The Bottom Shelf at the Supermarket Might Soon Get More Attention

“I love grocery shopping when I’m home. That’s what makes me feel totally normal.” — Yo-Yo Ma

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Changes to the Supplemental Nutrition Assistance Program (SNAP) via President Donald Trump’s Big Beautiful Bill Act went into effect starting Sept. 1. Each state will need time to implement the changes independently, but the federal legislation will ultimately result in significant cuts to a benefits program that has long helped low-income American families pay for groceries. 

The resulting social and policy implications are beyond our purview. What does seem clear, however, is that many of those affected will be looking to make their grocery budgets stretch further, seeking ways to feed themselves for less money. Arguably, this could drive many away from raw ingredients (fresh produce and meat, for example) and toward processed and ultraprocessed foods, which tend to be cheaper — even if Health and Human Services Secretary Robert F. Kennedy Jr. might prefer otherwise. 

Manufacturers of lower-priced private-label products — what used to derisively be known as bottom-shelf “generic” foods, might thus be particularly poised to benefit. Even before the change to SNAP policy, private-label sales had been on the rise — the Private Label Manufacturers Association said sales set a record in 2024, hitting $271 billion, up 3.9% from 2023 and outpacing the growth of national brands. Much of that is still driven by consumer uncertainty and financial limitations, but that doesn’t tell the whole story. During the pandemic and lockdown, amidst an array of supply-chain disruptions, shortages in name-brand products forced many consumers to try generics — and it appears some were pleasantly surprised at the quality, enough to stick with them and maybe even try more of them when inflation hit their pocketbooks after lockdown. 

That’s helped add to a demographic shift: while Boomers and GenX might have once viewed the purchase of generic grocery items as a sign of poverty and reason for embarrassment or shame, Millennials and Zoomers do not attach the same stigma to them. It turns out that the generations that embraced “dupes” (less expensive versions of luxury goods) aren’t particularly inclined to limit themselves to established name brands at the grocery store either. That’s partly why Trader Joe’s, which is heavily reliant on its own private-label products, is so popular. 

Retail giants have taken notice. Walmart, Amazon, Kroger, Costco, and Target each have their own in-house private-label brands, with some of them recently launched. This might turn out to be a prescient bet. 

Although some of these are being produced in-house, others are manufactured by third-party manufacturers whose identities tend to be kept under wraps. Treehouse Foods (THS) is widely believed to supply many of these retail chains with private-label products, and the company’s shareholders would surely welcome any tailwinds that might arise. The company’s stock is down 48% YTD. In comparison, Tyson Foods (TSN), which offers a mix of branded and private-label products, is largely flat over the same period, down 2.2%. 

The converse, however, is that if Trump’s SNAP cuts accelerate sales growth of private-label products, makers of nationally branded packaged foods might face new headwinds. Companies like PepsiCo, General Mills, and Kellanova have seen their respective shares struggle in 2025. So, too has Kraft Heinz, owner of brands like Oscar Mayer, Lunchables, Velveeta, and of course, Kraft and Heinz. The company earlier this week announced plans to split into Global Taste Elevation Co and North American Grocery Co., in part to make it easier for executives to focus on developing their various well-known brands. The challenge might now be larger than they had hoped. 

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Catch up with Fundstrat

We are surprised to see AAII net bulls still negative, with bears outnumbering bull for five consecutive weeks. Generally, this is constructive for stocks near term.

Technical

SPX price has pushed up to areas just below the highs of the recent range as of Thursday’s close. I think any reversal from today into next Monday should be respected as something which might kick off a short-term trend reversal for equities, though yesterday showed no signs of this happening,

Crypto

September seasonality remains weak, but October is historically strong for crypto. TGA refill and Treasury issuance over the coming weeks could be a short-term headwind.

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