Arizona Iced Tea Immune To Inflation?
During a period of such stark inflation it seems like no product is immune, except for Arizona Iced Tea, that is.
This article is more than 2 years old
Due to the highest inflation rates in four decades, the cost of everything has soared. From gas to groceries, Americans from all walks of life have taken a financial hit. But as prices of everyday items continue to rise, the price of an AriZona Iced Tea has remained steady at 99 cents. Adjusted for inflation, it actually costs less than half as much as it did in 1992. So how has the New York-based company managed to keep its prices low after all this time?
The short answer is that the beverage giant is just making less money right now. Speaking to the Los Angeles Times, AriZona Chairman and Founder Don Vultaggio said every company has to deal with cost increases, but customers have to deal with those increases too. So they are happy to make less money on their Iced Tea if it means not having to raise prices. “I’m committed to that 99-cent price – when things go against you, you tighten your belt,” Vultaggio told the outlet.
Vultaggio added that the company doesn’t want to do what the bread guys and the gas guys and everybody else are doing. “People don’t need another price increase from a guy like me,” he explained. Over the years, this customer-first concept has also served as its own marketing campaign. AriZona Iced Tea started to print the 99-cent price on its cans in 1996. And that’s become part of the company’s iconic design.
According to Food & Wine, the company sells approximately one billion units of AriZona Iced Tea every year, accounting for a quarter of the firm’s total revenue. Meanwhile, the product’s price point has remained steady, even though the cost of high fructose corn syrup increased by 300% in the past 20 years. And the cost of aluminum has doubled in the past 18 months alone. But since Vultaggio predicted these cost increases, the company has always made concessions in other areas that would allow them to save money and keep the price of its iced tea the same.
As an example, the beverage manufacturer doesn’t waste money on advertisements or marketing campaigns. “We feel like it’s more important to spend money on something that our customer really cares about,” Vultaggio told the Thrillist in 2016. So instead of buying billboards or putting AriZona Iced Tea cans in the hands of a random celebrity for a few minutes, the company chooses to keep the drink price at 99 cents.
AriZona also uses savvy cost-saving production methods. For instance, using recycled materials allows the company to use 40% less aluminum in its Iced Tea cans. Additionally, its trucks transport the New York firm’s products at night to reduce the time spent in traffic and burn less fuel. “It’s really about working smarter,” Vultaggio added.
Unfortunately, not everything has the same consistency as AriZona Iced Tea. Earlier this month, a slice of plain cheese pizza in New York became more expensive than a subway ride. Since 1980, it seemed like the price would stay below a single subway fare. However, increases in the price of ingredients, gas, and restaurant staff wages have turned that into nothing more than a fond memory.
