Warren Buffett: It's 'very hard' to offer a premium for a packaged food company

  • Warren Buffett said Thursday it is "very hard" to offer a premium for a packaged food company.
  • Buffett, along with private equity firm 3G Capital, is an investor in Kraft Heinz.
  • The ketchup maker has been cited as a logical buyer of Campbell, which activist investor Dan Loeb has been pressuring to sell.

Warren Buffett said Thursday it is "very hard" to offer a premium for a packaged food company, tempering speculation Kraft Heinz may make a play for Campbell Soup.

Buffett made his comments in an interview with CNBC's Becky Quick, ahead of his lunch at Smith & Wollensky steakhouse in New York with the winning bidder of the annual Glide auction. Buffett also turned 88 on Thursday.

Buffett, along with private equity firm 3G Capital is an investor in Kraft Heinz. The ketchup maker has been cited as a logical buyer of Campbell, which activist investor Dan Loeb has been pressuring to sell.

The soup company announced Thursday the results of a three-month review, saying it plans to sell some of its businesses. When Campbell announced the review in May, it sparked speculation that the company as a whole could be sold. Speculation regarding potential buyers has focused on Kraft Heinz.

While a pairing of Campbell and Kraft Heinz traditionally would have made sense, both food giants are struggling with growth. Big Food is being challenged by upstart brands that appeal to the tastes of modern consumers, who are looking for more natural and healthy foods. Food companies are also grappling with rising transportation and commodity costs and retailers that are looking to squeeze out more profits.

Shares of Kraft Heinz have dropped roughly 30 percent over the past year. Last quarter, it posted a decline of 1.9 percent in its U.S. net sales, while adjusted earnings before interest, taxes, depreciation and amortization shrunk 8 percent.

Meantime, 3G co-founder Jorge Paulo Lemann recently acknowledged at the Milken Institute Global Conference that he was caught flat-footed by onslaught of challenger brands.

"We bought brands that we thought could last forever," he said, according to Forbes. He added, "You could just focus on being very efficient. ... All of a sudden we are being disrupted."

3G earlier this month sold 20.6 million shares in Kraft Heinz, bringing its stake down 7 percent to 270.1 million shares, according to a securities filing. After the sale, 3G Capital has a 22 percent ownership of Kraft Heinz, while Buffett's Berkshire Hathaway is its largest.

The proceeds of Buffett's annual auction raise money for the San Francisco anti-poverty organization by having bidders compete for a lunch with the billionaire investor known as the Oracle of Omaha. This year's winning bidder paid more than $3.3 million.

Watch the full Buffett interview here.