SNAP Junk Food Bans: A Sector-Specific Risk and Opportunity Analysis for 2025

The expansion of state-level restrictions on Supplemental Nutrition Assistance Program (SNAP) benefits—banning purchases of soda, candy, and other “junk foods”—is reshaping the consumer goods landscape. With Nebraska and Arkansas leading the charge and a growing coalition of states poised to follow, this policy shift poses both risks and opportunities for investors. Here’s how to navigate the evolving terrain.

The Current Landscape: A Groundswell of Change

As of early 2025, Nebraska and Arkansas have implemented federal-approved SNAP restrictions, while Idaho, Iowa, Texas, and others are advancing legislative proposals. These bans target high-sugar beverages, candy, and “unhealthy” snacks, aligning with the “Make America Healthy Again” (MAHA) movement. Federal support under USDA Secretary Brooke Rollins has accelerated approvals, but critics argue the bans risk stigmatizing SNAP recipients and may fail to improve nutrition.

Implications for Consumer Goods Companies: Demand Shifts and Margin Pressures

The bans are creating dual dynamics:

1. Declining Demand for Junk Food: Soda and candy manufacturers face reduced SNAP-driven sales. For example, Coca-Cola (KO) and PepsiCo (PEP) derive significant revenue from mass-market beverage sales, including in SNAP-eligible households.

Both stocks have underperformed broader market indices over the past 12 months, reflecting investor concerns about policy risks.

1. Rising Costs for Retailers: Grocers like Walmart (WMT) and Kroger (KR) may incur higher compliance costs to enforce bans, squeezing margins. However, these chains could also benefit from increased sales of healthier, higher-margin private-label products.

Risk Assessment: The Vulnerable Sectors

• Soda and Candy Makers: Companies heavily reliant on mass-market snacks—such as Mars Inc. (non-public) or Mondelez International (MDLZ)—are exposed to declining demand.
• Discount Retailers: Dollar stores like Family Dollar (FDO) and Dollarama (DOL), which sell affordable junk food, may see reduced SNAP-driven sales.

Opportunities: Investing in Health-Conscious Trends

The bans are accelerating demand for healthier alternatives, creating openings for:
1. Producers of Nutritious Staples: Companies like General Mills (GIS) and Kellogg (K) could see growth in oatmeal, whole-grain cereals, and plant-based snacks.
2. Organic and Clean-Label Brands: Beyond Meat (BYND) and Danone (BN) (via its plant-based products) are positioned to capitalize on shifting consumer preferences.

BYND has surged amid investor optimism about protein alternatives, while GIS and K remain undervalued relative to their potential.

1. Incentive Program Partners: States expanding programs like Double Up Food Bucks (which subsidize produce purchases) may favor companies supplying fresh fruits and vegetables.

Key Stocks to Watch:

• Short Candidates: PEP, KO, MDLZ (exposed to declining junk food demand).
• Long Candidates: GIS, BYND, WMT (benefiting from health trends or operational adaptability).
• Wildcard: KR (Kroger)—its digital health initiatives and private-label expansion could mitigate margin pressures.

Conclusion: Act Now—The Tide Is Turning

The SNAP waiver movement is no fleeting trend. With MAHA-aligned policies gaining traction and federal support, investors must act swiftly to reposition portfolios.

• Short the vulnerable: Soda and candy stocks face structural headwinds.
• Buy the resilient: Companies offering affordable, nutritious alternatives—or retailers adapting to policy changes—will thrive.

The clock is ticking. As more states enact bans, the consumer goods sector will bifurcate sharply between winners and losers. Investors who act now can secure gains in this new era of food policy—and avoid the pitfalls of lagging behind.

The author holds no positions in the stocks mentioned. Always conduct independent research before making investment decisions.