Originally printed in the June 2023 issue of Produce Business.
By Ryan Backherms
Supplemental Nutrition Assistance Program, or SNAP, participation and produce spending are on the rise. Year 2020 showed an increase of 1.9 million more households participating in the program, and another 0.8 million households joined in 2022. SNAP provides nutrition benefits to supplement the food budget of needy families so they can purchase healthy food.
In 2022, SNAP households spent an average of $839 on produce, up $50 from the previous year and accounted for nearly 18% of total produce sales. Understanding the behavior changes of SNAP shoppers is crucial for the produce industry to continue growing in 2023.
Some of this growth could be attributed to the Emergency Allotment (EA) program implemented by the U.S. Department of Agriculture (USDA) in March 2020 to assist SNAP households with hardships resulting from the COVID-19 pandemic. The program increased each household’s benefits by at least $95 a month.
However, the EA program ended in March 2023, and the spending power of SNAP households will be negatively impacted by the loss of these benefits on top of inflationary pressures. Because of these changes, SNAP households will be forced to closely consider what they purchase with their benefits.
Since the SNAP household is valuable to the produce industry and the SNAP consumer is facing a challenging situation, brands and retailers need to focus on how best to support them. The first step is understanding the SNAP household in three key areas:
- Who are they?
- How will their shopping behavior change?
- What is most beneficial to them when shopping for groceries?
WHO ARE SNAP SHOPPERS?
Understanding the household structure and preferences of SNAP recipients, who currently make up an estimated 17% of American households, will provide insight into proper targeting and messaging. SNAP households are a diverse group, with the majority being large Gen Z and Millennial households containing children, and they are in the bottom 30% of purchasing power, which factors in income, cost of living and household size.
Although low in purchasing power, SNAP households prioritize organic food, with over 20% being committed/very committed to organics and 17% willing to pay a price premium for them. Compared to non-SNAP households, SNAP households over-index on both metrics.
Understanding the behavior of SNAP shoppers is crucial for the produce industry.
Over half of SNAP households make a grocery list before heading to the store, and one-third check ads and clip coupons. Therefore, brands and retailers can utilize pre-shopping mediums such as retailer circulars or Free-Standing Insert (FSIs) as effective ways to reach SNAP consumers.
NO MORE EMERGENCY ALLOTMENT
To offset the loss of EA benefits and the rise in grocery prices, SNAP households are changing their shopping behavior. Since the program ended in March, they have switched to cheaper brands, stocked up during sales and bought more private label.
While skipping out on fresh produce is low on the list of saving tactics, one in four SNAP consumers claim to have purchased less produce to save money.
COPE WITH RISING PRICES
SNAP households are also shifting where they buy produce, and the industry will need to follow. While the food (grocery) channel still accounts for the majority of spending, SNAP households are increasingly buying produce online and in gas and convenience and dollar channels. These shifts are likely due to the increased convenience and lower absolute prices offered in these channels.
WHAT IS MOST BENEFICIAL TO SNAP SHOPPERS?
To better support SNAP shoppers, it is recommended to focus on convenience, such as increasing the number of SNAP-eligible retailers and e-commerce sites that allow SNAP purchases, including purchases of fresh produce. Moreover, convenience could be added by allowing for an easier in-store shopping experience with fewer out-of-stocks on SNAP-eligible products and better signage for eligible foods.
LEVERAGE THESE INSIGHTS TO SUPPORT THE SNAP CONSUMER
SNAP consumers might not anticipate cutting back on fresh produce to reduce costs, but it is a possibility. By making shopping more convenient for SNAP consumers, fresh produce brands and retailers can reduce the likelihood of decreasing sales.
Walmart has excelled in making the grocery shopping experience easier for SNAP households. Its e-commerce site adds an “EBT eligible” icon to qualifying products and enables SNAP consumers to add their EBT card to their wallet and search for “EBT eligible” items. Retailers can follow Walmart’s lead and focus on EBT to attract more SNAP households both in-store and online by:
Offering the option for SNAP households to pay with EBT for online grocery orders;
- Making SNAP-eligible foods more identifiable, both in-store and online;
- Partnering with grocery delivery services to allow EBT deliveries.
- Mark packaging as SNAP-eligible so shoppers can quickly determine if the product meets the SNAP criteria;
- Partner with retailers or third-party vendors to create signage in-aisle to indicate SNAP-eligible items;
- Create specific SNAP-eligible online items that have a low price point;
- Ensure that SNAP-eligible products are in stock.
Ryan Backherms is a consumer insight consultant at Numerator Insights. He advises leading brands to find growth with their consumers through robust analytics and storytelling. He has five years of experience in the CPG industry, where he has worked with brands such as Ball and Splenda.