Introduction to Arizona Beverages
A 22-ounce can of Arizona iced tea has been 99 cents since the company was founded in 1992. Amid global trade wars, tariffs, and sticker shock for consumers, Arizona Beverages’ chairman and co-founder Don Vultaggio is committed to keeping that sweet deal.
Commitment to Affordable Pricing
“Right now, no. We have no plan to do it,” Vultaggio says when asked if he plans on raising his iced tea’s 99-cent price tag. “We’re trying to hold the line,” he says, reaffirming, “No, we’re not.” Vultaggio launched Arizona Beverages in 1992 from a Brooklyn warehouse. He built a fortune with his 99-cent ice tea can, which includes its popular green tea and Arnold Palmer.
Challenges in Maintaining Affordable Pricing
Amid companies like Costco, Procter & Gamble, Mattel, Apple, and more raising prices due to President Donald Trump administration’s tariff policy, Arizona iced tea’s price tag has stood the test of time. But Vultaggio says it’s becoming harder to maintain. The 99-cent cans cause the American company to use more than 100 million pounds of aluminum a year, with about 20% of that supply coming from Canada.
Impact of Tariffs on Aluminum and Steel Imports
In June, the White House announced that tariffs on aluminum and steel imports would double from 25 to 50%. It should be noted that most of the aluminum the company uses is recycled in America, but 100% of their supply is being tariffed. Vultaggio tells Sellers that the cans are costing him about 40% more, and with a 100 million pound purchase, he’s dishing out $40 million more and absorbing the cost.
Strategies to Offset Costs
“The way I can get some of that back is by increasing volume, increasing the top line, the sales of the company,” he says. “And we’ve been doing that successfully. That’s a good way to offset costs.” Another way to offset costs is by using more plastic bottles. Next month, Arizona’s plastic-bottled 20-ounce beverages known as “tall boys” will have a new $1 price tag instead of $1.25.
Prioritizing Consumer Value
“Offering value is always a good idea, and when you can do it, you should,” Vultaggio says, noting that he is choosing against putting the extra production cost on the consumer. “I can kind of tighten my belt, because the people I service and the customers of mine, they’re tightening their belt every day,” he adds. Vultaggio, who is worth $6.2 billion according to Forbes, believes that if he doubled or tripled the price, his sales might fall.
Conclusion
Vultaggio’s largest manufacturing facility is located in New Jersey, dubbed “Arizonaland,” and he says he stands by the price tag for their popular products, which he believes is something worth fighting for. “I grew up in Brooklyn, and I worked for $1 an hour. I respect the value of $1. And I’d say, if I can help people who do that and give them a refreshing beverage for an affordable price, why not? And since I can afford to do it, why not continue to do it,” Vultaggio adds.
FAQs
Q: Why is Arizona Beverages committed to keeping the 99-cent price tag for their iced tea?
A: Arizona Beverages’ chairman and co-founder Don Vultaggio is committed to keeping the 99-cent price tag as a way to offer value to consumers and prioritize their needs.
Q: How does the company plan to offset the increased cost of aluminum due to tariffs?
A: The company plans to offset the increased cost by increasing volume, increasing the top line, and using more plastic bottles.
Q: What is the impact of tariffs on aluminum and steel imports on Arizona Beverages?
A: The tariffs have caused the cost of aluminum to increase by 40%, resulting in an additional $40 million cost for the company.
Q: Why does Vultaggio believe that raising prices is not a viable option?
A: Vultaggio believes that raising prices could lead to a decline in sales and instead chooses to prioritize consumer value and absorb the increased cost.
Q: What is the significance of the 99-cent price tag to Vultaggio?
A: The 99-cent price tag is significant to Vultaggio as it represents a commitment to offering affordable products to consumers and respecting the value of $1, which he believes is essential for people who work hard for their money.
