The growing push to limit Americans from using government food assistance to buy certain processed or sugary products is creating a new challenge for some of the largest US food and beverage companies.
The US Department of Agriculture as of May had approved a waiver of food restrictions for Supplemental Nutrition Assistance Program benefits. in 23 states, affecting about one-third of all SNAP participants, according to Numerator. The research firm estimates that the restrictions could reduce food and beverage sales by up to $830 million this year as consumers shift spending to approved products or cut back altogether.
Kroger CEO Greg Foran said on the company’s first-quarter earnings call Thursday that customers remain under pressure in part because of reduced SNAP benefits, as well as higher gas prices, which are “putting pressure on budgets.”
“Customers are managing money carefully and shopping with a real purpose,” Foran said.
Most waivers focus on reducing the consumption of sugary drinks and confectionery products, indicating a targeted approach rather than broad dietary restrictions. As the movement spreads, it forces large packaged food companies to monitor consumer behavior and assess whether they need to redo their product lines – although many of them are already changing what they offer after changing consumer habits in recent years.
Iowa recently became the first state to incorporate components of “Make America Healthy Again,” or MAHA, into law, passing legislation targeting artificial food dyes, highly processed school foods and SNAP purchases.
“Overall, this bill improves the health and well-being of all Iowans today and for generations to come,” Iowa Gov. Kim Reynolds said when she signed the measure last month.
He added that the legislation helps “refocus federal food assistance programs on the true purpose they were created for: helping low-income families afford nutritious food.”
Attendees were greeted with “Eat Real Food” signs as they gathered for US Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr. and Secretary of Agriculture Brooke Rollins to announce new nutrition policies at the Department of Health and Human Services in Washington, DC, US, January 8, 2026.
Jonathan Ernst Reuters
The law bans several artificial dyes, including Red 40 and Yellow 5, from most K-12 school meals and vending machines, while also preventing SNAP recipients from using the benefits to buy products like soda and candy.
Navigating the MAHA era
Many food companies are not waiting to see how policies change.
At Goldman Sachs’ conference in May, Hershey said it has researchers in Texas conducting in-store interviews with consumers receiving SNAP benefits to understand how shopping behavior is changing under the state’s new restrictions.
“We’ve seen some consumer uncertainty at the register as the new restrictions go into effect,” a Hershey spokesperson told CNBC. “We expect this to improve as store usage improves, rules become clearer, and SNAP users can plan and budget with more confidence.”
The company studies everything from product changes to budget trade-offs, giving an early look at how major food manufacturers are preparing for a potential big shift in consumer demand.
Many of the products most exposed to the changes are produced by some of the biggest companies in the industry such as Kraft Heinz, PepsiCo, Coca-Cola, General Mills, Nestle and others.
JM Smucker CEO Mark Smucker, however, told CNBC that he expects the SNAP policy changes to have a more muted impact.
“I would say that the current situation is not that different from what we have seen over time, and so far some changes have not had a noticeable impact on our business,” he said.
Still, the company’s Hostess products like Twinkies and Donettes — the latter of which saw net sales grow 13% in the most recent quarter, according to the company — could be affected by the state’s broader restrictions on “highly processed snacks.”
The current SNAP waivers in states like Texas focus mostly on candy and sugary drinks, not snack cakes. However, some states have proposed broader definitions that could eventually include packaged desserts and sweet baked goods.
At the same time, fewer Americans are receiving benefits. Another analysis estimates that 3.5 million people have lost their SNAP assistance since President Donald Trump last year signed a bill restricting SNAP eligibility, among other changes.
Many American households have found it difficult to pay for groceries following the reforms. The restrictions also meant fewer dollars flowing to big businesses.
Walmart is particularly exposed to SNAP spending, which accounts for nearly a quarter of all SNAP grocery dollars nationwide, according to Numerator. Kroger, Costco again Amazon follow at about 8%, 6% and 5%, respectively.
Restrictions on what consumers can buy with government assistance are seen by food companies only.
At a hearing before the Senate Health, Education, Labor and Pensions Committee in April, Health and Human Services Secretary Robert F. Kennedy Jr. he even said he would “support” a ban on junk food television advertising. The ministry had not yet taken steps to introduce a similar ban.
In response to both Kennedy’s MAHA plan and changing consumer preferences, food manufacturers have also accelerated efforts to reformulate products and reduce artificial ingredients in products such as Kool-Aid, Fanta, Doritos and Flamin’ Hot Cheetos, which contain dyes such as Red 40 and Yellow 5.
General Mills, Kraft Heinz and Target have all committed to eliminating certain artificial colors and additives by 2027 or sooner.
Nestle announced on Monday that it has reached its time commitment to completely eliminate Food, Drug and Cosmetic colors from its US food and beverage portfolio.
