MAHA SNAP restrictions on fast food may change spending

Growing pressure to restrict Americans’ use of 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.

As of May, the USDA approved dietary restriction waivers for Supplemental Nutrition Assistance Program benefits In 23 states, affecting nearly 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 either shift spending to approved products or reduce spending overall.

Kroger Customers remain under pressure in part due to declining SNAP benefits, as well as rising gas prices, which is “stressing budgets,” CEO Greg Foran said on the company’s first-quarter earnings call Thursday.

“Customers manage spending carefully and shop with real intention,” Foran said.

Most exemptions focus on limiting consumption of sugar-sweetened beverages and confectionery products, suggesting a targeted approach rather than broad dietary restrictions. As the movement spreads, it is forcing major packaged food companies to monitor shoppers’ behavior and assess whether they need to reshape product lines — even though many have already changed what they offer as consumer habits have changed 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 targeting artificial food dyes, ultra-processed foods in schools and purchases made through SNAP.

“Overall, this bill advances the health and wellness of every Iowan 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 actual purpose for which they were created: helping low-income families afford nutritious food.”

The law bans several artificial dyes, including Red 40 and Yellow 5, in most K-12 school lunches and school vending machines, while also restricting SNAP recipients from using benefits to buy products like soda and candy.

Many food companies are not waiting to see how policies develop.

And at the Goldman Sachs conference last May. Hershey She said she has researchers in Texas conducting in-store interviews with shoppers who receive SNAP benefits to understand how purchasing behavior has changed under new restrictions in the state.

“We have noticed some consumer uncertainty at the register as the new restrictions go into effect,” a Hershey spokesperson told CNBC. “We expect this to improve as store implementation improves, rules become clearer, and SNAP users can plan and budget with more certainty.”

The company examines everything from product substitutions to budget trade-offs, offering an early glimpse into how major food manufacturers are preparing for a potentially major shift in consumer demand.

Many of the products most exposed to changes are produced by some of the largest companies in the industry e.g Kraft Heinz, PepsiCo, coca cola, General Mills, Nestle And others.

J.M. Smoker However, CEO Mark Smucker told CNBC he expects the SNAP policy changes to have a more subdued impact.

“I would say the current environment is really no different from what we’ve seen over time, and so far some of the adjustments haven’t had any measurable impact on our business,” he said.

However, the company’s Hostess products like Twinkies and Donettes — the latter of which saw net sales grow 13% last quarter, according to the company — may be affected by broader government restrictions on “ultra-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 include packaged desserts and sweet baked goods.

At the same time, fewer Americans are receiving these benefits. One analysis estimates that 3.5 million people have lost their SNAP benefits since President Donald Trump last year signed a sweeping bill restricting SNAP eligibility, among other changes.

Many American families have found it difficult to pay for groceries after the changes. The restrictions also mean less money flowing to larger companies.

Walmart SNAP spending is particularly exposed, accounting for nearly a quarter of all SNAP grocery dollars nationwide, according to Numerator. kroger, Costco and Amazon followed by about 8%, 6% and 5% respectively.

Limits on what consumers can buy with federal aid is just one shift 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 TV advertising for fast food. The administration has not yet taken steps to impose such a ban.

In response to Kennedy’s MAHA initiative and changing consumer tastes, food manufacturers have also accelerated efforts to reformulate products and reduce artificial 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 pledged to phase out some artificial colors and additives by 2027 or sooner.

Nestlé announced Monday that it has met its on-time commitment to completely remove food, drug and cosmetic colors from its food and beverage portfolio in the United States.