinz owns cornerstone brands like Heinz Tomato Ketchup, Philadelphia Cream Cheese, and Kool-Aid. Kraft Heinz's sales have declined for eight consecutive quarters. In September 2025, the company announced it would split into two, reverting to the pre-2015 merger structure. Tensions exist among senior leadership. Many employees are uncertain about who is giving orders and which company they will ultimately work for, creating further confusion. On January 1st, the company replaced its CEO, with veteran food industry executive Steve Cahillane taking over from Carlos Abrams-Rivera. Major food companies are deeply embattled: not only are they facing stricter scrutiny of processed foods in recent years, but they must also contend with public resentment fueled by high inflation and market disruptions caused by the weight-loss drug trend. Kraft Heinz executives, responsible for managing the vast cheese, cold cuts, lunch combinations, and boxed dinner product business, face the same dilemma as other legacy food companies: should they adapt their flagship products, risking alienation of the loyal customers that made them category leaders, or stick with old formulas that fail to resonate with younger consumers? New CEO Cahillane stated in mid-December that the industry is "clearly at a challenging moment," and Kraft Heinz "must meet this moment." Kraft Mac & Cheese first launched in 1937, priced at 19 cents per box. It was the brainchild of Chicago cheese merchant James L. Kraft, who started his business selling cheese from a horse-drawn wagon. Marketed initially as a "meal for four," it gained rapid popularity during World War II and eventually became a common staple for family dinners, prized for its speed and convenience. For decades, it remained one of the most profitable brands in the food industry. In 2013, after Warren Buffett and Brazilian private equity firm 3G partnered to acquire ketchup giant Heinz, they orchestrated the merger of Heinz with Kraft, creating the world's fifth-largest food company. Although Kraft Mac & Cheese still dominates store shelves, and the company's Velveeta Shells & Cheese is also a bestseller, consumer tastes are shifting away from such processed foods towards fresher, healthier options. Competition has also intensified, with General Mills acquiring Annie's, a producer of organic macaroni and cheese, in 2014. During an earnings call following the Heinz-Kraft merger, Kraft Heinz executives described macaroni and cheese as an opportunity to revitalize the business. The company improved the recipe in 2016, replacing artificial colors with natural ones. Several Kraft Heinz executives from 3G implemented an aggressive cost-cutting measure known as "zero-based budgeting," where all expenses must be justified anew each year. The company shuttered factories, cut thousands of jobs, and reduced annual expenses by nearly $2 billion. The company claimed that improved efficiency would free up resources for reinvesting in its brands. In 2016, the total dividends paid to shareholders jumped to $3.6 billion from $1.3 billion the previous year. Kraft Heinz boasted one of the highest operating margins among food companies. But former employees and Wall Street analysts say the company lost experienced leaders and strength in marketing, research, and sales. "They hollowed out the company on multiple levels," said Rob Moskow, an analyst at TD Cowen. Kraft Heinz struggled to shift from cost-cutting mode to growth mode. According to former executives and other employees, executives skilled at cutting costs found it difficult to build brands, often leaving junior staff with meager budgets to boost sales of struggling products. In 2019, poor sales performance and accounting missteps led the company to write down the value of its assets by $17 billion. The company hired a new CEO, Miguel Patricio, who promised renewed investment in areas like marketing. Less than a year into his tenure, the pandemic hit, and homebound consumers flocked to familiar brands like Kraft Mac & Cheese. The company expanded capacity to produce more of the iconic blue-and-orange boxed macaroni and cheese and other core products. Boosted by a surge in online orders, Kraft Heinz's sales grew by 5% in 2020. Abrams-Rivera, then president of Kraft Heinz's U.S. business, told an investor presentation: "In this year alone, we sold nearly 90 million pounds of mac and cheese, equivalent to the weight of 41 Statues of Liberty." A year earlier, Paul Earle walked the aisles of Chicago grocery stores with a notebook and pen. He paused when he reached the familiar wall of blue Kraft macaroni boxes. The seasoned consumer goods entrepreneur had joined Kraft in the late 1990s, briefly working at the food giant as an assistant brand manager on the Kraft Mac & Cheese business. Earle recalled thinking then that the product could be made more nutritious to meet growing American demand for healthier food. Earle left Kraft and later started several companies, including ones selling whiskey and shampoo. As he browsed the Chicago stores, he was searching for a new venture. He bought several brands of macaroni and cheese and cooked them at home. Earle said his 10-year-old son spat out a healthier version made by one of Kraft's competitors. The classic Kraft version still tasted great and evoked fond memories, Earle said, but it didn't look much healthier than when he had worked there. "I knew there was a way to do better," he said. Earle found Jen Zeszut, who had run the baby food startup Cerebelly. They agreed that Kraft Heinz had left the door open for a macaroni and cheese challenger. Goodles, led by Zeszut, positioned itself as a fun, healthier version of the classic. The company added protein and nutrients from spinach, squash, and kale to its noodles and said its ingredients and flavors justified a price more than double that of Kraft's product. While Kraft Heinz and General Mills tried to attract children with noodles shaped like SpongeBob SquarePants and Disney characters, Goodles targeted a different demographic. Earle and Zeszut believed many young adults were secretly eating mac and cheese, and others would too if it could shed its dorm-room food image. The duo sought help from "Wonder Woman." Years earlier, Zeszut had discussed another business venture with Israeli actress Gal Gadot, who portrayed the superheroine on screen. The actress didn't invest then, but she signed on when Zeszut pitched Goodles. Gadot became a brand ambassador for Goodles, posting videos to her over 100 million Instagram followers of herself cooking and tasting the product. She said mac and cheese was her favorite childhood comfort food, but existing brands weren't healthy enough for her four children. Goodles quickly won over consumers. Zeszut said retailers became fans of the brand because they achieved higher margins on Goodles. "It's a higher-income consumer, a younger consumer," she said. "That's the target demographic retailers want to bring back to the center store aisles." When Goodles landed on store shelves, Kraft Heinz was in the midst of its pandemic boom, with sales growing for multiple consecutive quarters. According to former employees, Kraft Heinz executives were initially not overly worried about competition from this new rival. After all, Kraft Mac & Cheese was the dominant category leader at the time, selling over one million boxes daily. There were other issues demanding attention. Kraft Mac & Cheese was losing customers to other quick meals like ramen, and many former Kraft buyers were also switching to cheaper store brands like Walmart's Great Value. In 2022, a Kraft Heinz team proposed attracting consumer attention through more promotions, new flavors, and high-protein varieties. Employees developed a proposal for new macaroni and cheese products, including items featuring premium cheeses like Gruyere, Gouda, and Parmesan, along with herbs and spices. Under the company's "value-driven design" approach, these employees needed to identify corresponding cost savings. They internally tested reducing the amount of cheese—the most expensive ingredient in mac and cheese—examining the impact on taste, texture, mouthfeel, cheesiness, and "cling" (how well the cheese sauce adhered to the noodles). A year later, another team presented a similar proposal to executives, showcasing sales data and retailer intelligence on Gen Z and millennial shoppers—many of whom were opting for premium products. The team argued that health-focused options and new flavors like truffle and cacio e pepe could help win back lost younger customers. Executives were grappling with other major problems. Frequent reorganizations and employee turnover led to shifting priorities, stalled projects, and retailer dissatisfaction. And within the Kraft Heinz portfolio, brands like Oscar Mayer and Maxwell House faced even greater challenges than Kraft Mac & Cheese.
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