Arizona Iced Tea founder refuses to raise the 99-cent price, calling it his little way of giving back

Arizona Iced Tea’s 23-ounce cans have remained priced at 99 cents for 32 years.

Founder Don Vultaggio told Today that he chooses not to raise prices for customers, contrasting with many companies that raise prices or reduce product sizes amid rising grocery costs.

Don started Arizona Beverage Company in New York in 1992, inspired by Snapple’s success. 

Arizona’s big cans of iced tea gained popularity, and Don continued running the company with his sons.

As grocery costs increase and some brands reduce product sizes without raising prices (known as “shrinkflation”), Arizona still sells its popular 23-ounce cans at the same price.

Don frequently addresses questions about how they offer classic products like green tea and lemon iced tea at such affordable prices.

“We make it faster, we ship it better, we ship it closer, the cans are thinner,” he said.

NBC’s Savannah Sellers questioned why Don doesn’t raise Arizona’s prices like competitors to increase profits.

He explained that despite their success and financial stability, he believes in keeping prices affordable for those facing financial challenges.

“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.”

Don hinted that while he doesn’t rule out future price changes entirely, he doesn’t foresee them happening soon.

“We’re going to fight as hard as we can for consumers because consumers are my friends,” he said.

In a 2022 CNBC Make It interview, Don explained that Arizona Iced Tea keeps prices low by not spending heavily on advertising like larger competitors do.

Instead, they rely on word-of-mouth to attract new customers. He likened competing with Coke and Pepsi to bringing a water gun to a gunfight.

Despite diversifying into merchandise and alcoholic beverages, Arizona stays focused on selling as many 99-cent cans as they can.

The U.S. has faced ongoing high inflation in recent years, although it has slightly decreased from its peak in 2022.

Consumer prices in May were 3.3% higher compared to the previous year, Morningstar noted.

For example, in May, the price of a loaf of white bread rose to $1.97 from $1.69 in June 2022, and a pound of ground roast coffee increased to $5.99 from $5.79 in June 2022.

Recent June data shows consumers are cautiously optimistic about inflation improving soon.

The consumer sentiment index increased to 68.2 from an earlier 65.6, indicating a belief that inflation will ease. However, it remains at its lowest level in seven months.

According to the Bureau of Labor Statistics’ Inflation Calculator, the 22-ounce Arizona Iced Tea drinks would now cost $2.22 if their prices had kept pace with inflation, marking a 124% increase from their current price.

Meanwhile, Arizona’s 99-cent cans show the suggested retail price, but occasionally, retailers charge a different amount for the product, according to the company.

Arizona Iced Tea products, along with Costco’s $1.50 hot dog and soda combo since 1985 and many dollar pizza slice shops in New York City, are praised by consumers for keeping their prices stable.

Is shrinkflation legal?

Shrinkflation is currently legal if companies disclose changes in product size on packaging, which many consumers miss. However, this may change pending legislation.

Senator Bob Casey has introduced a bill to tackle shrinkflation, as per CNET‘s report.

The proposed legislation would authorize the Federal Trade Commission to label shrinkflation as deceptive or unfair.

It aims to forbid manufacturers from practicing shrinkflation. It enables federal and state authorities to prosecute companies that engage in such practices.

Watch the success story behind Arizona Iced Tea, which has maintained the price of its popular drink at $0.99: