Cramer: Heinz Should Spin Off Frozen Food Division

Heinz(HNZ) is certainly one stock that needs no introduction as it is likely to be in your pantry, if not your portfolio.


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