The Real Reason One Tea Brand Can't Raise Its Prices
Inflation has impacted pretty much everything. From housing and groceries to gas and your morning Dunkin' run, the price of day-to-day living has increased dramatically. However, there's one product that's holding out and refusing to change its pricing. For thirty years, AriZona Teas have been quenching people's thirst and saving their wallets. Times have changed since AriZona Beverage's founding in 1992 when the average gallon of gas cost a mere $1.09 (per Statista). Luckily, there's one item at the gas station that won't give you sticker shock. AriZona Teas continue to sell for $0.99.
Due to inflation, food prices have skyrocketed. AriZona Iced Tea is a rarity and one of the last food products whose price has stayed the same. The tea is a rare survivor alongside another fan favorite that's been able to hold out against inflation, the famously cheap Costco hot dog.
Beyond the below-dollar price tag, fans also love the popular tea for its flavor. The iconic brightly colored cans offer a wide array of tea flavors from lemon to cucumber.
With the price of just about everything going up, AriZona Tea fans have been wary of grabbing a can only to see the iconic 99 cents banner changed. Taking to social media, folks have aired their woes over inflation and have found comfort in the canned tea's never-changing price. One Instagrammer sums it up, captioning his post "Shoutout to #ArizonaIceTea for still being 99 cents.... while 99% of everyone else increasing their prices."
AriZona Tea remains a great buy
The founder and chairman of AriZona Beverage Company, Don Vultaggio, spoke with the Los Angeles Times saying, "'I'm committed to that 99-cent price – when things go against you, you tighten your belt.'" In short, Vultaggio and his company aren't making as much money off of the big tea cans as they were before inflation.
At first glance, it can be hard to see why a company would choose to take a loss on one of its most popular items when they could simply raise the price. However, food economist David Ortega explained AriZona's strategy to NPR saying "Those are loss leaders, meaning that they are priced below cost because these are the products that bring people into the store."
Moreover, Rabobank beverage analyst Bourcard Nesin told NPR of AriZona Tea that "The 99 cents is part of the brand's iconography," and adds, "It's now core to the advertising of AriZona to the point that [they get] all the free press in this environment simply because they haven't raised their price."
When searching the beverage cooler in your local gas station, that 99-cent banner may be the deciding factor in which drink you choose, keeping AriZona Tea in high demand. What the future holds for this big can, however, we just don't know.