Arizona Iced Tea founder says the 99-cent price tag will stay the same
Arizona Beverages' chairman and co-founder Don Vultaggio knows the value of a relationship.
This shrewd understanding, he told TODAY Food in an interview, is why despite recently witnessing inflation rates hit a 40-year high, he’s sold his iced tea drinks at the same exact same price for years. Best known for its cherry blossom aesthetic, hefty 23-ounce size and reliable 99-cent price tag, Arizona iced tea is one of those gas station staples whose prices make it a sure and sound go-to like your mom’s lasagna or the rhythms of Old Faithful.
In a now-viral article published last week, the LA Times posed the question: "As inflation soars, how is AriZona iced tea still 99 cents?"
“To me, the worst day as a salesman is to go to a retailer and say, ‘Hey, by the way, I’m raising the price on that can today,” Vultaggio explained in his interview with TODAY. For Vultaggio, such changes have negative trickle-down effects he’s made a point to avoid. After all, an increase in price for a retailer means a change in what a consumer might purchase from them altogether. More, it might cause a customer to overlook the tall, brilliant cans oft found in the refrigerated sections of bodegas, corner stores and pharmacy chains in the future. “Our point is what you want to do is have a customer come in and get a fair value on a can of tea or juice and then buy other things in your store to offset those costs.”
Vultaggio co-founded Arizona Beverages USA 30 years ago — on May 5, 1992, to be exact. At the time, a gallon of whole milk was $1.13, a gallon of gas was the exact same and a can of Arizona iced tea was 99 cents. The price for basic necessities has shot up in the past year, however, with surging inflation rates marking up milk and gas to $4.02 and $4.11, respectively. Still, through the decades, Arizona iced tea has held the line. Instead of cranking up the value of its iced tea, the company has opted to snip out the extra expenses that might increase the price. Its cans are made of aluminum (the price for which increased by 17.03% since the start of 2022) so now it's shaving off how much aluminum it uses by narrowing up the neck of the can.
“If you keep doing those things, you can kind of offset costs and rising costs, and get the consumer value and the ability to buy your product and everybody’s happy,” Vultaggio explained, noting that, as a businessman, his job is to stay ahead of increasing costs. “One day I was on the George Washington Bridge, and it was backed up. It was like two o’clock in the afternoon. And I said, 'We’ve got to get our trucks off the roads during the day. We've got to come in at night.' It was a simple decision. Because, you know, you’ve been down the road at one o’clock in the morning, the roads are a lot less crowded. We’ve now shipped all of our product overnight so that our trucks will be more efficient.”
Vultaggio says this steadfast approach has largely stemmed from his early years, when he first learned how to work for pennies.
PSA: Our recommended selling price for AriZona in the USA is still 99c! The can on the right is from Canada, where $1.29 converts to around 99c!
Don’t worry fam, we still got you 💚🌸😊 https://t.co/lZgHEsTBly
— AriZona Iced Tea (@DrinkAriZona) January 20, 2021
Today, Vultaggio is estimated to be worth $3 billion. Decades ago, however, he was 13 years old clocking in at a grocery store after a day of school so that he could earn $1 per hour. Growing up, he watched his own father work at a grocery store as a manager and as an adult, Vultaggio says some of his greatest friendships stem from those early days bagging produce at that grocery store in Brooklyn, New York. In fact, one of his closest and most important relationships was with that first employer of his many decades ago. Recently, when that friend passed away at 97, Vultaggio said his family sent him the ashes. "He's buried in my backyard," he explained.
It’s a story with the sort of sentimentality, not often attributed to the like-moneyed executives— think Ray Kroc of McDonald’s in “The Founder" or Logan Roy in "Succession." Likely, it’s also what’s brought about the attention Arizona has gained in recent weeks as gas prices increases and surging inflation encumber the pockets of working-class families. The income of these families largely go to basic necessities like rent, groceries and gas, making products like iced teas, doughnuts and other snacks a luxury.
"Everything (people are) buying today there’s a price increase on. We’re trying to hold the ground and hold for a consumer who is pinched on all fronts," Vultaggio explained. "I’ve been in business a long time and candidly I’ve never seen anything like what’s going on now. Every single thing has gone up, and I call it 'from a paper clip to a too-big filling machine.'"
In the meantime, through high inflation and low inflation, consumers can rely on one thing for certain: That iconic Arizona 99-cent stamp will remain the same.