Danone CEO Antoine de Saint-Affrique told CNBC that inflationary pressures stemming from the Iran conflict could lead to increased food prices. "No one knows when this war will end, and how the situation evolves over the next two to four weeks will lead to vastly different macroeconomic outcomes," stated de Saint-Affrique. A de facto blockade of the Strait of Hormuz has not only driven up energy prices but also caused significant increases in fertilizer and shipping costs.
The CEO of Danone indicated to CNBC that due to the high uncertainty surrounding the Middle East conflict, inflationary pressures from the Iran war might force the company to consider raising prices. When asked if price increases were planned, CEO Antoine de Saint-Affrique said, "We are not at that point yet." He told CNBC's Charlotte Reed, "No one knows when this war will end, and developments over the next two to four weeks will produce entirely different results from a macroeconomic perspective." "If the conflict lasts long enough, it will inevitably have an impact," he added. His comments come as a growing number of companies are assessing the war's effects on their operations and cost bases. The Middle East conflict has entered its sixth week, with US President Donald Trump escalating rhetoric against Iran over the weekend, demanding the reopening of the Strait of Hormuz. On Monday, Trump stated that Iran must reopen this strategic chokepoint—through which roughly one-fifth of the world's oil supply typically passes—by 8 PM Eastern Time. The effective blockade of the strait has not only caused a sharp rise in energy prices but also led to soaring costs for fertilizers and shipping. International Monetary Fund Managing Director Kristalina Georgieva warned on Monday that even if the conflict is resolved quickly, the Iran war will inevitably increase inflation and weaken economic growth. Earlier this month, the UK's Food and Drink Federation forecast that food inflation would reach at least 9% by year-end, a significant upward revision from a previous estimate of 3.2%. This would be the highest annual inflation rate for food and non-alcoholic beverages since 2023. "Given the rapidly changing situation, this revision is based on the assumption that the Strait of Hormuz will resume freight movement within the next two to three weeks, and that most key facilities, including oil, gas, and fertilizer bases, will return to normal operation within a year," the FDF stated on April 1. "If the conflict lasts long enough, it will inevitably have an impact," de Saint-Affrique reiterated.
Health and Nutrition Transformation While acknowledging macroeconomic uncertainties and future challenges, he remained optimistic about the company's resilience amid economic headwinds. "Now is precisely the time to continue investing in brand building," he said. "Consumer priorities are clear—brands either meet their needs or fall by the wayside... Right now, we must stay focused on our differentiation, uniqueness, and core mission of creating value for consumers." Danone reported that overall prices increased by approximately 2.1% in the fourth quarter, while volume-driven growth reached 2.5%. The company is betting on health-focused brands to remain competitive as food brands face increasing pressure from cheaper private-label products, which offer retailers higher margins. In March, Danone announced it would acquire protein shake maker Huel for an undisclosed sum, aiming to strengthen its position in the fast-growing nutrition sector. Retailers have also warned that they can only absorb rising costs for so long before passing them on to consumers. UK retailer Next said late last month that it had estimated potential additional costs of £15 million (approximately $20 million)—such as from fuel and air freight—due to the Middle East conflict, assuming disruptions persist for three months. "If costs remain elevated after three months, we will begin passing them on through price increases," Next stated.
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