During rising economic inflation, food and gas prices are going up rapidly. However, Arizona iced tea manages to stay a 99 cents even though everything is going up, so how do they do it?
Since 1994 Arizona ice tea has been 99 cents, it came in a highly recognizable can, and it has been like this for almost 30 years, according to Taste of Home. So how does Arizona manage to keep this same pricing throughout the decades? With everything imaginable going up in pricing, it is reasonable to think that our iconic 99-cent drink might be next in line, but that fear is unfounded.
Keeping It A Buck Since 1994
This iconic drink for a dollar has been this way since 1994, even with everything going up in price. According to the LA Times, even with the high fructose corn syrup costing 3-times what it did 20 years ago, and the price of aluminum has been doubling over the last 2-years, Arizona keeps everything a buck. Although these factors may leave you to believe that Arizona would cost more, it doesn’t. The company decided to take a short-term profit loss instead.
“Your company has to deal with cost increases, but your customers have to deal with cost increases too,” Arizona founder Don Vultaggio said in a recent LA Times interview.
The Can That Sells Itself
Unlike other major food and beverage companies, Arizona managed to keep its costs down but not spend it on advertising. Without the expensive ad campaigns and celebrity endorsements, Arizona manages to keep its costs down and its profits up. Arizona is a drink that sells itself. Most find that it tastes good, and for the price of a dollar, it’s a hard deal to pass up for most people. The company chooses to rely on its strong branding and its price attractiveness, regularly bringing in consumers of their product.
According to Vultaggio, “Most brands in America today believe they have to go out and have a Super Bowl commercial or do traditional advertising. When we first started, I didn’t have the money for that—so each can had to be like a billboard. That’s why I chose the big can. It stood tall.”
Efficient Manufacturing and Operations
Arizona can keep its 99-cent price point because it focuses on manufacturing and operation efficiency. By keeping their costs down with methods like using recycled aluminum cans, which only use half of what other companies would use. Shipping
the tea during the night avoids slowdowns due to traffic, and since its product weighs less, it costs less to ship. The lowered cost of manufacturing and shipping is how Arizona passes the buck to consumers, allowing them to keep their cost of 99 cents per can. The operation costs are also lowered as they only employ 350 people at their headquarters and only 1,500 across the whole company.
#99 Cents Equals 99 Cents
Although inflation has impacted many industries, especially the food and beverage industry, Arizona still keeps its original mission of keeping its can costing less than a dollar. According to the Arizona official Twitter, they started a #99centsequals99cents campaign to let retailers and consumers know that they refuse to allow others to change their prices. Some companies attempt to upcharge the cost of 99 cents by putting a $2 sticker over the label, which is why Arizona started this hashtag campaign.