November 3, 2016

How is Arizona Iced Tea still cheaper than water?

When Arizona Iced Tea came onto the scene in 1992, the family-owned company quickly toppled industry leader, Snapple, thanks to a simple formula: never raise prices. In fact, Arizona is so committed to its 99 cent price tag that “99¢” is still printed in bold on every can to keep retailers from charging more (though […]

When Arizona Iced Tea came onto the scene in 1992, the family-owned company quickly toppled industry leader, Snapple, thanks to a simple formula: never raise prices.

In fact, Arizona is so committed to its 99 cent price tag that “99¢” is still printed in bold on every can to keep retailers from charging more (though some try).

But thanks to the arrival of healthier options like kombucha, commodity prices increasing for corn and aluminum, and competitors like Coke beefing up with timely, Honest Tea acquisitions… staying under a buck is no easy task.

Here’s how they’ve managed to do it

Let’s start with a question: Have you ever seen an Arizona Iced Tea advertisement? Didn’t think so.
Turns out that’s intentional, as it saves a ton of money and allows them to allocate more money to keeping the super-low price alive.

“We feel like it’s more important to spend money on something that our customer really cares about, instead of buying billboards or putting our cans in the hands of some celebrity for a few minutes,” says co-owner (and son of the founder) Spencer Vultaggio. Love this guy.

They’re also extremely efficient

While inefficient production practices force most bottled drink companies to mark up prices, Arizona’s got this thing down to a cost-cutting science.

They’re like the IKEA for sugary beverages.

When it comes to bottling cans, they’ve cut the time it takes in half and use 40% less aluminum than they did in the early days.

Shipping-wise, their trucks only drive at night to avoid traffic and their 40 factories are strategically located to ensure that trucks never travel long distances.

The Takeaway

One of the best ways to build brand loyalty is to commit to a higher purpose and do whatever it takes to keep that promise to your customers.

For Arizona, it’s the 99 cent price tag, but it could be anything. Zappos is the best customer service. Just gotta ask yourself: What does your company believe in?

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