The growing push to prevent Americans from using federal food aid to buy certain processed or sugary products is creating a new challenge for some of America’s largest food and beverage companies.
In May, the U.S. Department of Agriculture approved waivers of dietary restrictions for Supplemental Nutrition Assistance Program benefits. 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 toward approved products or cut back overall.
Kroger CEO Greg Foran said Thursday during the company’s first-quarter earnings conference call that customers remain under pressure in part because of reduced SNAP benefits, as well as rising gasoline prices, “squeezing budgets.”
“Customers are managing their spending carefully and buying with real intention,” Foran said.
Most exemptions focus on limiting the consumption of sugary drinks and confectionery products, signaling a targeted approach rather than broad dietary restrictions. As the movement spreads, it’s forcing large packaged food companies to monitor buyer behavior and evaluate whether they need to rethink their product lines — even though many have already changed their offerings after consumer habits have shifted in recent years.
Iowa recently became the first state to codify elements of the “Make America Healthy Again,” or MAHA, movement into law, approving legislation that targets artificial food coloring, ultra-processed foods in schools and purchases made through SNAP.
“Overall, this bill advances 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.
She added that the law helps “refocus federal food assistance programs on the real purpose for which they were created: helping low-income families afford nutritious food.”
Attendees are greeted with “Eat Real Food” signs as they gather for U.S. 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, U.S., January 8, 2026.
Jonathan Ernst | Reuters
The law bans several synthetic dyes, including Red 40 and Yellow 5, in most K-12 school lunches and vending machines, while prohibiting SNAP recipients from using their benefits to purchase products such as soda and candy.
Navigating the MAHA Era
Many food companies aren’t waiting to see how policies evolve.
At a Goldman Sachs conference in May, Hershey said Texas researchers are conducting in-store interviews with shoppers who receive SNAP benefits to understand how shopping behavior is changing under the state’s new restrictions.
“We have observed some consumer uncertainty at the register as new restrictions take effect,” a Hershey spokesperson told CNBC. “We expect this to improve as in-store fulfillment improves, the rules become clearer, and SNAP users can plan and budget with more certainty.”
The company studies everything from product substitutions to budget trade-offs, offering a first look at how major food manufacturers are preparing for a potentially significant shift in consumer demand.
Many of the products most exposed to change are made by some of the biggest companies in the industry, like Kraft-Heinz, PepsiCo, Coca-Cola, General mills, Nestle and others.
JM Smucker CEO Mark Smucker told CNBC, however, that he expects the SNAP policy changes to have a more muted impact.
“I would say the current environment isn’t really any different than what we’ve experienced over time, and so far some of the changes really haven’t had any significant impact on our business,” he said.
Still, the company’s hostess products like Twinkies and Donettes — the latter of which saw net sales increase 13% in the most recent quarter, according to the company — could 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 cake. However, some states have proposed broader definitions that could ultimately encompass packaged desserts and sweet baked goods.
At the same time, fewer Americans benefit from it. One analysis estimates that 3.5 million people have lost their SNAP assistance since President Donald Trump signed a sweeping bill last year that restricts SNAP eligibility, among other changes.
Many American households found it more difficult to pay for their groceries following the changes. The restrictions have also led to fewer money flows 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 follow at approximately 8%, 6% and 5%, respectively.
Restrictions on what consumers can buy with federal aid are just one change food companies are seeing.
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 junk food television advertising. The ministry has not yet taken steps to introduce such a ban.
Responding to both Kennedy’s MAHA initiative and changing consumer tastes, food manufacturers have also accelerated efforts to reformulate their products and reduce synthetic ingredients in products like Kool-Aid, Fanta, Doritos and Flamin’ Hot Cheetos, which contain colors like Red 40 and Yellow 5.
General Mills, Kraft Heinz and Target have all committed to phasing out certain artificial colors and additives by 2027 or sooner.
Nestlé announced Monday that it has met its commitment to completely eliminate food, pharmaceutical and cosmetic colors from its food and beverage portfolio in the United States on time.