Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Kraft Heinz is hell-bent on cutting fat. That could be a boon to food companies willing to snap up its scraps.

Right now, all the buzz about the newly-merged packaged food titan created by Warren Buffett and 3G Capital is about its recent moves to yank the free Jell-O and cheese sticks out of the corporate break room, shutter production plants and hack at employee ranks. But it won’t be long before Kraft Heinz starts looking for suitors for the cheeses, juices, and packaged foods that make up its brand laggards.

Sour Sauce

Any child of the ‘80’s has fond memories of nuking a packet of powder and dry noodles into the gooey, vibrantly orange amazingness that is a Mac & Cheese dinner. But Kraft Heinz is now dealing with a new generation of consumers, who prefer organic carrot sticks to processed potato chips and prefer simpler foods with fewer, quality ingredients to chemical-laden frozen dinners.

Sales of Packaged Food Decline As Shoppers Shift to Healthier Meals
Percentage Growth From 2006 to 2015
Source: Euromonitor

Mac & Cheese is likely to stay in Kraft Heinz’s arsenal -- albeit with a new recipe that removes artificial coloring. But others in the company's more than 200-brand portfolio are likely to end up on the chopping block as the conglomerate uses this restructuring time -- and the leeway Wall Street is giving it -- to quietly shop around its worst-performing products.

There’s a list of willing buyers who would relish the opportunity to grab some of these brands, namely Pinnacle Foods, B&G Foods, J.M. Smucker, Post Foods, and McCormick & Co., RBC Capital Markets pointed out in a recent research note.

3G's playbook from its 2013 purchase of Heinz could preview what's to come. Executives at Heinz became laser-focused on core brands like ketchup and sauces, quietly backing away from frozen foods, pet foods, and private-label soup, notes Bloomberg Intelligence analyst Kenneth Shea. Ketchup and sauces now make up half its revenue, compared with 43 percent in 2011, as meals and snacks declined to 34 percent from 40 percent in 2011, according to data compiled by Bloomberg. 

The same could happen with the Kraft portfolio, which largely got saddled with mature, slow-growing brands like Mac & Cheese and Kool-Aid following its split from Mondelez

During its first earnings call as the combined Kraft Heinz, executives categorized its flailing brands as “turnaround opportunities.” They declined to go into detail about possible spin-offs, but made no secret of the company's struggles to revive Capri Sun ready-to-drink beverages, which the company has tried to infuse with healthier ingredients, and Smart Ones frozen meals, which have suffered from the consumer shift to fresher fare.

Estimates from Euromonitor suggest other laggards that could be put up for sale include Kraft Singles, Jell-O, and Miracle Whip, brands where sales have been steadily declining and last year dropped 2.5 percent, 4.6 percent, and 3.1 percent, respectively. 

Dealmakers should have plenty of action.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Shelly Banjo in New York at

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