Competitive pricing for healthy foods
Local governments can invest in this strategy using State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act (ARPA).
- This strategy can help residents access health services. The U.S. Department of Treasury has indicated that strategies that help achieve this outcome are eligible for the use of Fiscal Recovery Funds.
- Investments in this strategy are SLFRF-eligible as long as they are made in qualified census tracts or are designed to assist populations or communities disproportionately impacted by COVID-19.
Program overview
Decreasing the price of healthy foods: Competitive pricing for healthy foods encompasses a variety of strategies that make nutritious foods (especially low-fat foods, fruits, vegetables, and water) less expensive than non-nutritious foods. By lowering the cost, such programs aim to increase the amount of healthy foods participants purchase and consume.
A broadly applicable strategy: Nonprofits, local governments, retailers, and school districts may all choose to introduce competitive pricing initiatives. For retailers, schools, and other businesses, this means adjusting the prices of products sold on premises. For nonprofit organizations and local governments, an initiative may focus on offering incentives, subsidies, and technical assistance to retailers across their jurisdiction.
Varied models for competitive pricing: Organizations managing healthy food interventions can choose from a range of competitive pricing models. Some programs simply apply a discount to eligible items at the point of sale, while others provide a rebate or store credit to participants after they make a healthy food purchase.
Eligibility varies across program location and design: Competitive pricing programs are often targeted toward people who already receive government benefits (especially SNAP or WIC), but eligibility requirements may also include income level, specific health conditions, or Medicaid enrollment status. In some contexts, especially workplaces and schools, pricing changes may be implemented universally.
Identifying subsidies for competitive pricing: Competitive pricing initiatives can receive funding from the federal government (in particular the Gus Schumacher Nutrition Incentive Program), nonprofits or private foundations, through local or state taxes (e.g., sugary drinks tax), or hospital community benefit funds. In addition, small businesses may choose to fund incentives themselves, as fresh produce has a higher profit margin than many other goods (but can be difficult to sell before it spoils).
- Strategies
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Improving access to healthy food
- Cost per Participant
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Not available
Multiple studies with rigorous designs demonstrate that competitive pricing for healthy foods is a well-supported strategy to increase the purchase of healthy foods.
A 2021 research synthesis identified competitive pricing for healthy foods as a scientifically supported strategy for increasing sales of healthy foods.
A 2017 systematic review found that pricing intervention strategies produce positive effects on consumer behavior, namely in increased purchasing and consumption of healthy foods and beverages.
Make price differences large: Larger price differences between lower cost healthy foods and higher cost unhealthy foods have been shown to lead to larger increases in healthy food consumption.
Include an educational component: For children and adolescents, competitive pricing is most likely to improve weight status when coupled with a multi-component school-based intervention. For all consumers, healthy food incentive programs may be more successful when coupled with educational efforts about the use, storage, and nutritional value of fruits and vegetables. Knowledge of how to prepare vegetables in particular has been associated with higher utilization of fruit and vegetable incentive programs.
Encourage decreased consumption of unhealthy foods: Both pricing and education approaches can also be used to explicitly encourage consumers to avoid unhealthy foods. Increasing the purchase of healthy foods may not be enough for consumers to fully shift from unhealthy to healthy choices, so strategies such as messaging that clearly explains the health consequences of unhealthy food options may help to facilitate that transition.
Incorporate best practices for incentives: For any competitive pricing program, it is important to publicize the changes in price or incentives available so that consumers are aware of opportunities to save money or earn rebates and spending matches. In addition, if competitive pricing programs rely on a mechanism other than direct discounts at time of purchase, they tend to be more utilized when reimbursements, coupons, or spending matches are available electronically rather than in a physical coupon format.