Danone CEO Antoine de Saint-Affrique told CNBC that the widening conflict in the Middle East, involving Iran, may amplify inflationary forces and result in higher food prices if the situation persists. The executive described the outlook as highly uncertain and linked potential price effects to the duration and trajectory of the war.
Asked directly whether Danone would raise prices for consumers, de Saint-Affrique said: "we are not there yet."
He elaborated on the uncertainty around the conflict and its macroeconomic consequences, telling CNBC anchor Charlotte Reed: "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."
The conflict has now entered its sixth week. Over the weekend, U.S. President Donald Trump increased pressure on Iran regarding the Strait of Hormuz. The president reiterated earlier that Iran has until 8 p.m. Eastern time to reopen the strategically important strait, a chokepoint through which normally a fifth of global oil supply passes.
De Saint-Affrique warned of the economic implications if fighting continues: "If it lasts for long enough, it will have an impact," he said.
Despite the risks stemming from geopolitical uncertainty, the CEO expressed confidence in the company's capacity to withstand macroeconomic headwinds and emphasized continued investment in brand-building. "This is the time where you need to keep investing behind the brands," he said.
He added that consumers are concentrating their spending and that brands must remain relevant. "People are focusing, so either you're relevant, or you're not relevant. This is time for us to keep focusing on what makes us different, what makes us unique, and what brings value for the consumer."
The remarks underline a cautionary stance from Danone's leadership: monitoring geopolitical developments closely while maintaining a strategy of brand support amid potential inflationary pressure.