The Supply Side: SNAP households to spend $55 billion in 2020

Households that qualify for the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP) will spend in 2020 an estimated $55 billion on food and beverage purchases, or roughly 9.7% of the nation’s total grocery spend, according to research firm IRI.

IRI also found SNAP shoppers make up about 13% of the total U.S. population at 42 million people as of April, an increase of 16% from a year ago. Spending and benefits have grown in 2020. The USDA implemented a 40% increase in overall SNAP benefits amid rising unemployment due to COVID-19. That added about $2 billion to monthly benefits, and IRI said SNAP spending is roughly $6.5 billion a month.

Sally Lyons Wyatt, an executive vice president at IRI, said SNAP recipients present meaningful opportunities for retailers and food suppliers. They make 8% more trips than the total population, and one-quarter of them spend more time in stores shopping for their families. Most of them also shop with their kids. Wyatt said 20% of the SNAP recipients surveyed spent 45 minutes on their last regular trip for groceries, and 6% said they spent more than one hour on their recent shopping trip for food and beverages.

Wyatt said the extended time in stores occurred during the pandemic. The number was likely higher before the pandemic, and more states began offering SNAP recipients the option for curbside pickup. She said there is an opportunity for retailers and suppliers to assist this shopping demographic with the challenges they face from cooking and convenience to affordability and informative education on healthy choices.

IRI found that this large cohort of shoppers also struggles to develop new meal ideas, and about a quarter of them lack the inspiration to cook because they are challenged to find quick and healthy entrees. Another 18% could use more help with meal planning, and they are also frustrated by not knowing what to do with leftover ingredients they purchased to make a particular dish.

Wyatt said retailers and brands could do a better job providing access to easy recipes, requiring only a few ingredients and healthier than typical processed and prepared foods. One retailer that she said is doing an excellent job in that area is Dollar General. She said SNAP shoppers spend a lot of money in the dollar-store channel because the retailers talk with them before shopping. They offer coupons for essentials that can be redeemed while shopping, then follow up with recipe ideas afterward.

She said grocery retailers can better engage with SNAP customers on a personal level because they want the direction. Wyatt said many of the SNAP recipients have large families, and they are looking for easy-to-make recipes that do not involve much cleanup. She said more than 20% have limited storage and freezer space, and it’s hard to store leftovers. Another 13% said they want recipes that don’t require a lot of prep time because they don’t have the time.

One of the biggest challenges SNAP shoppers have is not finding all the items on their lists when they are shopping. This challenge has been exacerbated during the pandemic as retailers have trouble keeping shelves stocked. The problem for SNAP consumers is they typically shop as soon as benefits are loaded on their cards. If the inventory is low, that’s a problem for them because they don’t have the luxury of waiting for the next shipment.

This group also said they are challenged to find healthy and fresh foods that don’t go bad quickly. They can’t afford to throw food away, and many lack freezer storage capacities. IRI found the respondents wanted help to prepare fresh foods better and discover healthy food options for small households with two or fewer people.

Wyatt said meal occasions represent 37% of SNAP recipients’ total spend, and beverage and snacks make up 43%. Dinner was the meal most households focused on buying items like instant potatoes, shelf-stable dinner, frozen corn on the cob, frozen dinner entrees, dry packages, dinner mixes and stuffing mixes. She said 4% was spent on lunch with refrigerated entrees, and 8% was spent on breakfast with purchases of toaster pastries, doughnuts, frozen breakfast food and refrigerated baked goods.

The survey found that 21% of the spend was on snacks with items like jerky, non-chocolate candy, breath fresheners, dry fruit snacks, shelf-stable dip and mixes, and frozen appetizers and snack rolls. While alcoholic beverages cannot be purchased with SNAP benefits, the shopping cohort said they did buy beer, ale and cider, which was 7% of their overall spend. Beverage is where 22% of the SNAP benefits are spent.

Other categories like baking, desserts and baby supplies garnered way less of the SNAP shopper budgets. IRI found 5% was spent on shelf-stable pudding and dessert toppings, frosting, ice cream mixes and cones, sugar and marshmallows, and evaporated and condensed milk. Just 1% was spent on desserts, and refrigerated items were the most popular. Spending on babies is less among SNAP families, mainly because many of them also get WIC (Women, Infants and Children) benefits from the USDA. The IRI study found just 2% SNAP spending was on baby food.

Wyatt said retailers and suppliers need to remember SNAP recipients shop differently across the generations. She said when retailers consider promotions, they need to consider all age groups are included. Younger SNAP recipients ages 24-30 spend more and shop more often for beverages and breakfast foods, while seniors age 75 and older spend more on baking and dinner foods.

She said the research also found SNAP recipients sometimes turn to restaurants mostly due to lack of time to prepare the meal (15%) or having cravings for a type of food (50%). Lyons said this is an opportunity for retailers and suppliers to feed those cravings with easy-to-make entrees, which could be more affordable and healthier than a take-out or eat-out option.

Since the spread of COVID-19, 33% of SNAP recipients said they are ordering less from restaurants, which is another opportunity for retailers and suppliers to convey messages in-stores for meal options that don’t take long to prepare.

Wyatt said there are plenty of opportunities for consumer packaged goods brands, mass retailers and traditional grocery to grow their SNAP sales share if they listen to this group’s needs and wants.

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