AriZona Iced Tea CEO vows to keep the 99-cent price tag 'for as long as we can'


Although inflation remains near its highest point in over 40 years, one grocery-store staple has maintained its 99-cent price tag: AriZona Iced Tea.

For 30 years, the tall 23-ounce cans, known for their eye-catching cherry blossom design, have sold in grocery stores and gas stations all over the U.S. for typically no more than 99 cents.

And despite rising costs, the billion-dollar beverage company has no current plans to raise prices on its 23-oz cans, chairman and founder Don Vultaggio tells CNBC Make It. "For as long as we can, we're going to hold our price," he says.

One way the family-owned company is able to maintain its low price point is by not trying to duplicate how other larger beverage companies operate.

"I tell people every day I go to a gunfight with Coke and Pepsi. I have a water gun and they have machine guns. And the way I succeed is by doing things differently," Vultaggio says.

While other beverage companies spend a hefty amount of money on traditional advertising that will need to later be recouped through sales, Vultaggio relies on word-of-mouth. There's nothing stronger than having customers recommend your product to their friends, he says.

"That's a lot better to me than a Super Bowl ad," he says. To that point, the average 30-second Super Bowl ad costs about $6.5 million.

Another way AriZona aims to beat rising manufacturing costs is by increasing the number of products sold at its low price point. Think of it this way: A company could choose to sell one product for $4 or four products for $1. AriZona chooses the latter.

The company focuses on increasing its sales volume to avoid passing on a price hike to consumers, Vultaggio says.

AriZona has also made subtle changes many customers might not initially notice. The company redesigned the lid of its cans in a way that cuts down on manufacturing costs, but doesn't impact the overall quality of the product, for example.

Quality is one thing Vultaggio refuses to sacrifice. In fact, he says he has to approve every drink AriZona makes before it's released to the public. His favorite flavor: Arnold Palmer.

Continuing to make tasty beverages at an affordable price is key to the company's success and longevity, Vultaggio says.

"I know what drives our base," he says. "We taste good consistently. We look good consistently, and we're priced fairly consistently."

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