KANSAS CITY — A proposal by the Republican-controlled House Agriculture Committee to cut more than $290 million from the Supplemental Nutrition Assistance Program (SNAP) over the next decade through more stringent work restrictions, Thrifty Food Plan revisions and state cost sharing would reverberate throughout the food and beverage industry.
A research note published by Morgan Stanley shortly after the House legislative proposal was approved said it would be a “headwind” for packaged food and beverage manufacturers.
“For packaged foods, SNAP cuts and category restrictions present another volume headwind (albeit modest) to an industry that is already struggling with weak underlying demand,” Morgan Stanley said. “For beverages, we view SNAP benefit cuts and state restrictions on SNAP use for soda (and potentially energy drinks) as a manageable incremental headwind for corporate sales growth.”
Companies identified by Morgan Stanley as having a high level of exposure include Kraft Heinz Co. and Conagra Brands, Inc. The note said The Coca-Cola Co., Keurig Dr Pepper and Monster Beverage Co. are, “well positioned despite moderate incremental SNAP risk, with strong pricing power, market share gains and existing historical volume growth.”
SNAP began in 1939 as a pilot food stamp program but has greatly expanded since then. More than 42 million people currently receive benefits each month, equal to 12.6% of US residents in fiscal 2023, according to the Economic Research Service (ERS) of the US Department of Agriculture.
The ERS said SNAP is the largest nutrition assistance program in the United States and comprised about 68% of USDA’s nutrition assistance spending in fiscal 2023. In comparison, 9% of the current farm bill goes for crop insurance, 7% for commodity price loss coverage and 7% for conservation efforts. SNAP would account for 81% of the total projected $1.4 trillion cost of the farm bill extension, according to the Congressional Research Service.
While monthly SNAP benefits vary widely from state to state, the national average maximum monthly benefit in fiscal 2025 for a single-person household is $292 and $975 for a four-person household. The average benefit is about $6 per day, or about $180 per month.
Impacts on CPG companies, retailers
Consumer packaged goods (CPG) companies and retailers that rely on SNAP recipients to buy their products and shop in their stores are watching the proceedings closely.
Walmart, for example, faces significant exposure. Ninety-four percent of SNAP shoppers bought groceries at Walmart in the 12 months ended July 31, 2024, and the retailer had captured 25.8% of the group’s annual grocery spend during that period, according to data from Numerator.
Low-price retailers, such as 7-Eleven, Dollar General, Dollar Tree and Winco Foods, drew about twice as much share from SNAP shoppers than non-SNAP ones, Numerator found.
Kraft Heinz reported headwinds from pandemic-related SNAP emergency funding cutbacks had affected the company's first-quarter earnings in 2024, including in its mac and cheese business. Source: ©SHEILAF2002 – STOCK.ADOBE.COM
Some CPG companies already have felt financial impacts from SNAP reductions, and others are anticipating doing so in the future. One example is Kraft Heinz Co., Chicago, which said headwinds from pandemic-related SNAP emergency funding cutbacks had affected the company’s first-quarter earnings in 2024, including in its mac and cheese business.
Andre Maciel, global chief financial officer, said at the time Kraft Heinz expected those headwinds to “begin to dissipate in the second quarter” of 2024. The company subsequently missed its top-line targets for fiscal 2024 and was consequently rethinking its pricing strategy.
NielsenIQ (NIQ) research found those previous SNAP cutbacks, which occurred in February 2023, caused “a ripple effect across stores,” said Chris Costagli, vice president and food insights lead for the Chicago-based market research firm. He said SNAP households pulled back 6.1% on overall spending and 2.4% on food and beverage spending for the period of March 5, 2023, through July 22, 2023, compared to the prior year.
Flowers Foods CEO Ryals McMullian said in March the role current economic factors play in pressuring consumers needs closer attention from the CPG industry.
“There are potential reductions in SNAP that would hit about 40 million people,” he said during a panel discussion at the annual meeting of the American Bakers Association. “That’s a big, big deal in our category, frankly across all food.”
CPG-related trade associations also are weighing in on the importance of SNAP and the impact proposed cuts may have.
“The Supplemental Nutrition Assistance Program is essential to providing food and beverage access to families during temporary times of hardship,” said John Hewitt, senior vice president of state affairs for the Consumer Brands Association. “The makers of America’s food and beverage products are committed to preserving consumer choice and maintaining access to safe, affordable and convenient brands and products for all Americans.”
