The Pittsburgh, Penn.-based consumer packaged foods company gave a cryptic presentation late-Thursday afternoon, ahead of its disappointing fourth-quarter results Friday. The message seemed to imply that the company is seeking new partners and deals.
"It left us with more questions than answers," wrote Barclays analyst Andrew Lazar. One of the possibilities, he added, is that Kraft Heinz is preparing to expand its portfolio.
"The company is cultivating a forum to help demonstrate to potential partners its long-term value proposition," he said in the note published Friday morning, "all in an effort to improve its standing with corporate boards and other stakeholders that could be key in any future M&A actions."
Kraft Heinz shares closed nearly 3% down on Friday, to $70.80, following a disappointing earnings report in which the condiments maker posted a 1.1% decline in U.S. sales, marking the seventh straight quarter of a dip in the U.S. segment. The slump in sales can be attributed to consumer preferences now for healthy and convenient snacking over KHC's aging brands, such as Velveeta cheese and Lunchables.
CEO Bernardo Hees even pointed to this trend himself, suggesting that Kraft Heinz is open to acquisitions.
"As our industry is undergoing a period of change, this will increase the pressure for further consolidation," he said in the Thursday presentation. "With our global presence and financial strength, we'll continue to generate opportunities for us to expand our portfolio, and our company."
If Kraft Heinz were serious about acquisitions now, it would be a latecomer among consumer packaged goods (CPG) companies. The Hershey Company (HSY) - Get Hershey Company Report , for instance, expanded its confectionaries-only portfolio by buying Amplify Snack Foods Inc. undefined , the maker of SkinnyPop popcorn and Tyrrell's potato chips. Campbell Soup Company (CPB) - Get Campbell Soup Company Report , which also posted a disappointing fourth quarter for its soup segment, bought snacking company Snyder's-Lance Inc. (LNCE) late last year in a $6 billion deal.
Kraft Heinz could follow suit, analysts say, and it's not too late.
"They can go two routes for future acquisitions: healthy or convenient," said Prashant Malaviya, the senior associate dean of MBA programs in the McDonough School of Business at Georgetown University. "The necessity is innovation, and they can achieve [it] internally through talent and externally through M&A. Most companies realize they need a healthy combination of the two."
So what are its options as few independent packaged foods companies remain on the market? Here are three that have yet to be swallowed up by the likes of Hain Celestial Group (HAIN) - Get Hain Celestial Group, Inc. Report and General Mills Inc. (GIS) - Get General Mills, Inc. Report .
1. Nature's Food Path
Known for its breakfast cereals, Nature's Food Path, a Canadian organic foods maker, has a portfolio of more than 100 products and is distributed in some 40 countries. Nature's Food, with a reputation for sustainable practices, checks all the boxes to meet changing consumer demands, especially as organic sales grow.
2. BFY Holdings LLC
Backed by private equity firm Permira, BFY Holdings LLC encompasses several young and wildly popular snack brands, including PopCorners, Our Little Rebellion and Crinkles.
3. Popchips Inc.
Once named among the 20 most promising companies in the U.S., Popchips Inc., a San Francisco-based company, offers a lower-calorie alternative to potato chips because they are "popped" in a pressurized chamber, not fried. It also has a robust list of celebrity investors, including singer Katy Perry and actor Ashton Kutcher.