President Trump's nomination of Robert F. Kennedy Jr. to head the Department of Health and Human Services has caused concern in the food industry. Kennedy is a well-known critic of Big Food and in his plan "Make America Healthy Again" that he would restrict the use of foods such as soda pop and highly processed products by Supplemental Nutrition Assistance Program (SNAP) would like to ban.
In an article for the Wall Street Journal, Kennedy stated that it is "pointless" for U.S. taxpayers to spend billions of dollars to subsidize unhealthy foods that harm the health of low-income Americans. These statements have already led to a drop in the stock prices of companies that rely heavily on SNAP sales.
Analyst Ken Goldman of J.P. Morgan pointed out that many food manufacturers could come under pressure if sugary and highly processed foods are excluded from SNAP. Companies like Post Holdings $601658 Conagra Brands $CAG (+1,4 %) J.M. Smucker $SJM (+1,61 %) Tyson Foods $TSN (+1,93 %) Kraft Heinz $KHC (+1,26 %) and Hershey $HSY (+1,4 %) generate more than 20 % of their sales with low-income consumers. consumers.
Goldman noted that products from Tyson and Lamb Weston $LW (+1,51 %) are unlikely to be the focus of Kennedy's plans as they offer fresh meat products and frozen potato products. In contrast, companies that sell healthy prepared foods, such as Kraft Heinz and Conagra Brands, could benefit if consumers switch their purchases from snacks and cereals to prepared meals.
Grocers are likely to be less affected than manufacturers as they offer a wider range of products and often have alternative revenue streams. However, retailers with a high percentage of low-income customers and SNAP users, such as dollar stores and large retailers, could face difficulties. Sprouts Farmers Market $SFM (+2,19 %) could benefit because a large portion of its sales come from fresh produce and consumers may be more likely to choose fresh fruits and vegetables.
Uncertainty over Kennedy's confirmation by the Senate remains, as his controversial views on vaccines and other issues have raised concerns. Investors are watching the situation closely and are concerned about the potential impact of his plans on the food industry.industry.
