(NEXSTAR) — Browsing the shelves at your local grocery store or pit stop, the prices of just about everything have steadily ticked upwards since the 1990s. But at least one price has remained exactly the same: a 99-cent can of iced tea.
The prominent 99-cent price label was added to the colorful designs of AriZona’s 23-ounce drink cans in 1997, founder Don Vultaggio said. If the price were adjusted merely to keep up with inflation, it would have almost doubled by now.
On top of inflation, the past two years alone have brought supply chain disruptions, skyrocketing aluminum costs, freight delays, worker shortages and record-breaking expensive gas. So how is it remotely possible the price of the company’s iced tea hasn’t budged, not even by a cent?
Vultaggio says the company sometimes has to tighten its belt, and sometimes it’s had to get creative.
Take rising commodity prices, for example. The cost of aluminum (for cans), corn (for corn syrup) and oil (for freight) are all key for AriZona’s business. Vultaggio tracks them closely, but doesn’t let the week-to-week swings make him nervous.
“When you see things spiking, is it a long-term deal?” Vultaggio said he asks himself. “Is that where it’s gonna stay? Because if things stay there, then you’ve got to make some long-term decisions. But if it’s a spike, which typically these things are, over the years, things spike up and then come back down.”
Vultaggio gets to be steely-eyed about the rising cost of doing business, he noted, because he doesn’t have a board of directors breathing down his neck. “It’s an easier way to make decisions for me, but a lot of corporate America guys … they’re forced to do things that I’m not forced to.”
Instead of raising prices, Vultaggio said AriZona has found ways to cut back. Trucking was a huge cost for the company, Vultaggio said. (“We’re not shipping marshmallows,” he quipped.) Shifting a sizable amount of their transport to rail has helped eased some of those costs.
The company just built a new factory with high-speed equipment that can pump out 1,500 cans per minute. They’ve also made a change to their cans’ lids, using less aluminum and making them lighter. They’ve opened up more plants around the country so the product doesn’t have to be driven as far to stores and gas stations.
“Those are the kinds of things you do behind the scenes that don’t affect the consumer,” he said. “What manufacturers have to understand is what I’ve learned a long time ago: You deal with what you can fix. The things out of your control, we can’t help. But the ones you can control, shame on you if you’re not doing something about it.”
Will AriZona be able to keep the price steady much longer? Vultaggio says things are looking sunnier, not worse, than they were even a few months ago. Aluminum prices are down from their pandemic high prices, and fuel prices nationwide have started to drop in recent weeks.
“I’m not even considering raising the price now because some of the things that were really pressuring us have eased off,” he said.
By keeping the price of a can of iced tea the same, AriZona also gets to brag about how they’ve kept the price the same (and they do on the company’s website). The company doesn’t buy any advertising, so they need customers to take notice, and Vultaggio thinks they do.
“We made the decision (not to change the price) because our consumers are being pinched on all corners of their lives. And I thought if we can hold price, that would be a great gesture towards our customer base that we’re working hard to keep.”
(Information from the Nexstar Media Wire)