'It's My Little Way To Give Back': CEO Explains Why Arizona Iced Tea Stayed 99 Cents For 32 Years

Don Vultaggio, who co-founded the company that makes Arizona Iced Tea and remains its CEO, has held the price for their beloved product at a mere 99 cents a can since it launched 32 years ago.

Drawing inspiration from Snapple's success, Vultaggio focused his attention to tea, founding the Arizona drinks company in New York back in 1992. Their signature large cans of iced tea were an instant hit, and Vultaggio continues to run the company with his sons by his side upto this day.

Arizona Iced Tea's Enduring Price Strategy

Despite rising grocery prices and some brands resorting to "shrinkflation" (reducing product quantity while maintaining price), Arizona Tea has remarkably kept their legendary 23-ounce cans at their original price.

Don Vultaggio, interviewed on Today this week, revealed he's often asked how they manage to sell their classic offerings, like green tea and lemon iced tea, for such a competitive price. "We make it faster, we ship it better, we ship it closer, the cans are thinner," he said.

Savannah Sellers from NBC pointed out that Arizona's competitors charge a higher price and questioned why they don't raise their prices to increase profit.

"We're successful. We're debt-free. We own everything. Why? Why have people who are having a hard time paying their rent have to pay more for our drink?" he said. "Maybe it's my little way to give back."

While he wouldn't rule out a price increase entirely, Vultaggio emphasised they have no plans to raise prices anytime soon. "We're going to fight as hard as we can for consumers because consumers are my friend," Vultaggio said.

The Surprising Story Behind Arizona Iced Tea's Name

Beyond their unique pricing strategy, Arizona Iced Tea boasts an equally fascinating origin story for its name. Decades ago, when Vultaggio was brainstorming names for his new iced tea venture, he sought a moniker that evoked a sense of warmth and a healthy environment.

This meant a move away from the Brooklyn environment of Vultaggio's upbringing. Interestingly, his friends nicknamed his New York home "Santa Fe" due to its adobe-style architecture with pink, yellow, and turquoise pops. This inspired his initial choice of "Santa Fe" for the drink's name, but it ultimately wasn't the right fit.

"When I put Santa Fe on the package, it didn't look right," Vultaggio told CNN Business. "I thought it looked like a train."

In search of a name that would translate well to a beverage can, Vultaggio turned his attention to locations geographically close to Santa Fe. Ironically, he landed on Arizona – a state he'd never visited. In fact, his travels hadn't even taken him west of the Mississippi River.

"I always associated Arizona with a healthy, clean and dry feel that was different from the Brooklyn feel," he said. "Having a name associated with a lifestyle, which is an environment and climate that made you want to grab a refreshing iced tea. That's why the name seemed to make sense to me."

Leveraging his prior success with a malt liquor brand, Vultaggio, along with his partners, made a strategic shift. They decided to offer their iced tea in the same eye-catching 23-ounce can size used for their malt liquor. This larger format offered a clear distinction from Snapple's smaller 16-ounce cans.

Maintaining the same price point was also key. Plus, Vultaggio opted for a stylish capital Z in the logo, believing it visually enhanced the can's design.

In a world where the biggest companies are increasingly focused on sustainability, other businesses are making bold changes in different areas. One such example is Scale AI, whose CEO recently announced the formalisation of his company's MEI hiring policy – Merit, Excellence, and Intelligence.