The growing push to ban Americans from using federal food aid to buy certain processed or sugary products is posing a new challenge to some of the largest U.S. food and beverage companies.
The U.S. Department of Agriculture approved exemptions from food restrictions 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 either shift spending to approved products or cut back altogether.
Hook CEO Greg Foran said on Thursday’s first-quarter earnings call that customers continue to face pressure, in part due to reduced SNAP benefits as well as higher gas prices that are “stressing budgets.”
“Customers are careful with their spending and shop with genuine intention,” Foran said.
Most exemptions focus on limiting consumption of sugar-sweetened drinks and confectionery, signaling a targeted approach rather than blanket food restrictions. As the movement spreads, major packaged food makers are being forced to monitor shopper behavior and assess whether they need to revamp their product lines – even though many of them have already changed their offerings as consumer habits have shifted in recent years.
Iowa recently became the first state to adopt elements of the Make America Healthy Again (MAHA) movement into law, passing laws targeting artificial food dyes, highly processed foods in school, and purchases made through SNAP.
“Overall, this bill advances the health and well-being 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 “focus federal food assistance programs on the true purpose for which they were created: helping low-income families afford nutritious food.”
Attendees are greeted with “Eat Real Food” posters as they gather for U.S. Secretary of Health Robert F. Kennedy Jr. and Secretary of Agriculture Brooke Rollins to announce new dietary guidelines at the Department of Health and Human Services in Washington, DC, USA, January 8, 2026.
Jonathan Ernst | Reuters
The law bans several synthetic dyes, including Red 40 and Yellow 5, from most K-12 school meals and vending machines, while also preventing SNAP recipients from using the benefits to purchase products such as soda and candy.
Navigating the MAHA era
Many food companies are not waiting to see how the guidelines evolve.
At a Goldman Sachs conference in May Hershey said researchers in Texas are conducting in-store interviews with shoppers who receive SNAP benefits to understand how purchasing behavior is changing under the state’s new restrictions.
“We have observed some consumer uncertainty at checkout as new restrictions take effect,” a Hershey spokesperson told CNBC. “We expect this will improve as business operations improve, rules become clearer, and SNAP users can plan and budget more confidently.”
Examining everything from product substitutions to budget tradeoffs, the company offers 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 manufactured by some of the largest companies in the industry Kraft Heinz, PepsiCo, Coca Cola, General Mills, Nestle and other.
JM Smucker However, CEO Mark Smucker 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 from what we’ve seen over time, and so far some of the changes really haven’t had a significant impact on our business,” he said.
Still, the company’s Hostess products such as Twinkies and Donettes – the latter of which posted net sales growth of 13% in the most recent quarter, according to the company – could be affected by broader government restrictions on “highly processed snacks.”
Current SNAP exemptions in states like Texas focus primarily on candy and sugary drinks, not snack cakes. However, some states have proposed broader definitions that could ultimately include packaged desserts and sweet baked goods.
At the same time, fewer Americans are receiving the benefits at all. According to one analysis, 3.5 million people have lost their SNAP assistance since President Donald Trump signed a sweeping law last year that, among other things, limits eligibility for SNAP.
Many U.S. households found it more difficult to pay for groceries following the changes. The restrictions have also resulted in fewer dollars flowing to large companies.
Walmart is particularly exposed to SNAP spending, accounting for about a quarter of all SNAP food dollars nationwide, according to Numerator. Kröger, Costco And Amazon follow at around 8%, 6% and 5% respectively.
Limits on what consumers can buy with government support are just one shift that 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. even went so far as to say he would “support” a ban on junk food television advertising. The ministry has not yet taken any steps to introduce such a ban.
In response to Kennedy’s MAHA initiative and changing consumer tastes, food manufacturers have also accelerated their 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 all committed to phasing out certain artificial colors and additives by 2027 or sooner.
Nestle said Monday that it has made timely progress on its commitment to completely eliminate food, drug and cosmetic dyes from its U.S. food and beverage portfolio.
Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.