PepsiCo’s Lobbying Efforts to Protect SNAP Eligibility
PepsiCo invested heavily in lobbying to maintain the eligibility of junk food items under SNAP. In the first half of 2025, the company spent nearly $2.8 million on internal lobbying, including efforts targeting SNAP purchasing restrictions. This was part of a broader industry push, with groups like the American Beverage Association (representing PepsiCo and others) more than doubling their spending to over $1.7 million in the same period. The aim was to preserve taxpayer-funded demand for sugary drinks, candy, and processed snacks in a program worth about $100 billion annually.
RFK Jr.’s Push and State-Level SNAP Restrictions
Under the “Make America Healthy Again” initiative, Health and Human Services Secretary Robert F. Kennedy Jr. worked with Agriculture Secretary Brooke Rollins to approve USDA waivers allowing states to restrict SNAP purchases of unhealthy items. This marked a significant policy shift to address obesity and chronic diseases by redirecting benefits toward more nutritious foods.
By early 2026, 18 states had implemented or were set to implement these restrictions, with varying scopes:
- Narrower rules in states like Utah and West Virginia focused on soda and soft drinks.
- Broader bans in places like Indiana (adding candy), Nebraska (including energy drinks), and Iowa (covering taxable prepared items alongside soda and candy).
The initial rollout began January 1, 2026, in Indiana, Iowa, Nebraska, Utah, and West Virginia, affecting millions of recipients. Additional states followed throughout the year, including Arkansas, Colorado, Florida, Hawaii, Idaho, Louisiana, Missouri, North Dakota, Oklahoma, South Carolina, Tennessee, Texas, and Virginia.
PepsiCo’s Rapid Price Cuts on Popular Snacks
Within weeks of the initial bans taking effect, PepsiCo announced price reductions of up to nearly 15% on key Frito-Lay brands, including Doritos, Lay’s, Cheetos, and Tostitos. The changes rolled out nationwide starting early February 2026, timed ahead of high-demand periods like the Super Bowl.
Examples included:
- An 8-ounce bag of Lay’s Classic dropping from $4.99 to $4.29 (nearly 15% reduction).
- An 8.5-ounce bag of Doritos falling from $6.29 to $5.49 (about 13% cut).
CEO statements attributed the move to “affordability” concerns and consumer feedback amid economic pressures, but the precise timing—closely following the SNAP changes—suggests a response to reduced subsidized demand.
SNAP’s Role in Junk Food Purchases
SNAP serves around 42 million Americans monthly, with federal spending nearing $100 billion yearly. Historical USDA data shows that sweetened beverages, desserts, salty snacks, candy, and sugar account for roughly 20 cents of every SNAP dollar spent—often the top categories, with soft drinks leading. Frito-Lay products appeared in about 7.2% of SNAP-funded shopping trips, representing a meaningful share of guaranteed revenue for PepsiCo.
When restrictions removed this artificial demand boost in affected states, companies faced pressure to compete more aggressively on price to maintain volume.
The Market Correction Without Heavy Regulation
The price drop happened organically: No direct price controls, no antitrust investigations, no mandates—just the removal of a subsidy that had inflated demand. Retailers and manufacturers adjusted quickly to retain customers shifting away from higher-priced options.
Parallels in Other Subsidized Industries
This pattern repeats across sectors where government guarantees create price inflation:
- Higher Education: Federal student aid and loans have driven tuition increases far beyond general inflation, with colleges capturing much of the added funding through hikes.
- Healthcare: Massive subsidies through Medicare, Medicaid, and insurance mandates contribute to elevated costs and reduced price sensitivity.
- Defense Contracting: Guaranteed government buyers lead to cost overruns and limited incentives for efficiency.
In each case, subsidies insulate providers from normal market discipline, raising prices and perpetuating dependency.
Potential Broader Impacts of Scaling Back Subsidies
If similar reforms expanded nationwide or to other programs, the effects could include:
- Lower consumer prices through restored competition.
- Taxpayer savings and redirected funds toward priorities like nutrition or efficiency.
- Incentives for innovation, such as healthier product reformulations.
- Short-term challenges for affected groups and industries, requiring thoughtful transitions.
The PepsiCo example shows how quickly markets can respond when subsidies vanish, offering a glimpse of what broader deregulation of demand-side supports might achieve.
The state-level SNAP restrictions approved under the “Make America Healthy Again” (MAHA) initiative represent a major shift in how the $100 billion program operates. Because each state has its own “waiver,” the definition of what constitutes “junk food” varies, creating a complex landscape for major brands like PepsiCo, Coca-Cola, and General Mills.
The following table summarizes the 18 states that have implemented or are scheduled to implement these bans in 2026, including the specific categories of products at risk.
