Millions of low-income Americans are facing tighter restrictions on what they can purchase with federal food assistance, a shift that threatens to further strain household budgets already squeezed by reduced benefits and rising costs. The U.S. Department of Agriculture had approved food restriction waivers for Supplemental Nutrition Assistance Program benefits in 23 states as of last month, affecting roughly one-third of all SNAP participants, according to Numerator.
The research firm estimates the restrictions could reduce food and beverage sales by as much as $830 million this year as consumers either shift spending to approved products or cut back overall. The changes come as 3.5 million people have already lost their SNAP aid since President Donald Trump last year signed a sweeping bill that restricts eligibility for SNAP, among other changes. Many U.S. households have found it harder to pay for groceries following the changes.
Families Under Pressure
Kroger CEO Greg Foran said on the company's first-quarter earnings call 3 days ago that customers remain under pressure in part due to reduced SNAP benefits, as well as higher gas prices, "squeezing budgets." "Customers are managing spend carefully and shopping with real intent," Foran said. Most waivers focus on limiting consumption of sugar-sweetened beverages and confectionery products, signaling a targeted approach rather than broad food restrictions.
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 dyes, ultra-processed foods in school and purchases made through SNAP. "Altogether, this bill advances the health and wellness for every Iowan today and for generations to come," said Iowa Gov. Kim Reynolds when she signed the measure last month. She added the law helps "refocus federal food assistance programs on the actual purpose for which they were created: helping low-income families afford nutritious food." The law bans several synthetic dyes, including Red 40 and Yellow 5, from most K-12 school meals and vending machines, while also restricting SNAP recipients from using benefits to buy products such as soda and candy.
Retailers and Food Companies Respond
At a Goldman Sachs conference last month, Hershey said it has researchers in Texas conducting in-store interviews with shoppers who receive SNAP benefits to understand how purchasing behavior is shifting under new restrictions in the state. "We've observed some consumer uncertainty at the register as new restrictions take effect," a Hershey spokesperson told CNBC. "We anticipate this will improve as store execution improves, rules become clearer, and SNAP users can plan and budget with more certainty." The company is studying everything from product substitutions to budget tradeoffs, offering an early glimpse into how major food manufacturers are preparing for a potentially significant shift in consumer demand.
Many of the products most exposed to the changes are produced by some of the largest companies in the industry like Kraft Heinz, PepsiCo, Coca-Cola, General Mills, Nestle and others. J.M. Smucker CEO Mark Smucker, however, told CNBC he expects the SNAP policy changes to have a more muted impact. "I would say the current environment isn't really that different than what we've seen over time, and thus far some of the modifications have really had no meaningful impact to 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 latest quarter, according to the company — may be impacted under broader state restrictions on "highly processed snacks." Current SNAP waivers in states like Texas focus primarily on candy and sugary drinks, not snack cakes. However, some states have proposed broader definitions that could eventually encompass packaged desserts and sweet baked goods.
Impact on Major Retailers
The restrictions have also meant fewer dollars flowing to major businesses. Walmart is particularly exposed to SNAP spending, capturing roughly a quarter of all SNAP grocery dollars nationwide, according to Numerator. Kroger, Costco and Amazon follow at about 8%, 6% and 5%, respectively.
The curbs on what consumers can buy with federal assistance are only one shift food companies are watching. At a hearing of the Senate Committee on Health, Education, Labor and Pensions 2 months ago, Health and Human Services Secretary Robert F. Kennedy Jr. went as far as to say he "would support" a ban on junk-food television advertising. The department has not yet taken steps to introduce such a ban.
Responding both to Kennedy's MAHA initiative and shifting consumer tastes, food manufacturers have also accelerated efforts to reformulate products and reduce synthetic ingredients in products like Kool-Aid, Fanta, Doritos and Flamin' Hot Cheetos, which contain dyes like Red 40 and Yellow 5. General Mills, Kraft Heinz and Target have all pledged to phase out certain artificial colors and additives by 2027 or sooner. Nestle announced 6 days ago it achieved its commitment on time to fully eliminate Food, Drug & Cosmetic colors from its U.S. food and beverage portfolio.
Why This Matters:
The dual pressures of restricted SNAP eligibility and new purchasing limitations are creating a compounding burden on low-income families already struggling with elevated food costs and economic uncertainty. With 3.5 million people cut from the program and one-third of remaining participants now facing restrictions on what they can buy, the safety net designed to prevent hunger is becoming harder to access and more restrictive to use. While public health goals around nutrition are important, the immediate impact falls on families managing tight budgets who now face additional complexity and potential stigma at checkout counters. The $830 million reduction in purchasing power represents not just a challenge for food companies, but a real constraint on household food security. How states balance nutrition policy with ensuring adequate access to affordable food will shape both the effectiveness of SNAP as an anti-hunger program and the economic stability of millions of American families navigating an already difficult cost-of-living environment.