By Vera Dvorakova and Jesus Calero
Oct 22 (Reuters) – Essity is seeing greater weakness among the US restaurants it supplies than the European ones, the CEO of the Swedish hygiene products maker said on Thursday, as rising prices and a slowing jobs market put pressure on American household budgets.
“Consumers are not going out to restaurants as much as they do in Europe,” Ulrika Kolsrud told Reuters.
The trend is hitting Essity’s professional hygiene business, which sells products such as Tork paper towels to restaurants and other businesses, and generates 40% of its revenue in the US. The unit’s sales, volumes and prices all fell in the third quarter, and Essity also flagged higher costs of goods sold.
Kolsrud’s comments reflect the strain faced by US consumers, whose wages are struggling to keep pace with inflation while companies pull back on hiring.
US consumer prices rose 3.7% in September from a year earlier, outpacing average hourly wage growth of 3.0% over the past 12 months. Meanwhile, employers excluding farms added just 29,000 jobs during the month.
A Gallup survey published on Wednesday showed that only 39% of Americans ate at restaurants at least once a week, down from 53% in 2019.
Consumer goods companies have been walking a fine line between raising prices to offset higher input costs and protecting demand after several years of inflation-driven hikes.
Essity management said it was again raising prices across business areas to offset higher raw material and energy costs, having previously lowered them in some categories.
The pressure from higher prices is the sharpest at the lower end of the income scale. The latest Federal Reserve survey, covering 2022 to 2025, showed that income gains for the less well-off did little to build wealth, and net worth for the bottom fourth of households fell by more than 50%.
(Reporting by Vera Dvorakova and Jesus Calero in Gdansk; Editing by Milla Nissi-Prussak)