SNAP Junk Food Restrictions by State (2026)
| State | Effective Date | Restricted Categories | Key Brands/Products “At Risk” |
| Iowa | Jan 1, 2026 | Strict: All state-taxable food items | Highest Risk: Most PepsiCo/Frito-Lay snacks, Hershey’s, Mars candy, all Soda/Energy drinks. |
| Indiana | Jan 1, 2026 | Soft drinks and Candy | Pepsi, Mountain Dew, Snickers, M&Ms, Skittles. |
| Utah | Jan 1, 2026 | Soft drinks | Pepsi, Coca-Cola, Sprite, Dr. Pepper. |
| Nebraska | Jan 1, 2026 | Soda and Energy drinks | Rockstar (PepsiCo), Monster, Red Bull, Gatorade (if sugary). |
| West Virginia | Jan 1, 2026 | Soda | All carbonated sweetened beverages. |
| Idaho | Feb 15, 2026 | Soda and Candy | All major soda brands; Reese’s, KitKat, Twizzlers. |
| Oklahoma | Feb 15, 2026 | Soft drinks and Candy | PepsiCo/Coca-Cola portfolio; major confectionary brands. |
| Louisiana | Feb 18, 2026 | Soft drinks, Energy drinks, Candy | Pepsi, Rockstar, Celsius, Prime Energy, Hershey’s. |
| Colorado | Apr 30, 2026 | Soft drinks (any <50% juice) | Pepsi, Tropicana (sugary blends), SunnyD, Snapple. |
| Texas | Apr 1, 2026 | Sweetened drinks and Candy | Massive market impact for Pepsi and Frito-Lay sweet snacks. |
| Virginia | Apr 1, 2026 | Sweetened beverages | Pepsi, Coke, flavored waters with sugar/artificial sweeteners. |
| Florida | Apr 20, 2026 | Soda, Energy drinks, Candy, Prepared desserts | PepsiCo brands; Hostess (Twinkies), Little Debbie, Nabisco cookies. |
| Arkansas | July 1, 2026 | Soda, Candy, Fruit drinks (<50% juice) | Caprisun, Hi-C, Ocean Spray (sugary blends), Pepsi. |
| Tennessee | July 31, 2026 | Processed foods, Soda, Energy drinks, Candy | High Risk: Frito-Lay chips (Doritos, Lay’s), Oreos, Gatorade. |
| Hawaii | Aug 1, 2026 | Soft drinks (>10g sugar/serving) | High-sugar Pepsi/Coke; excludes milk-based drinks. |
| South Carolina | Aug 31, 2026 | Soft drinks, Candy, Energy drinks | Pepsi, Rockstar, energy shots, chocolate bars. |
| North Dakota | Sept 1, 2026 | Soft drinks, Energy drinks, Candy | Broad impact on PepsiCo and General Mills snack lines. |
| Missouri | Oct 1, 2026 | Candy, Prepared desserts, Unhealthy drinks | Little Debbie, Keebler, Pepsi, Energy drinks. |
Analysis of Brands at Highest Risk
- PepsiCo (Frito-Lay & Beverages):
- The Threat: PepsiCo is uniquely exposed because it owns both the leading soda brands and the leading snack brands. Frito-Lay products (Doritos, Lay’s, Cheetos) appear in 7.2% of all SNAP shopping trips.
- The Reaction: The 15% price cut announced in February 2026 is a direct attempt to retain the “volume” lost in states like Iowa and Indiana, where SNAP recipients must now use their own cash for these items.
- Monster & Rockstar (Energy Drinks):
- The Threat: States like Louisiana and Florida have explicitly targeted energy drinks. Because these are often priced higher than standard soda, they are the first “luxury” items cut from a restricted budget.
- The “Taxable” Trap (Iowa Model):
- The Threat: Iowa has the “strictest ban in the nation” because it uses the state tax code. If an item is subject to sales tax, it is banned from SNAP. This captures a massive range of “middle-aisle” products, from packaged popcorn to fruit snacks.
- Prepared Desserts (Florida & Missouri):
- The Threat: Brands like Hostess and McKee Foods (Little Debbie) are at high risk in these states. Traditionally, these were eligible as “bread/bakery” items, but the new waivers specifically classify them as “unhealthy desserts.”
Why the Market “Corrected”
Retailers reported that in the first month of the Indiana and Iowa bans, sales of restricted items dropped significantly as SNAP users reached the checkout and realized their EBT card wouldn’t cover the chips or soda. To prevent these items from rotting on shelves, PepsiCo and others had no choice but to slash prices to make them “affordable” to the cash-paying consumer.