Eighteen states have written soda out of the definition of food, and the list has quietly grown past sugar

The Food and Nutrition Administration published eighteen separate Federal Register notices on September 15, 2026, one for each state running a demonstration project under section 17(b) of the Food and Nutrition Act of 2008 that amends the SNAP definition of food for purchase. The states are Arkansas, Florida, Hawaii, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, Virginia and Wyoming. Comment periods close October 15, 2026.

Most are already in force, and each state wrote its own list. Indiana and Utah began on January 1, 2026 excluding “soft drinks.” Texas started April 1, 2026 excluding “sweetened drinks and candy,” modified in January 2026 to clarify that naturally sweetened beverages and medical-grade electrolyte drinks stay eligible. Florida began April 20, 2026 excluding “soda, energy drinks, candy, and prepared desserts.” Arkansas began July 1, 2026 excluding “soda, low and no-calorie soda, fruit and vegetable drinks with less than 50% natural juice, other unhealthy drinks, and candy.” South Carolina began August 31, 2026 excluding “candy, energy drinks, soft drinks, and sweetened beverages.”

Ohio and Virginia take effect October 1, 2026. Ohio’s request, approved March 4, 2026, excludes “sugar-sweetened beverages,” and was modified on June 12, 2026 to also exclude “fountain drinks.” Missouri’s project, covering “candy, prepared desserts, and certain unhealthy beverages,” was moved on June 2, 2026 to a February 15, 2027 start.

Trade reporting puts approvals at 23 states covering roughly a third of SNAP recipients, with an estimated $830 million of lost food and beverage sales in 2026, of which about $430 million is soda and $100 million energy drinks. Measured purchase data cited in that reporting shows soda purchase activity falling roughly twice as much in waiver states as in unchanged states, and year-to-date category volume in restricted states running 310 basis points below the US average in soft drinks and 370 basis points below in hard candy.

Share prices verified at the September 15, 2026 close: PepsiCo $135.50, within half a percent of its one-year low of $134.95 and 20.5% below its one-year high; Celsius Holdings $27.63, 57.4% below its high; Monster Beverage $44.63, 10.7% below; Keurig Dr Pepper $31.49, 6.0% below; Coca-Cola $88.71, 3.6% below.

Opportunity

The story as reported is that states are banning sugary soda for food-stamp shoppers, and at that description it is small — a few hundred million dollars against a category worth tens of billions, most of it arguably just a change in which pocket a purchase comes out of. Reading the eighteen notices rather than the coverage gives a different picture, in two ways.

The first is scope. The exclusion lists have drifted well past sugar. Arkansas excludes zero- and low-calorie soda outright, along with any fruit or vegetable drink under 50% juice. Florida and South Carolina exclude energy drinks. Ohio excludes fountain drinks. Zero-sugar is where essentially all the remaining volume growth in carbonated soft drinks sits, energy is the fastest-growing beverage category in the United States, and the fountain is the highest-margin way a soft drink gets sold. A rule aimed at sugar has become a rule aimed at the liquid refreshment aisle and the convenience-store dispenser.

The second is direction of travel. This went from nothing to 23 approved states in roughly eighteen months, no state has reversed, and the notices show states coming back after approval to widen their own lists rather than narrow them — Ohio adding the fountain in June 2026 being the clearest instance.

Hypothesis: the beverage majors are valued on volume stability, and the measured effect — purchase activity falling about twice as fast in restricted states as elsewhere — suggests genuine substitution rather than a change of tender, which would make this a structural volume headwind that compounds state by state rather than a one-off transfer. That is an inference drawn from one set of trade-reported scanner measurements, not an established fact, and at company level the amounts involved are currently small.

How it could play out

Ohio and Virginia switch on October 1, 2026 and Missouri on February 15, 2027, each adding SNAP households to the restricted pool. Retailers across eighteen states carry the cost of item-level eligibility coding across the beverage aisle, and in Ohio across the fountain as well. Measured volume gaps between restricted and unrestricted states widen on a larger sample and begin showing up in company disclosure rather than only in scanner data. If those gaps hold, the political case for the remaining states gets easier to make, and the categories with the fastest growth turn out to be the ones most exposed. If instead households simply pay cash for the same drinks, the effect washes out and the whole thing reduces to a retail compliance cost.

Questions worth asking

• Is the measured decline real substitution or just a change of payment method? SNAP dollars are fungible up to a household’s cash income, so the honest test is total category volume in a restricted state, not SNAP-tendered volume. Everything here turns on that distinction.
• Which companies are most exposed to the categories that got added rather than the ones everyone expected — zero-sugar carbonated soft drinks, energy drinks, and fruit drinks under 50% juice?
• Ohio excludes fountain drinks from October 1, 2026. What share of convenience-store and quick-service gross profit is the fountain, and does anyone disclose it at a level that would let you size this?
• Who bears the compliance cost? Every SNAP retailer in eighteen states needs item-level restriction across millions of barcodes under eighteen different definitions. Is that a burden on small independent grocers and an advantage to chains with central systems?
• Which retailers have the highest SNAP share of sales in these particular states, and does a restricted basket change their mix rather than simply their total?
• Is there a beneficiary? Water, milk, unsweetened drinks and 100% juice remain eligible in every one of these states, and someone sells those.

Where to look

• PepsiCo — carbonated soft drinks plus Gatorade and Rockstar, currently trading within half a percent of its one-year low
• Coca-Cola and Keurig Dr Pepper — the other two large owners of the excluded carbonated categories, including their zero-sugar lines
• Monster Beverage and Celsius Holdings — energy drinks, excluded outright in Florida and South Carolina
• Hershey and Mondelez — candy, excluded in Texas, Florida, Arkansas, South Carolina and, from 2027, Missouri
• Dollar General, Grocery Outlet and convenience-store operators — retailers with high SNAP share of sales in the affected states
• the Federal Register notices themselves, which are the only complete statement of what each individual state actually excludes and from what date

Thesis check

The underlying facts are about as solid as this system ever gets: eighteen dated federal notices naming exactly what each state excludes and when, alongside independently measured purchase declines in the states already running. The real constraint is size — an estimated $830 million of industry-wide lost sales in 2026 is immaterial to Coca-Cola or PepsiCo on its own, so the idea only works if the state count keeps rising and the exclusion lists keep widening, and nothing that has happened so far guarantees either.

Sources

Federal Register, State of Ohio SNAP Demonstration Project, Sep 15 2026 · Federal Register, State of Texas SNAP Demonstration Project, Sep 15 2026 · Federal Register, State of Arkansas SNAP Demonstration Project, Sep 15 2026 · Food Business News, lost sales from SNAP waivers, 2026 · CNBC, SNAP restrictions and food companies, Jun 20 2026