There’s no question to the impact that taxes and regulation can have on the food and beverage industries. I recall in 2017 when a neighboring county enacted a sweetened beverage tax. Although it only lasted approximately four months, Cook County, Illinois, implemented a penny-per-ounce tax on both sugar-sweetened and artificially sweetened drinks.

As a follow-up to experiment the University of Illinois at Chicago School of Public Health published a study in 2020 in the Annal of Internal Medicine in which it found that purchases of taxed beverages decreased 21%. This is even after adjustments were made for cross-border shopping.

Although not a tax, newly enacted limitations seem to be showing a similar pattern. Beginning on Jan. 1, 2026, Indiana, Iowa, Nebraska, Utah and West Virginia enacted policy changes which make carbonated soft drinks (CSDs) ineligible for SNAP shoppers.

Ibotta, a performance marketing company that offers digital promotions to consumers, has noticed the shift in purchase patterns in these states.

“In states that removed SNAP eligibility for soda, we’re seeing a clear and immediate contraction in category demand among SNAP shoppers,” says Chris Riedy, chief revenue officer at Ibotta. “Soda purchase activity declined roughly twice as much in waiver states compared to states where eligibility remained unchanged (-15% vs. -7.5%), with an overall 18% greater decline in purchase in states that have implemented restrictions. Importantly, total grocery purchasing trends remained consistent across both groups, reinforcing that this drop is directly tied to the policy change — not broader shifts in consumer spending.”

Riedy highlights, however, that shopping behavior at a granular level shows that consumers are adapting versus disappearing.

“While overall soda purchases are down, there’s a notable shift toward larger pack sizes (12- and 24-count), suggesting that when shoppers do buy soda with out-of-pocket dollars, they are prioritizing lower cost-per-unit options,” he says.

Although it is early stages, consumers are embracing substitutes following the policy change.

“Most notably, powdered beverage mixes have experienced a measurable increase in purchase activity in affected states, outpacing growth in non-waiver states,” Riedy says. “This shift appears largely independent of promotional or seasonal drivers, indicating that shoppers are actively seeking SNAP-eligible alternatives rather than simply responding to discounts.”

Riedy also notes that the policy change is having an effect on non-beverage categories as adjacent snack categories such as snack bars and fruit snacks experienced increases. This “suggests a broader rebalancing of baskets toward eligible, shelf-stable, and perceived value-oriented items,” Riedy says. “Taken together, this points to a reallocation of spend rather than a simple reduction in consumption.”

The CSD market also is likely to see a greater impact as additional states sought SNAP Food Restriction Waivers. Idaho and Louisiana enacted waivers in February. Meanwhile,

Virginia, Florida and Texas have or will implement similar SNAP exclusions. In Viriginia, SNAP recipients no longer can purchase “sweetened beverages” with benefits. The change was set to take effect April 1, but reports from local news sources, including WRIC 8News, state the implementation will now take place in October. Texas has restricted purchases of sweetened drinks and candy with SNAP benefits. Beginning April 20, Florida SNAP recipients will no longer be able to use their benefits to purchase CSDs, energy drinks, candy or ultra-processed prepared desserts.

Riedy expects to see a similar pattern among consumer shopping once all these changes take effect.

“Texas, Florida and Virginia, where new restrictions are taking effect, rank among the top states for soda consumption (No. 2, No. 3, and No. 4, respectively),” he says. “That makes them disproportionately important to overall category volume. Given the consistency of behavior observed in the initial waiver states, combined with the scale of these markets, it’s reasonable to expect both a meaningful decline in SNAP-driven soda purchases and a broader ripple effect across adjacent categories as shoppers adjust.”

Although the short-term effects on the CSD market cannot be understated, the long-term effects could potentially reshape demand within the beverage market, Riedy notes.

“First, it introduces sustained pressure on traditional sweetened beverage categories that rely heavily on SNAP participation for volume,” he says. “As more states adopt similar waivers, these declines could compound into meaningful top-line impact. Second, it accelerates a shift toward value-oriented purchasing behavior. The rise in larger pack sizes and dollar-store channel growth suggests that price sensitivity will become an even more dominant force in category dynamics. 

“Finally, it may drive a gradual rebalancing toward SNAP-eligible or adjacent categories —whether that’s powdered beverages, juice alternatives or other formats that can meet similar consumption occasions at a lower effective cost,” he continues.

For beverage-makers operating in these categories, changes will need to be made to continue engagement with consumers. Riedy expects brands to respond across three key fronts: pricing, portfolio strategy and promotional intensity.

“Ibotta’s 2026 State of Spend report makes clear that this shift is already underway,” he says. “Today’s shopper is fundamentally more price-driven, with 62% prioritizing price over brand and increasingly willing to switch products, retailers, or formats to maximize value. This is reinforced by a broader move toward private label, deal-seeking behavior, and more flexible, less brand-loyal shopping patterns. Against that backdrop, SNAP eligibility changes are likely to accelerate trends that were already in motion.”

In terms of pricing and pack strategy, Riedy expects to see a continued push toward value-oriented formats such as larger pack sizes, reduced cost-per-unit options and sharper price positionings. Promotions also have become a core lever as they’ve become an expectation.

“With 56% of shoppers now expecting digital offers and 64% actively using them, brands will need to lean heavily into targeted incentives to maintain relevance in the aisle,” he says.

Portfolio reviews and innovation also will play a factor, Riedy suggests. Here brands could like to expand with “better-for-you” beverages or reposition existing products to align with SNAP eligibility, he adds.

Lastly, he cautions that loyalty is more fragile than ever.

“SNAP-specific data reinforces this broader trend: only about 40% of SNAP shoppers say they would stick with their preferred soda brand if benefits no longer apply,” Riedy says. “That underscores how quickly brand preference can erode when price sensitivity increases. 

With additional states slated to enact waivers throughout this year, and various states with implementations for 2027 and 2028, beverage-makers must look to adapt to this new shopping environment.

“Taken together, this isn’t just a short-term disruption, it’s a forcing function,” Riedy says. “Beverage brands will need to compete less on habit and more on tangible, immediate value at every point of purchase.”