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AriZona Beverages founder describes why a can of iced tea is still $0.99

10
Edwin Roman
·Producer, Writer
·3 min read

Inflation may have reached a 40-year high, but AriZona Beverages has no plans to raise the $0.99 selling price on its 23-ounce cans of iced tea.

“I've seen inflation before, and it's not a pretty sight for a consumer who's trying to manage their budget,” AriZona Beverages co-founder Don Vultaggio told Yahoo Finance (video above). “And since I started out as a working man and a real blue-collar guy, I recognize how important it is, from a manufacturing point of view, to help maintain pricing so consumers don't suffer the consequences of higher prices.”

The price for AriZona's iced tea beverage hasn't budged since it was launched 30 years ago. And at a time when brands from PepsiCo to P&G have announced price hikes, how does AriZona do it? According to Vultaggio, who co-owns the company with his two sons, it's a "bunch of things."

“We've tried to manage the things behind the scenes not by cutting quality of product but by producing it faster, making it more efficient, handling it less in warehouse, putting it on trains versus trucks, solar panels on roofs, higher speed machines — things that the consumer doesn't understand, because why would they?” he said.

'Efficiencies are very important'

Even though food and drink prices have continued to increase, AriZona Beverages has refused to follow suit, staying authentic to its promise to consumers.

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"Margins are shrinking," Vultaggio conceded, though he added that the company has "offset margin hits by increasing our sales."

Additionally, the company has worked to make the manufacturing process more efficient. If the facilities produce more, Vultaggio explained, "the cost of maintaining those buildings and keeping the lights on don't change dramatically. So efficiencies are very important."

Part of the strategy is also the company's use of its iconic aluminum cans rather than other materials — though even those costs are increasing. The Today Show reported that as a result of higher aluminum prices, AriZona is now narrowing the neck of the can to shave off how much of the metal is used.

PARIS, FRANCE - FEBRUARY 28: Cali Chiki wears glasses a pale blue oversized pullover from Asos, drinks an Arizona iced tea beverage in a metallic can, on February 28, 2021 in Paris, France. (Photo by Edward Berthelot/Getty Images)
PARIS, FRANCE - FEBRUARY 28: Cali Chiki drinks an Arizona iced tea beverage in a metallic can, on February 28, 2021, in Paris, France. (Photo by Edward Berthelot/Getty Images) (Edward Berthelot via Getty Images)

The cans also double as a marketing vehicle, since the drink maker cuts costs by forgoing big ad campaigns.

"We as a company have never used traditional advertising. And therefore, we have not had the expense of traditional advertising," Vultaggio said. "We use our cans, our bottles and clothing, and other kinds of [sales performance incentive funds] SPIFs, we call them, for consumers to see our stuff. And we get them because, candidly, it's great-looking stuff."

All these factors allow AriZona Beverages to hold its ground at a $0.99 price point while inflation hits consumers elsewhere, like food and at the gas pump.

"As brand owners, we don't want to lose touch with the consumer," Vultaggio said. "I've been at it for a long time, and the pricing has always been attractive and great. It only looks greater now because everybody else is moving."

Edwin is a producer for Yahoo Finance. You can follow him on Twitter @Edwin__Roman.

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