Restricting SNAP purchases
That access may change due to changing SNAP policies. At least 11 states have requested waivers from the federal government to restrict SNAP beneficiaries from purchasing soda, candy and other products perceived as junk food.
Secretary of Agriculture Brooke Rollins is expected to approve the waivers, the first of which was granted to Nebraska.
“There’s absolutely zero reason for taxpayers to be subsidizing purchases of soda and energy drinks,” said Nebraska Governor Jim Pillen. “SNAP is about helping families in need get healthy food into their diets, but there’s nothing nutritious about the junk we’re removing with today’s waiver. I’m grateful to have worked with Secretary Rollins and the Trump administration to get this effort across the finish line. It is a tremendous step toward improving the health and well-being of our state. We have to act because we can’t keep letting Nebraskans starve in the midst of plenty,”
Secretary of Health and Human Services Robert Kennedy Jr. recently said he’s working with 24 states to remove sugary soft drinks from the list of approved SNAP purchases as part of his “make America healthy again” initiative. Sugary sodas are one of the top items purchased by both SNAP shoppers and non-SNAP shoppers, according to a 2016 USDA report.
The American Beverage Association (ABA) took exception to Arkansas' waiver request and said it doesn’t make sense to restrict SNAP purchases of soda and candy while buying a wide array of desserts, snack cakes and treats remain approved.
“Restricting products — like soda — from SNAP won’t make anyone healthier or save $1 in taxpayer spending, whether SNAP costs today or health costs tomorrow,” the ABA said. “Instead, restrictions will only grow government bureaucracy and costs while creating a slippery slope to government deciding ‘good’ and ‘bad’ foods.”
Secretary of Agriculture Brooke Rollins granted a waiver that allows Nebraska to restrict SNAP beneficiaries from purchasing soda, candy and other products perceived as junk food. Source: ©12EE12 - STOCK.ADOBE.COM
While nutrition and public health groups generally support limiting soda and candy consumption, not all favor the approach with SNAP policies. Some say it would be ineffective because most SNAP shoppers typically augment their monthly benefit with cash, while other groups believe SNAP needs more extensive improvement.
The Academy of Nutrition and Dietetics said while improving dietary quality within SNAP is a shared objective, “imposing restrictions without addressing broader systemic barriers is unlikely to achieve meaningful public health improvements and may harm the individuals the program is designed to support.”
Instead, the group supports a “comprehensive approach that includes increasing access to affordable, nutritious foods and investing in robust nutrition education initiatives.”
Increasing work requirements
Besides efforts to restrict certain products beneficiaries may purchase under SNAP, there may be efforts to expand work requirements. Able-bodied adults without dependents between the ages of 16-59 are generally required to work 30 hours per week to receive SNAP benefits, although there are several exceptions.
House Agriculture Committee Chairman Glenn Thompson of Pennsylvania said April 8 that too many SNAP recipients are not working. He said SNAP’s safety net “has become a spider’s web, and too many of our most vulnerable Americans are trapped.”
However, a literature review of the work requirements published by the Brookings Institution found the number of those applying for SNAP drops and employment doesn’t increase.
Another issue of concern regarding SNAP is fraud. Jennifer Hatcher, chief public policy officer for FMI – The Food Industry Association, recently wrote that policymakers may reduce SNAP costs while preserving its “modest benefits” with efficiency improvements.
FMI said the state agency “error rate” on electronic benefit transfer card amounts “is historically high at roughly 12%, costing taxpayers more than $10 billion annually.”
FMI also highlighted organized criminal fraud in which card skimmers are used to steal card numbers and benefits from SNAP participants. This criminal activity may cost more than $1 billion per year, the group said.
Charting an uncertain future
While work on a new farm bill proceeds, food and beverage manufacturers, retail grocers and SNAP beneficiaries wait to see what will emerge. Many of the latter may not know about possible program changes that will directly affect them.
A February 2025 NIQ survey found “only around 62% of SNAP users were even aware that any changes were being talked about for 2025,” Costagli said.
He recently posted a statement on LinkedIn addressing the wide-ranging impact of proposed SNAP cuts:
“The rising cost of food and potential benefit cuts are putting immense pressure on families relying on SNAP, causing further financial strain and forcing difficult decisions about food and beverages.
“For manufacturers and retailers, this will create a ripple effect, impacting sales not only in food and beverages but across other departments in the store. We’ve seen this before when SNAP benefits were reduced, leading to declining sales across the store. It’s crucial to enhance support and communication for these households to help them navigate these challenging times.”
