Don Vultaggio, the brand chairman and founder of AriZona Beverages – the maker of the popular 99-cent iced tea – recently made headlines for his comments on the company’s commitment to keeping its original 99-cent price tag. Although it isn’t the only company holding off on raising its prices, AriZona Beverages is a unique case study on how brand identity and creative marketing can powerfully contribute to the bottom line.
Although price setting is often one of the most looked-at decisions when it comes to a company’s profitability, other factors, such as marketing, are capable of having an equal or greater impact and are also worth including in your reporting. Here’s AriZona’s story for inspiration.
Creating AriZona Iced Tea
Despite its name, AriZona Beverages was not actually founded in the state of Arizona nor has it ever been headquartered there. The company was actually started in Brooklyn, New York by Vultaggio and his former business partner John Ferolito. The two opened a successful beer distribution business in 1971 before pivoting to the tea business in the early 1990s inspired by the success of Snapple.
In order to stand out from the competition, the partners decided to use a 24-ounce can – the kind used for tallboy beers – that would literally tower over the 16-ounce Snapples on the shelf, while selling it at the same price: 99 cents. In addition to the size, the duo went with bright eye-catching packaging they believed would stand out to convenience store shoppers.
When naming the iced tea, Vultaggio wanted a brand identity that evoked a healthy and warm lifestyle, the opposite of the Brooklyn he was familiar with. Originally he wanted to go with the name Santa Fe – a nickname for his pastel-colored home – but claimed it didn’t look right on the can. Even though he had never been to Arizona, he associated the state with the type of dry healthy environment where people would want a refreshing iced tea. And it helped that the name looked good on the can, with a stylized capital Z in the middle.
Fast success and a focus on consistency
The marketing forethought of the company paid off. AriZona Iced Tea was an immediate success, selling over 18 million cases in three years and currently selling over 3 billion containers of beverages a year.
In another move that proved successful, the company struck a deal to bottle a version of the famous Arnold Palmer Iced Tea in 2001. Although it was not an immediate success, the company stuck by the product that eventually found unprecedented year-over-year growth by the early 2010s. The company currently produces over 400 million cans of the beverage a year.
Vultaggio told CNN in 2022, “We use packaging and a value story, then a great product inside. The first time a person buys us is because of the package. And forever more, they’re buying it because it tastes great.”
