Danone CEO Antoine de Saint-Affrique has warned that the ongoing Iran war and the effective closure of the Strait of Hormuz are creating significant inflationary pressures, which may force food companies to consider price hikes in the coming weeks [1]. He stated, 'Nobody knows when [the war] is going to stop, and depending how the next two to four weeks are going to evolve, the outcome from a macroeconomic standpoint, is going to be very, very different,' highlighting the uncertainty surrounding the conflict's duration and its economic impact [1].
The closure of the Strait of Hormuz, a critical passage for global oil supply, has led to surging energy prices as well as soaring fertilizer and shipping costs, further exacerbating inflationary pressures on the food industry [1]. U.S. President Donald Trump has demanded Iran reopen the strait by 8 p.m. Eastern time, underscoring the geopolitical urgency of the situation [1]. The Head of the International Monetary Fund, Kristalina Georgieva, warned that even if the conflict resolves soon, the Iran war will inevitably lead to higher inflation and weaker growth [1].
Britain's Food and Drink Federation (FDF) revised its food inflation forecast upwards, now expecting at least 9% food inflation by the end of the year, compared to a previous estimate of 3.2%. This would mark the highest annual food and non-alcoholic drink inflation since 2023. The FDF's revision assumes the Strait of Hormuz will reopen to cargo traffic within two to three weeks and key facilities will return to normal within a year [1].
Despite the macroeconomic uncertainty, de Saint-Affrique expressed optimism about Danone's resilience, emphasizing the importance of continued investment in brands and relevance to consumers during turbulent times [1].
CONCLUSION
The Iran war and closure of the Strait of Hormuz are driving up energy, fertilizer, and shipping costs, with food inflation forecasts rising sharply. Danone and other food companies may be forced to raise prices if the conflict persists, though the CEO remains confident in the company's resilience. Market participants should brace for heightened inflation and uncertainty in the food sector.