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On CNBC’s Fast Money, host Jim Cramer told viewers that Heinz should spin off its frozen food business:
“It’s time for Heinz to spin-off its frozen division as a separate company or find someone else to sell it to,” Cramer said, adding that the move would make it easier for Heinz to hit its 4 to 5 percent organic revenue growth target. “The break-up would rid the company of a struggling division so that Heinz can focus its innovation on faster growing categories domestically, and on rapidly expanding emerging markets, which have already become a big chunk of Heinz’s business, but would be even bigger, accounting for 30 percent of sales if they dumped the frozen foods division.”
Cramer follows a report last week out of Barclays suggesting the frozen food spinoff. Frozen food accounts for 15% of the company’s sales, but is growing more slowly than the rest of the firm.
Besides its flagship Ketchup product, Heinz owns a wide variety of brands, including OreIda and SmartOnes. We have seen several instances of spinoffs in the packaged food space; it remains to be seen whether Heinz will continue the trend.
Disclosure: The author holds no position in any stock mentioned
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