Efforts to restrict Americans from using federal food aid to purchase certain processed and sugar-containing products are creating new challenges for some of the country’s largest food and beverage companies.
As of May, the U.S. Department of Agriculture had approved dietary restriction waivers 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 reduce spending overall.
kroger Chief Executive Officer Greg Foran said on the company’s first-quarter earnings call Thursday that customers continue to be under pressure, including “budgets being squeezed” by reduced SNAP benefits and rising gas prices.
“Customers are managing their spending carefully and shopping with real intent,” Foran said.
Most of the exemptions focus on restricting the consumption of sugar-sweetened beverages and confectionery products, indicating a targeted approach rather than broad food restrictions. As the movement grows, large packaged food companies are being forced to monitor shopper behavior and assess whether they need to reinvent their product lines, and many have already changed their offerings in response to changes in consumer habits in recent years.
Iowa recently became the first state to codify elements of the Make America Healthy Again (MAHA) movement into law, approving a bill targeting artificial colors, ultra-processed foods in schools, and purchases through SNAP.
“Overall, this bill will promote health for all Iowans today and for generations to come,” Iowa Gov. Kim Reynolds said when she signed the bill last month.
He added that the legislation would help “refocus federal food assistance programs on the actual purpose for which they were created: helping low-income families obtain nutritious food.”
“Eat Real Food” placards greet attendees as they gather for U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. and Secretary of Agriculture Brooke Rollins to announce new nutrition policy at the Department of Health and Human Services in Washington, DC, on January 8, 2026.
Jonathan Ernst | Reuters
The law bans several synthetic dyes, including Red 40 and Yellow 5, from most K-12 school lunches and vending machines, and also restricts SNAP recipients from using their benefits to buy products like soda and candy.
Survive the MAHA era
Many food companies are not waiting to see how policy evolves.
At the Goldman Sachs conference in May, hershey Researchers in Texas announced they are conducting in-store interviews with shoppers receiving SNAP benefits to understand how their shopping behavior is changing under the state’s new restrictions.
A Hershey spokesperson told CNBC, “As new regulations go into effect, we see consumers feeling anxious at the checkout line.” “We expect this situation to improve as store operations improve, rules become clearer, and SNAP users can plan and budget more confidently.”
The company studies everything from product substitutions to budget tradeoffs, offering an early glimpse into how major food manufacturers are preparing for potentially major shifts in consumer demand.
Many of the products most exposed to change are manufactured by the largest companies in their industries, including: Kraft Heinz, pepsico, coca cola, general mills, nestle And others.
JM Smucker But CEO Mark Smucker told CNBC he expects the impact of the SNAP policy changes to be more modest.
“I would say the current environment is not all that different from what we’ve seen in the past. So far, some of the changes haven’t really had a meaningful impact on our business,” he said.
Still, the company said Hostess products such as Twinkies and Donettes (the latter of which saw net sales increase 13% in the latest quarter, according to the company) could be affected by broader state regulations on “highly processed snacks.”
Current SNAP exemptions in states such as Texas primarily focus on candy and sugary drinks rather than snack cakes. But some states are proposing broader definitions that could eventually include packaged desserts and sweet baked goods.
At the same time, fewer Americans are reaping the benefits. One analysis estimates that 3.5 million people have lost their SNAP subsidies since President Donald Trump signed sweeping legislation last year that limited SNAP eligibility.
As a result of this change, many U.S. households are finding it harder to pay for groceries. This restriction also means that less money will flow to major companies.
walmart They’re especially affected by SNAP spending, which accounts for about a quarter of the national SNAP grocery value, according to Numerator. kroger, costco and Amazon Below, they are approximately 8%, 6%, and 5%, respectively.
Restrictions on what consumers can buy with federal aid are just one of the changes food companies are taking note of.
At a Senate Health, Education, Labor, and Pensions Committee hearing in April, Secretary of Health and Human Services Robert F. Kennedy Jr. even said he “supports” banning junk food television advertising. The ministry has not yet taken steps to introduce such a ban.
In response to both President Kennedy’s MAHA initiative and changing consumer preferences, food manufacturers are also accelerating efforts to reformulate products and reduce synthetic ingredients in products such as Kool-Aid, Fanta, Doritos, and Flamin’ Hot Cheetos, including dyes such as Red 40 and Yellow 5.
General Mills, Kraft Heinz, and Target have all pledged to phase out certain artificial colors and additives by 2027.
Nestlé announced on Monday that it had delivered on time on its promise to completely eliminate food, drug and cosmetic colors from its U.S. food and beverage portfolio.
