Growing pressure to prevent Americans from using federal food aid to buy certain processed or sugary products is creating a new challenge for some of the largest food and beverage companies in the United States.
The U.S. Department of Agriculture had approved food restriction waivers for Supplemental Nutrition Assistance Program benefits in May. in 23 states, affecting about a 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 their spending to approved products or reduce spending overall.
kroger CEO Greg Foran said on the company's first-quarter earnings conference call Thursday that customers remain under pressure in part due to reduced SNAP benefits, as well as higher gas prices, “squeezing budgets.”
“Customers manage their spending carefully and buy with real intention,” Foran said.
Most exemptions focus on limiting consumption of sugary drinks and confectionery, indicating a targeted approach rather than broad dietary restrictions. As the movement spreads, it is forcing major packaged food companies to monitor shopper behavior and evaluate whether they need to remake their product lines, although many of them have already been changing what they offer after consumer habits changed in recent years.
Iowa recently became the first state to codify elements of the “Make America Healthy Again” (MAHA) movement into law, passing legislation targeting artificial food dyes, ultra-processed foods in schools, and purchases made through SNAP.
“Taken together, this bill promotes 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 law helps “refocus federal food assistance programs on the real purpose for which they were created: helping low-income families acquire nutritious foods.”
Attendees are greeted with signs reading “Eat Real Food” as they gather for US Secretary of Health and Human Services (HHS) 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, on January 8, 2026.
Jonathan Ernst | Reuters
The law bans several synthetic dyes, including Red 40 and Yellow 5, in most vending machines and K-12 school meals, while restricting SNAP recipients from using benefits to purchase products such as soda and candy.
Navigating the MAHA era
Many food companies are not waiting to see how policies evolve.
At a Goldman Sachs conference in May, Hershey said it has researchers in Texas conducting in-store interviews with shoppers who receive SNAP benefits to understand how shopping behavior is changing under the new restrictions in the state.
“We've seen some consumer uncertainty at the checkout as new restrictions come into effect,” a Hershey spokesperson told CNBC. “We anticipate this will improve as in-store execution improves, rules become clearer, and SNAP users can plan and budget with greater certainty.”
The company is studying everything from product substitution to budget tradeoffs, offering an early look at how major food makers are preparing for a potentially significant shift in consumer demand.
Many of the products most exposed to change are produced by some of the largest companies in the industry such as kraft heinz, PepsiCo, Coca-cola, general mills, Be protected and others.
J.M. Smucker However, CEO Mark Smucker told CNBC he expects the SNAP policy changes to have a more moderate impact.
“I would say the current environment isn't really that different from what we've seen over time, and so far some of the modifications really haven't had a significant impact on our business,” he said.
Still, the company's Hostess products like Twinkies and Donettes (the latter saw 13% net sales growth last quarter, according to the company) may be affected by broader state restrictions on “highly processed snacks.”
Current SNAP waivers in states like Texas focus primarily on candy and sugary drinks, not cupcakes. However, some states have proposed broader definitions that could eventually encompass packaged desserts and sweet baked goods.
At the same time, fewer Americans even receive the benefits. One analysis estimates that 3.5 million people have lost their SNAP aid since President Donald Trump signed a sweeping bill last year that restricts eligibility for SNAP, among other changes.
Many American households have found it harder to pay for food following the changes. The restrictions have also meant fewer dollars flowing to big businesses.
Walmart is particularly exposed to SNAP spending, capturing about a quarter of all SNAP grocery dollars nationwide, according to Numerator. kroger, costco and Amazon They follow with around 8%, 6% and 5%, respectively.
Restrictions on what consumers can buy with federal assistance are just one change food companies are watching.
At a Senate Health, Education, Labor and Pensions Committee hearing in April, Health and Human Services Secretary Robert F. Kennedy Jr. went so far as to say he would “support” a ban on television advertising for junk food. The department has not yet taken steps to introduce such a ban.
In response to both Kennedy's MAHA initiative and changing consumer tastes, food manufacturers have also accelerated efforts to reformulate products and reduce synthetic 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 committed to eliminating certain artificial colors and additives by 2027 or sooner.
Nestlé announced Monday that it was on time on its commitment to completely eliminate food coloring, drugs and cosmetics from its food and beverage portfolio in the United States.
