If you thought nothing could get less expensive than water, you're wrong. AriZona iced tea has become a ubiquitous bodega drink because of its insanely cheap, 23.5-ounce cans. But how? Today, food costs about 50% more than it did in 2000, which is around the time AriZona decided to cement its $0.99 price tag on all of their cans, much to the dismay of bodega owners everywhere.
Even Coca-Cola, which cost a nickel for 70 years, had to eventually cave in to rising costs. Despite the price point, AriZona tea hasn't gone the way of Netflix and MoviePass, who struggle to make profits because of their low price points, or the way of Amazon, a company that keeps their costs minimal by treating warehouse workers and delivery drivers poorly. AriZona tea seems to be a mysterious entity impervious to inflation.
John Ferolito and Domenick Vultaggio founded the Brooklyn-based AriZona Beverage Company in 1992. Prior to launching the arguable king of cheap drinks, the pair were selling beer out of the back of their Volkswagen.
Today, AriZona rakes in $1 billion a year and has a team of 1,000 employees. They continue to grow year after year. In 2012, for instance, they saw a whopping 9.3% rise in profits.
arizona ice tea has the most appealing cans and no one can tell me otherwise pic.twitter.com/rBKg08phBK— Fireburn (@fireburn02) September 26, 2017
In 2016, soda consumption was at a 30-year low. According to The New York Times, full-calorie soda sales have plummeted by 25 percent in the last 20 years. Modern, health-conscious consumers aren't as interested in sugary drinks as previous generations.
Across-the-board, people are ditching sugar and artificial sweeteners in favor of healthier drinks like seltzer. Over the last five years, sales of fizzy water have more than doubled to upward of $2 billion. In 2017, for the first time ever, bottled water sales beat out soda.
To combat poor soft drink sales, soda companies have made smaller packs at higher prices and introduced healthier lines of drinks such as Bubly, Pepsi's answer to La Croix. AriZona has taken a totally different approach and stuck to their guns.
So I went and got some Arizona tea today�� pic.twitter.com/38MVt9vohg— egodth sound (@egodthbeats) April 6, 2013
AriZona has done virtually nothing to market themselves outside of their giant, instantly recognizable $0.99 label on each can. Compare their approach to Snapple, owned by Dr. Pepper Snapple Group. The company dropped upward of $486 million on marketing in 2013, a cost which consumers end up absorbing.
AriZona Beverages's cofounder Don Vultaggio—who is nearly seven feet tall—told Forbes, "I had a guy come in here one day from a major company and ask, 'How big is your marketing department?'" In reference to himself, Vultaggio replied, "6-foot-8."
Instead of spending money on commercials, celebrity endorsements, or influencer marketing campaigns, the company focuses on creating a product with a cheap price point and great taste.
@rydelR5 Told you I'd get Arizona tea! Haha pic.twitter.com/0WzqT5iB5J— YT (@YTriminio) March 11, 2015
AriZona may be sticking to its $0.99 guns, but that doesn't mean the company hasn't had to shift a few things around. To keep the price tag so low in a changing market, the company has thinned out their cans. They currently use 40% less aluminum (and a whole lot more recyclable material) than they did in the '90s. Their packaging is greener and cheaper—a total win-win.
The new cans never lost their $0.99 label, however, so shop owners can't jack up the price.