“We all heard the headlines about a 25% increase in SNAP benefits coming in October. That was the truth, but it didn’t tell the full story,” Sally Lyons Wyatt, executive vice president and practice leader at IRI, warned during a webinar late last month.
She explained that while changes to the Thrifty Food Plan, on which SNAP benefits are based, increased the average amount beneficiaries receive monthly by about 27% beginning in October, this increase was on the base amount received before pandemic-related stimulus temporarily increased the allotments in recent months.
Through out 2020, SNAP benefits increased, starting with 40% or about $2bn in the spring. In December last year, Congress provided a 15% increase in SNAP benefits from January through June 2021, which was then extended through September as part of the American Rescue Plan.
Those increases raised the average monthly benefit spend per person by 38% -- all of which went to the food and beverage industry. In addition, other emergency stimulus allotments that were not specifically earmarked for food likely bolstered beneficiaries grocery spending by freeing up money that would have gone to other categories, Lyons Wyatt said.
However, those benefits were never permanent and they ended just as the Thrifty Food Plan increase went into effect – a tradeoff that will result in what feels like only a modest increase, rather than the significant one touted in many headlines, she explained.
“So, we did the math,” and found a difference of $3bn between what SNAP beneficiaries received during the pandemic and what they would receive post-pandemic, Lyons Wyatt said.
She explained that on average SNAP beneficiaries received $251 per month before the emergency allotments ended, but post-pandemic they would receive on average $169, including the increase from the reevaluation of the Thrifty Food Plan – a difference of $82. Multiplied by the number of beneficiaries an estimate of $3bn is lost from stimulus to the CPG industry.
To soften the blow of this loss – both on companies’ bottom lines and SNAP households’ pantries – Lyons Wyatt said manufacturers and retailers need to collaborate to capture more of SNAP shoppers’ overall spend.
She recommended offering pack size options to reduce costs per volume, providing bunded occasion-based solutions that provide economies of scale, offering ‘imperfect fruits and vegetables’ at reduced prices compared to ‘perfect’ options to make them more economically accessible and innovating to align with a budget-minded consumer.
Retailers can also leverage a variety of programs to assist SNAP consumers on their health and wellbeing journey by teaching them how to cook on a budget and providing nutritious budget-conscious recipes to inspire purchases, she said.
And while retailers and manufacturers must be careful not to run afoul of regulations about promotions targeting SNAP shoppers, they can make available to all shoppers promotions and benefits that will disproportionately help budget-shoppers.