In this article, learn about:
How the 2026 SNAP reforms reshape supplier and retailer strategies
The financial and operational impacts of waivers
Data, compliance, and innovation opportunities to stay competitive
The Supplemental Nutrition Assistance Program (SNAP) has been a cornerstone of food access in the United States for over fifty years. Beyond helping families put food on the table, it has also driven billions of dollars in sales across grocery, convenience, and CPG industries. SNAP hasn't just been a social safety net—it has been a demand driver that shapes supplier strategies.
With the passing of the One Big Beautiful Bill (OBBB), we are seeing significant changes to the SNAP program (Sec.10101-10108). The legislation brings stricter work requirements, shifts benefit costs to states, and introduces food restriction waivers that could fundamentally reshape CPG performance.
For suppliers and retailers, this is more than just policy news. It’s a pivotal moment for the CPG industry—one that requires agility, foresight, and new approaches to protecting margins.
What is SNAP?
The program was introduced in 1961 by John F. Kennedy as a pilot program for a dual purpose. It combats hunger by providing qualifying individuals with benefits to purchase nutritious food and also ensures economic purchasing power within communities across the nation.
The program was in full swing by 1974 and over the decades, SNAP has become a powerful economic engine by:
Boosting local economies: Money spent on SNAP ripples outwards, supporting jobs, retail, agriculture, logistics and manufacturing.
Fueling supplier growth: SNAP households represent roughly 20% of CPG sales, making them a critical shopper segment.
Increasing retail activity: SNAP shoppers make 29% more trips to the supermarket than non-SNAP households, and they spend 11% more per trip and purchase a higher number of items.
Simply put, SNAP isn’t just about food access for those that need it—it’s about consumer demand across the entire supply chain.
Related Reading: What is Supply Chain Resilience?
SNAP Reforms in the OBBB
The OBBB represents substantial changes to SNAP benefits and those who receive them.
Changes for Qualifying Individuals
Key changes include raising the age limit for work requirements to age 65 and removing exemptions for veterans, homeless individuals, and former foster youth who have aged out of the system.
Cost Shifting to States
Starting in 2028, states will share in SNAP’s benefit costs. The contribution will be dependent on each states SNAP error rate:
States with error rate above 6% must pay at least 5% of total benefits
States with lower error rates will see smaller cuts
Some states may face budget strain severe enough to cut SNAP benefits, restrict eligibility or even end participation altogether
Administration Cost Increase
States will also face higher administrative burdens. More staff, more audits, and more oversight will be required to comply. The federal government has essentially handed states both new flexibility as well as new financial risks.
Related Reading: Trade Deductions and Chargebacks
Waivers
Perhaps the most notable change for suppliers and retailers is the roll out of the food restriction waivers. These allow states to limit the types of food and beverages that can be purchased with SNAP funds, in an effort to control error rates and funding.
Approved State Waivers
2026 rollout: Colorado, Florida, Louisiana, Oklahoma, Texas, and West Virginia
Earlier Approvals: Arkansas, Idaho, Indiana, Iowa, Nebraska, and Utah
Retailer Waivers
Retailers can also apply for flexibility through programs like the Healthy Incentives Waiver, which rewards purchases of healthier items.
Why it Matters
This system means SNAP eligibility will look different across each state. A soda SKU may qualify in Idaho but not in Texas. For suppliers with national distribution, this complicates forecasting, demand planning, and promotional execution.
What This Means for Retailers
Operations and compliance will need high priority considerations. For example, Point-of-Sale (POS) systems should flag restricted SKUs to ensure multi-layer compliance. Staff should be trained in new guidelines and with scripts to de-escalate tense situations. Audit readiness will also need to be considered as compliance checks are likely to increase.
Related Reading: What is a Stock Keeping Unit (SKU)?
Customer Experience
With these recent changes, retailers are wise to rethink in-store placements to minimize abandoned items and carts. Signage, apps, and cashier messaging should be communicated in a clear and un-biased manner to reduce customer friction as declined items may cause frustration.
Retailers that smooth the shopper experience in waiver states could gain loyalty—while those that do not risk losing foot traffic.
What This Means for Suppliers
SNAP households represent more than 20% of total CPG sales. They make 29% more trips than non-SNAP households and 11% spend more and buy more items per trip.
Category Risks
Direct Targets: soda, candy, sweetened beverages, and certain snacks.
Unsellable SKUs: Inventory risk rises in waiver states.
Write-offs: Without mitigation, margins will suffer.
Category Opportunities
Reformulation: lower sugar, smaller packs, or functional benefits could help maintain eligibility.
Better-For-You options: 100% juice, fortified foods, and whole grain snacks will gain share.
Innvoation: New product launches aligned with healthy initiatives may thrive.
Related Reading: Sourcing in the CPG Industry
Financial Impacts
Suppliers would be wise to adjust demand models in waiver states as well as using trade spend strategically to offset lost volume. Repurposing stock with bundles, promotions and donations might be beneficial.
Consumer Behavior to Watch
SNAP shoppers remain one of the most important segments for the CPG industry, but their behavior is already shifting—and the new reforms are likely to accelerate the trend. In recent years, SNAP households' contribution to retail food and beverage sales have dropped 2%. On top of this, retailers may begin to see smaller cart sizes, and fewer trips as SNAP shoppers face more limitations at checkout. For suppliers and retailers alike, the ability to monitor shifts on a state-by-state basis will become a competitive advantage.
Industry Collaborations
Fortunately, new doors are opening for collaboration. Suppliers and retailers can strengthen joint business planning by aligning assortments, promotions, and compliance efforts to ensure shoppers are still served well under these new rules.
Promotional creativity, such as bundled offers that pair healthier beverages with popular grab-and-go meals may help protect margins while still guiding shoppers toward approved categories.
At the same time, partnerships with food banks and non-profit organizations provide an outlet for unsellable SKUs, creating goodwill while reducing waste. Finally, trade groups, like the National Grocers Association, may play a significant role in shaping how waiver rules are implemented, providing a voice for suppliers and retailers while navigating the patchwork state-level changes.
Technology and Data
Adapting to these new changes will increasingly depend on how effectively suppliers and retailers track data. Real-time data tools will be essential for monitoring state-level waiver changes and ensuring compliance across diverse geographic locations. Demand and forecasting models will have to evolve to give suppliers the ability to adjust production and distribution plans quickly.
At the retail level, POS systems will need to be upgraded to track valuable data on shopping patterns. Electronic Benefit Transfer (EBT) systems will need to be updated to ensure federal and state compliance. This data can reveal which products shoppers turn to when restricted products are declined, which then helps retailers fine-tune assortments.
Companies that lean into analytics and data-driven decision-making will be better equipped to stay agile as SNAP reform shapes the marketplace.
Related Reading: Retail Data Explained
Ripple Effects
The 2025 SNAP reform is more than just policy adjustments. The changes represent a supply chain disruption with ripple effects across categories, channels, and shopper segments.
Suppliers should:
Prepare for sales declines in at-risk categories
Innovate and reformulate products
Rebuild assortments around state-level restrictions
Retailers should:
Update POS/EBT systems
Train staff and reduce shopper friction
Rebuild assortments around state-level restrictions
For both groups, the path forward is clear: stay agile, stay collaborative, and use data as a compass. SNAP reforms will test the industry’s resilience, but they also open doors for innovation, healthier options, and stronger supplier-retailer relationships.
This is a pivotal moment for the CPG industry and those who move quickly will be the ones who win.
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