Lactalis Warns of Higher Prices as Iran War Raises Costs

Lactalis Warns of Higher Dairy Prices Due to Iran War Supply Chain Disruption

Impact of Iran War on Lactalis and Global Dairy Markets

By Sybille de La Hamaide

Supply Chain Disruptions and Rising Costs

GRANADA, Spain, April 16 (Reuters) - Lactalis, the world's largest dairy company, said the Iran war had blocked shipments, delayed sales and would lead to higher consumer prices as supply-chain disruptions drive up costs for energy, transport and packaging across its global operations.

The conflict has forced the group to reroute cargoes away from the Strait of Hormuz, a critical chokepoint for global trade, while some perishable shipments risk spoiling at sea, underscoring how the war is rippling through food supply chains and threatens to push up grocery bills for consumers worldwide.

Passing Costs to Consumers

"We'll need to pass these costs on to our clients. This will be the key issue in 2026," Lactalis Chairman Emmanuel Besnier said during the company's results presentation in Spain.

Cargoes Blocked Due to Iran War

CARGOES BLOCKED DUE TO IRAN WAR

The increase in prices of Lactalis' products, which include brands such as President, Galbani and Lactel, would be of "a few percents", Besnier said, but far below the 20%-25% rise it had passed on in 2022-2023 in the wake of the energy crisis after Russia's invasion of Ukraine.

World food prices hit a six-month high in March and were set to continue rising, the United Nations Food and Agriculture Organization said.

French Agriculture Minister Annie Genevard on Thursday called producers and retailers to discuss how to share extra costs.

Perishable Goods at Risk

Several cargoes carrying fresh Lactalis products such as butter and cream were blocked at sea or in ports due to the near closure of the Strait of Hormuz and risk being lost if expiry dates are exceeded, Besnier told Reuters.

Lactalis, the world's ninth-largest food group, is trying to divert shipments but faces a spike in demand for alternative transport and a surge in maritime rates, he said.

Expansion and Financial Performance

U.S. and Asian Expansion

U.S., ASIAN EXPANSION

The family-owned company's revenue reached 31.2 billion euros ($35.30 billion) in 2025, up 2.9% from 2024, while net profit rose to 528 million euros, or 1.7% of sales, from 359 million a year earlier.

Sales were negatively affected by the high rate of the euro, notably against the dollar and the Brazilian real.

Global Growth and Acquisitions

Founded in 1933, the group has grown into a global dairy powerhouse with operations spanning cheese, milk, yogurt, butter, cream and infant nutrition.

Lactalis purchased General Mills' yogurt business in the U.S. last year, including brands such as Yoplait, allowing it to become the third-largest player on the U.S. fresh dairy market. The Americas' sales topped 10 billion euros for the first time last year.

Earlier this month, Lactalis closed the acquisition of Fonterra's global consumer business for NZ$4.22 billion ($2.48 billion), which should enable it to double activities in Asia and Oceania.

Debt and Future Outlook

Acquisitions pushed debt to a three-year high of 6.3 billion euros in 2025 and will continue to weigh in 2026, limiting appetite for other takeovers in 2027, Besnier said.

($1 = 1.6987 New Zealand dollars)

(Reporting by Sybille de La Hamaide; Editing by Susan Fenton)