States' SNAP limits put soda, candy and snack makers on alert
USDA-approved SNAP purchase limits now cover 23 states, prompting food companies and retailers to track how low-income shoppers adjust.
By Daniel Okafor · Business Editor
3 min read
New state restrictions on what shoppers can buy with SNAP benefits are putting pressure on food and beverage companies whose sales depend in part on low-income households. The U.S. Department of Agriculture had approved purchase-restriction waivers in 23 states as of May, covering about one-third of SNAP participants, according to research firm Numerator.
Numerator estimated that the rules could cut food and beverage sales by as much as $830 million this year if shoppers move to eligible items or spend less overall. CNBC reported that the approved waivers mainly target sugar-sweetened beverages and candy, rather than broad categories of groceries.
Kroger CEO Greg Foran said on the grocer’s first-quarter earnings call Thursday that customers remain financially strained, citing lower SNAP benefits and higher gas prices as factors “squeezing budgets.” He said shoppers are watching spending closely and buying with specific plans.
Food companies study shopper shifts
Large packaged-food companies are watching the restrictions because many of the affected products are sold by major brands. CNBC identified Hershey, PepsiCo, Coca-Cola, Kraft Heinz, General Mills and Nestle among the companies exposed to changes in demand for sweets, soda and processed foods.
Hershey said at a Goldman Sachs conference in May that it had researchers in Texas interviewing SNAP recipients in stores to learn how the rules are changing purchases. A Hershey spokesperson told CNBC the company had seen some confusion at checkout as restrictions began, and said that could ease as stores improve execution and shoppers understand the rules.
J.M. Smucker CEO Mark Smucker told CNBC he expects the current SNAP changes to have limited effect on the company. He said recent modifications had not had a meaningful impact on its business so far, though CNBC noted that broader state rules on highly processed snacks could affect products such as Hostess Twinkies and Donettes.
Iowa adds MAHA policies to law
Iowa recently enacted legislation tied to the “Make America Healthy Again” movement, according to CNBC. Gov. Kim Reynolds said when signing the bill last month that it would promote health and wellness in the state and refocus food aid on helping low-income families buy nutritious food.
The Iowa law bars several synthetic dyes, including Red 40 and Yellow 5, from most K-12 school meals and vending machines, according to CNBC. It also restricts SNAP purchases of products such as soda and candy.
Food makers are also responding to pressure over synthetic ingredients. CNBC reported that General Mills, Kraft Heinz and Target have pledged to remove certain artificial colors and additives by 2027 or earlier, while Nestle said Monday it had completed its plan to eliminate Food, Drug & Cosmetic colors from its U.S. food and beverage portfolio.
The policy shift comes as fewer Americans receive SNAP aid. CNBC cited an analysis estimating that 3.5 million people have lost benefits since President Donald Trump signed a broad bill last year that changed SNAP eligibility rules, among other provisions.
Retailers are exposed as well. Walmart captures about one-quarter of all SNAP grocery dollars in the U.S., while Kroger, Costco and Amazon account for about 8%, 6% and 5%, respectively, according to Numerator.
Federal health officials have signaled interest in additional limits on junk-food marketing. Health and Human Services Secretary Robert F. Kennedy Jr. told a Senate Health, Education, Labor and Pensions Committee hearing in April that he “would support” a ban on junk-food television ads, though CNBC reported that the department had not introduced such a proposal.
This story draws on original reporting from CNBC.